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Finra SIE Exam - Topic 3 Question 25 Discussion

A registered representative (RR) intends to enter into an arrangement for compensation with an unaffiliated entity to participate in the sale of promissory notes to the general public. Which of the following statements is true?
B) The RR must receive written approval from his firm prior to entering into this arrangement.
A) This is a permissible arrangement, and the RR is only required to notify his firm.
C) The RR is required to notify his firm regarding this arrangement if compensation received is directly related to transactions.
D) The RR is not required to provide prior notice to his firm as promissory notes are not considered securities.

Finra SIE Exam - Topic 3 Question 25 Discussion

Actual exam question for Finra's SIE exam
Question #: 25
Topic #: 3
[All SIE Questions]

A registered representative (RR) intends to enter into an arrangement for compensation with an unaffiliated entity to participate in the sale of promissory notes to the general public. Which of the following statements is true?

Show Suggested Answer Hide Answer
Suggested Answer: B

Step by Step

Private Securities Transactions: Under FINRA Rule 3280, RRs must obtain written approval from their employing firm before participating in the sale of securities outside the firm.

Promissory Notes: These are typically considered securities, requiring prior approval.

Incorrect Options:

A & C: Notification alone is insufficient; written approval is required.

D: Promissory notes are generally treated as securities under federal law.

FINRA Rule 3280 (Private Securities Transactions): FINRA Rule 3280.


by Lina at Jun 01, 2026, 05:28 AM

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Tammy
I thought promissory notes were considered securities in many cases, so I don't think D is right. It seems like the RR should notify the firm regardless.
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Angella
5 days ago
I practiced a similar question, and I feel like the rules around promissory notes can be tricky. I want to say option B is correct, but I’m not completely confident.
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Vanesa
10 days ago
I'm not entirely sure, but I remember something about needing to notify the firm if the compensation is tied to transactions. Could that be option C?
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Annice
15 days ago
I think the RR definitely needs to get written approval from the firm before entering into any compensation arrangement. That sounds like the safest route.
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