If an individual was convicted of insider trading four years ago, what is her status for becoming a registered representative?

If an individual was convicted of insider trading four years ago, what is her status for becoming a registered representative?

• A. She can be hired but will not be permitted to talk to clients.
• B. She cannot be hired as a registered representative for six years.
• C. She can only provide advice on exempt securities.
• D. Any sales she executes must be preapproved in writing by a principal.

Answer: (B)

The correct answer is that the individual cannot be hired as a registered representative for six years following a conviction for insider trading. This regulation is in place to maintain the integrity of the financial markets and to protect investors. The Securities and Exchange Commission (SEC) has strict guidelines regarding the employment of individuals with a history of securities violations. Insider trading is a serious offense that undermines the trust in the financial system, and therefore, such offenders face significant penalties, including restrictions on their ability to work in the securities industry. The six-year prohibition serves not only as a punishment for the violation but also as a measure to ensure that individuals with a demonstrated disregard for the law are kept out of positions where they could harm investors or the market integrity further. This context helps clarify why the individual is not eligible to register as a representative during this six-year period, highlighting the importance of regulatory oversight in maintaining ethical standards in the financial industry.

The correct answer is that the individual cannot be hired as a registered representative for six years following a conviction for insider trading. This regulation is in place to maintain the integrity of the financial markets and to protect investors. The Securities and Exchange Commission (SEC) has strict guidelines regarding the employment of individuals with a history of securities violations.

Insider trading is a serious offense that undermines the trust in the financial system, and therefore, such offenders face significant penalties, including restrictions on their ability to work in the securities industry. The six-year prohibition serves not only as a punishment for the violation but also as a measure to ensure that individuals with a demonstrated disregard for the law are kept out of positions where they could harm investors or the market integrity further.

This context helps clarify why the individual is not eligible to register as a representative during this six-year period, highlighting the importance of regulatory oversight in maintaining ethical standards in the financial industry.