Finra Series-6 Exam - Topic 8 Question 20 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 20
Topic #: 8

[All Series-6 Questions]

A fund's 12b-1 fees may not be used to pay which of the following?

Aprinting prospectuses

Bcompensating brokers who sell shares of the fund

Cmailing sales literature to existing and prospective customers

Dadministrative expenses of the fund's investment adviser

Show Suggested Answer

Suggested Answer: D

A fund's 12b-1 fees may not be used to pay the administrative expense of the fund's investment adviser. This would be part of the fund's management fees. SEC rule 12b-1 authorizes a fund to pay for distribution costs out of a fund's assets only if the fund has adopted a 12b-1 plan. The SEC defines these distribution costs to include the costs of marketing and selling the fund shares, including compensating brokers who help to sell the shares, and printing and mailing prospectuses and sales literature to existing and prospective customers.

by Sue at May 03, 2022, 06:53 AM

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Sophia

4 months ago

They definitely can’t pay brokers, that’s a no-go!

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Jade

4 months ago

I thought 12b-1 fees were more flexible than that.

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Louisa

4 months ago

Wait, can they really not pay for printing prospectuses?

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Curt

4 months ago

Totally agree, it's all about marketing costs!

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Barb

5 months ago

12b-1 fees can't cover administrative expenses.

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Penney

5 months ago

I practiced a question similar to this, and I think printing prospectuses is definitely not covered by 12b-1 fees.

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Octavio

5 months ago

I remember something about not using 12b-1 fees for administrative expenses, but I can't recall the specifics.

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Venita

5 months ago

I think 12b-1 fees can be used for compensating brokers, but I'm not sure about the other options.

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Penney

5 months ago

I’m a bit confused; I thought mailing sales literature was allowed, but now I’m questioning that.

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Emily

5 months ago

I feel pretty confident about this one. The question is asking about the ad size, and the code snippet specifies "BANNER", so the correct answer is likely one of the banner-related options provided.

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Shenika

5 months ago

Easy peasy! Environmental laws are all about controlling and eliminating pollution and environmental damage. Option D covers it all, so that's my pick.

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