Securities Industry Essentials (SIE) Quiz: Identify Outside Business Activities

What this quiz covers

This quiz focuses on Identify Outside Business Activities, giving you a quick way to practice the rules, question types, and explanations that matter most for Securities Industry Essentials (SIE).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. a passive investment not subject to disclosure.
2. a private securities transaction requiring firm approval.
3. an outside business activity requiring prior written notice. (correct answer)
4. permissible only if the newsletter is distributed for free.

Question 2

1. This is a passive investment and requires no notification to her firm.
2. This is an outside business activity that requires prior written notice. (correct answer)
3. This is a private securities transaction because it involves real estate.
4. This only needs to be reported if she forms an LLC to own the property.

Question 3

1. deny the request, as all PSTs are prohibited.
2. approve the request in writing and record it on the firm's books.
3. forward the notice to FINRA for approval.
4. provide the associated person with a written acknowledgement and may impose conditions. (correct answer)

Question 4

1. a private securities transaction.
2. an outside business activity. (correct answer)
3. a conflict of interest that is strictly prohibited.
4. a hobby that does not require disclosure.

Question 5

1. consider the potential impact on the public and the firm.
2. evaluate whether the activity will interfere with the rep's duties.
3. maintain a record of the notice and the firm's response.
4. automatically approve the activity if it is disclosed in a timely manner. (correct answer)

Question 6

1. Reimbursement for legitimate out-of-pocket expenses related to the transaction.
2. A verbal 'thank you' from the issuer.
3. Receiving securities or an equity stake in the new venture. (correct answer)
4. The personal satisfaction of helping a friend's business.

Question 7

1. The names of all other people involved.
2. The expected duration of the activity.
3. The proposed compensation arrangement. (correct answer)
4. A certification that no firm clients will be solicited.

Question 8

1. verbal notification to her supervisor.
2. prior written notice to her firm as an outside business activity. (correct answer)
3. nothing, because the compensation is in stock options, not cash.
4. filing an amendment to her Form U4.

Question 9

1. Prior to engaging in the activity. (correct answer)
2. Within 10 business days of starting the activity.
3. During their annual compliance meeting.
4. Only after receiving the first payment from the activity.

Question 10

1. A representative working part-time as a tax preparer.
2. A representative teaching a paid finance course at a local college.
3. A representative helping a startup company sell convertible notes to investors. (correct answer)
4. A representative receiving royalties for a book they wrote on retirement planning.

Question 11

1. is strictly prohibited from doing so under any circumstances.
2. must follow the same notice or approval procedures as for any other PST. (correct answer)
3. can proceed without notice as long as no commissions are paid.
4. is only subject to the rule if the family member is also a client of the firm.

Question 12

1. Disclose the activity on their Form U4 within 30 days of starting.
2. Inform the firm only if their real estate income exceeds their securities-related income.
3. Obtain verbal permission from their direct supervisor.
4. Provide prior written notice to the firm. (correct answer)

Question 13

1. Working as a paid soccer coach on weekends.
2. Serving as a compensated officer of a local civic club.
3. Maintaining a personal securities portfolio of publicly traded stocks. (correct answer)
4. Operating a part-time consulting business from home.

Question 14

1. They must receive prior written approval from their firm.
2. They must provide prior written notice to their firm.
3. They generally have no reporting obligation for this activity. (correct answer)
4. They must disclose the activity on their Form U4 as an outside business activity.

Question 15

1. a permissible referral.
2. an outside business activity.
3. a private securities transaction. (correct answer)
4. a standard customer service function.

Question 16

1. failure to supervise. (correct answer)
2. improper use of customer funds.
3. violating Regulation S-P.
4. marking the close.

Question 17

1. a permissible referral activity.
2. a reportable outside business activity.
3. an unapproved and compensated private securities transaction. (correct answer)
4. a violation of the gift limit, but no other rule.

Question 18

1. a passive investment that likely does not require disclosure as an OBA. (correct answer)
2. an outside business activity that requires prior written notice.
3. a private securities transaction that requires firm approval.
4. a prohibited activity for any associated person.

Question 19

1. calculate the potential income to ensure it is reasonable.
2. confirm the insurance agent is properly licensed.
3. provide prior written notice to her employing firm. (correct answer)
4. disclose the arrangement verbally to each referred client.

Question 20

1. do nothing, since no compensation is received and it involves family.
2. obtain prior written approval from the member firm.
3. provide prior written notice to the member firm. (correct answer)
4. only proceed if all investors are accredited.