Finra Series-6 Exam - Topic 6 Question 67 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 67
Topic #: 6

NewWave Investments, a family of mutual funds, hires the star of a new motion picture about the workings of Wall Street to provide a testimonial as part of NewWave's new television ad campaign. The actor's financial adviser has, in fact, invested some of the actor's monies in NewWave's funds. NewWave provides the actor with a script in which the actor explains the concept of dollar cost averaging to the viewers. At the conclusion of the actor's explanation, the viewers are informed that the actor has been paid for his testimonial, that his experience may not be representative of that of other clients, and that past performance is no guarantee of future performance. Based on these facts:

ANewWave has violated no rules; it has complied with all of FINRA's disclosure requirements.

BNewWave has violated a FINRA rule stipulating that testimonial providers can receive no payment for their testimonies.

CNewWave has violated a FINRA rule that prohibits testimonials of public figures from being used advertisements.

DNewWave has violated a FINRA rule requiring that any testimonial that contains a technical aspect related to investing must be given by someone who has both the knowledge and experience to hold a valid opinion on the topic.

Show Suggested Answer

Suggested Answer: D

The false statement regarding both a UGMA and a UTMA is that the assets must be re-registered in the minor child's name when the child turns 18. The rule differs between the two types of accounts. The UGMA requires that the assets must be re-registered when the child reaches the ''age of majority,'' as defined by the state, and the definition differs among states. Under the UTMA, the transfer of the account can be delayed until the minor child has reached the age of 25.

by Arminda at Nov 27, 2023, 07:22 PM

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Catarina

4 months ago

But isn't it weird to pay someone for a financial opinion?

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Beatriz

5 months ago

I think they might be pushing it with that testimonial.

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Truman

5 months ago

Wait, can an actor really explain dollar cost averaging?

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Kaycee

5 months ago

I agree, seems compliant with FINRA rules.

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Michal

5 months ago

Sounds like they covered their bases with the disclosures.

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Lashandra

6 months ago

I thought that any technical explanation had to come from someone with expertise. I'm leaning towards option D, but I need to double-check the rules on that.

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Eleonora

6 months ago

I feel like there's a rule against using public figures for testimonials, but I can't remember if it applies here since they disclosed the payment.

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Regenia

6 months ago

I think I saw a similar question about testimonials in our practice exams. If the actor is paid, it might violate some FINRA rules, but I can't recall the specifics.

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Corazon

6 months ago

I remember discussing testimonials in class, but I'm not sure if paying the actor is a violation. It seems like it could be okay if they disclosed it properly.

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Kara

6 months ago

I'm a bit unsure on this one. The actor's financial background is relevant, but the disclosures may be enough to satisfy the rules. I'll have to think it through carefully.

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Adell

6 months ago

I'm pretty confident this is option A. The question states the required disclosures were provided, so NewWave appears to have complied with the rules.

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Jess

6 months ago

I'm leaning towards B. Paying the actor for the testimonial seems like it would violate a FINRA rule, even if the other disclosures are made.

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Celeste

6 months ago

Hmm, the key seems to be whether the actor's financial experience is representative of other clients. If not, then I think option D is the way to go.

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Sage

6 months ago

This seems like a tricky one. I'll need to carefully review the FINRA rules on testimonials and disclosures to determine which one applies here.

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Trina

6 months ago

The Empirical Rule sounds familiar, but I'm having trouble recalling the specifics. I'll make sure to study that concept and how it's used to estimate probabilities based on the standard deviation.

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Barbra

6 months ago

I'm not too familiar with Cisco Meraki, but the advanced replacement service sounds like a pretty valuable benefit. I'll go with option B.

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Meaghan

6 months ago

Okay, I've got a strategy for this. I'll eliminate the options that are things we can control, like testing, requirements, and usage. That should help me narrow it down to the right answer.

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Leontine

11 months ago

I'm just picturing the actor on set, rehearsing that dollar cost averaging line over and over again. Gotta earn that paycheck!

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Ressie

10 months ago

C) Yeah, I agree. NewWave has violated a FINRA rule that prohibits testimonials of public figures from being used in advertisements.

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Shawnta

10 months ago

B) I think NewWave has violated a FINRA rule stipulating that testimonial providers can receive no payment for their testimonies.

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Refugia

10 months ago

A) NewWave has violated no rules; it has complied with all of FINRA's disclosure requirements.

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William

11 months ago

Yeah, and imagine the actor reading that script like it's his own words. Option C is the one, FINRA doesn't allow public figure testimonials in ads.

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Reuben

10 months ago

Even if the actor's financial adviser invested in the funds, they still can't use a public figure in the ad according to FINRA rules.

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Arlette

10 months ago

But the actor's financial adviser invested in NewWave's funds, so maybe that's why they used him.

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Jolene

10 months ago

I agree, using a public figure in the ad is a violation of FINRA rules.

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Matthew

11 months ago

Haha, I bet the actor's financial adviser is laughing all the way to the bank! Option B is the way to go - no payment for testimonials, that's the rule.

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Thomasena

11 months ago

I disagree. Option D seems more appropriate to me. The actor may not have the knowledge and experience to provide a valid opinion on the technical concept of dollar cost averaging.

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Lynsey

11 months ago

That's true, but it's still important for someone providing a testimonial on a technical aspect of investing to have the necessary knowledge and experience.

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Lindsey

11 months ago

But the actor's financial adviser has invested in NewWave's funds, so maybe he has some knowledge about it.

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Willow

11 months ago

I think Option D is correct. The actor might not be qualified to explain dollar cost averaging.

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Eliseo

12 months ago

I'm not sure, but I think NewWave may have violated a FINRA rule that prohibits testimonials of public figures from being used in advertisements.

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Aracelis

12 months ago

I disagree, I believe NewWave has complied with all of FINRA's disclosure requirements.

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Chan

1 year ago

I think option A is correct. NewWave has disclosed the actor's payment and the fact that his experience may not be representative. As long as they comply with FINRA's disclosure requirements, they haven't violated any rules.

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