Series 26 Practice Questions (2026) — Free Sample Questions with Answers

Answer: A

Have the order repriced at the next NAV computed after receipt and review the firm's cutoff controls: Correct. Rule 22c-1 requires forward pricing: an order is priced at the next NAV computed after receipt. An order received at 4:12 p.m. gets the next day's NAV; giving it the 4:00 p.m. price is late trading.

Let the price stand because the customer called before the market closed in his own time zone: Incorrect. Forward pricing runs from the fund's pricing time and the time the order was received, not the customer's local time.

Let the price stand because the fund had not yet published that day's NAV: Incorrect. Under Rule 22c-1 what matters is when the order was received relative to the 4:00 p.m. pricing time, not when the NAV was published.

Cancel the order and require the customer to resubmit it on the next business day: Incorrect. The order can be processed at the next computed NAV; cancelling it is unnecessary and does not address the control gap.

Under Rule 22c-1, fund shares are bought and redeemed at the NAV next computed after the order is received; post-cutoff orders receive the next day's price.

Answer: A

May 14: Correct. FINRA By-Laws Art. V, Sec. 2(c): a U4 amendment involving a statutory disqualification must be filed not later than 10 days after the disqualification occurs. A felony conviction on May 4 is a disqualification, so May 14 is the deadline.

May 19: Incorrect. Fifteen days is the CTR filing period, not the U4 deadline for a disqualifying event.

June 3: Incorrect. Thirty days after learning of the facts is the general U4 amendment deadline; disqualifying events have the shorter 10-day deadline.

July 3: Incorrect. Sixty days has no role in U4 amendments (it is, for example, the window to review an applicant's last Form U5).

U4 amendments are due within 30 days of learning of the facts, but amendments reporting a statutory disqualification are due within 10 days after it occurs.

Answer: C

Approve the trades, since sales charges in different fund families never aggregate: Incorrect. It is true that families do not aggregate, which is exactly why splitting a lump sum just under each family's breakpoint is a red flag; approving without asking skips the review.

Cancel the three trades and rebook them in a single fund family: Incorrect. Remediation may follow, but cancelling trades before learning the reason (and the customer's wishes) is premature.

Ask the representative why the purchases were split across three fund families: Correct. Three purchases just under each family's $25,000 breakpoint from a single $73,000 inheritance suggest breakpoint avoidance (Rule 2341 and NASD NtM 02-85). The principal's first step is to inquire into the rationale; remediation such as refunds or rebooking comes after the facts are known.

Report the representative to FINRA for breakpoint avoidance under Rule 4530: Incorrect. Reporting is premature: the principal must first investigate and determine whether a violation occurred.

Purchases split across families just below breakpoints are a breakpoint-avoidance red flag; the principal's first step is to obtain and document the representative's rationale.

Answer: B

Approve it, because $25 is a nominal amount and the tellers will never discuss specific products: Incorrect. The amount may be nominal, but paying only when a purchase results makes it transaction-based.

Object: a fee to unregistered bank staff must be nominal, one-time, fixed and not tied to a sale: Correct. Under Rule 3160 and the Regulation R networking exception, unregistered bank employees may receive only a nominal, one-time, fixed-dollar referral fee that is not contingent on whether the referral results in a transaction. A fee paid only when a fund is bought is contingent.

Approve it if the tellers pass the SIE exam, which permits them to receive referral fees: Incorrect. Passing the SIE does not register anyone or permit transaction-based pay.

Approve it, provided the bank rather than Ivybridge pays the fee to the tellers: Incorrect. Who pays does not cure the contingency; the fee is still tied to a securities sale.

In networking arrangements, unregistered financial-institution employees may get only nominal, one-time, fixed referral fees that do not depend on whether a transaction occurs.

Answer: B

Rule 2020: Incorrect. Rule 2020 is the general antifraud rule; it may apply, but a specific rule addresses trading on knowledge of an imminent block.

Rule 5270: Correct. Rule 5270 prohibits a member or associated person from trading a security while holding material, nonpublic market information about an imminent block transaction in it. A 250,000-share order is a block.

Rule 5280: Incorrect. Rule 5280 covers trading ahead of a research report, not a customer block order.

Rule 5320: Incorrect. Rule 5320 bars a member from trading for its own account ahead of a customer order it holds; it addresses firm proprietary trading, not an associated person's use of block information.

Trading ahead of an imminent customer block transaction on nonpublic market information is front running under Rule 5270.

Answer: D

1. 1. Start date: the OSJ received the complete and correct application on Thursday, November 19.
2. 2. Count business days: Fri Nov 20 (1), Mon Nov 23 (2), Tue Nov 24 (3), Wed Nov 25 (4), skip Thu Nov 26, Fri Nov 27 (5), Mon Nov 30 (6), Tue Dec 1 (7).
3. 3. The latest review date is Tuesday, December 1, 2026.
4. Check: 7 business days, with weekends and the Thanksgiving holiday excluded.

Wednesday, November 25: This counts from the branch's receipt of an incomplete application. The clock starts when the OSJ receives a complete and correct application.

Thursday, November 26: This counts 7 calendar days. The rule uses business days.

Monday, November 30: This counts Thanksgiving as a business day.

Tuesday, December 1: Correct. Counting 7 business days from Thursday, November 19 (Nov 20, 23, 24, 25, 27, 30 and Dec 1) and skipping Thanksgiving gives Tuesday, December 1.

The 2330 principal review is due no later than 7 business days after an OSJ receives a complete and correct application package. Count business days only.

Answer: D

No error occurred, because each Pinecrest purchase was under $50,000 and was priced separately: The family's prospectus combines same-day purchases across its funds, so pricing each one separately was wrong.

All three purchases should be combined, so every trade qualifies for a level above $100,000: Aggregation works within one fund family. The Yardley fund is outside the Pinecrest schedule.

A breakpoint error arises only if the customer signed a letter of intent, so no correction is due: Combining concurrent purchases within a family does not depend on a letter of intent.

The two Pinecrest trades qualified for the 4.25% rate, so the overcharge on both must be corrected: Correct. The Pinecrest prospectus combines same-day purchases across its family: $48,000 + $45,000 = $93,000, which falls in the 4.25% tier. Both trades were charged 5.00%, so the firm must correct the overcharge. Yardley is a separate family and does not aggregate.

Breakpoint reviews must combine purchases as the fund family's prospectus allows, and only within that family. Missed breakpoints call for customer remediation and a review of the control that failed.

Answer: A

Weigh the March 2024 exchange with the other Rule 2330 factors and document her decision: Correct. The March 2024 exchange is about 30 months before this one, inside the 36-month look-back. She must weigh it with the 6% surrender charge, the new surrender period, any lost benefits and the new rider, then approve or reject within 7 business days and document the basis.

Reject the application, because Rule 2330 bars a second exchange within 36 months of the first: Rule 2330 makes a recent exchange a factor to consider. It does not prohibit the transaction.

Approve it, because the living-benefit rider counts as a product enhancement: Incorrect. Rule 2330 does not treat a new rider as automatically justifying an exchange; the principal must weigh it against the 6% surrender charge, the new surrender period and the prior exchange.

Send it to the insurer now and finish the 36-month analysis within 7 business days afterward: The principal review must be finished before the application is transmitted to the insurance company.

A deferred VA exchange within 36 months of another is a red flag that the principal must weigh and document. It is not an automatic bar. Review happens before transmittal, within 7 business days of OSJ receipt.

Answer: D

Within 30 days, begin taping calls of only the five persons who came from disciplined firms: Incorrect. Taping covers all registered persons' customer calls, and 30 days is the window to reduce staff, not to start taping.

Within 60 days, tape only calls in which a security is recommended, keeping tapes for one year: Incorrect. All customer calls are taped, and tapes are kept at least 3 years.

Place the five persons under heightened supervision; taping is optional if the WSPs cover them: Incorrect. Taping is mandatory for a taping firm unless it reduces staff within 30 days or obtains an exemption.

Within 60 days, adopt procedures that include taping all registered persons' customer calls: Correct. Rule 3170 requires a taping firm to establish special written procedures, including taping all telephone conversations between its registered persons and existing or potential customers, within 60 days of notice, and to keep them for 3 years.

A taping firm must, within 60 days, tape all customer calls of its registered persons and keep the procedures for 3 years, unless it reduces staff within 30 days or obtains an exemption.

Answer: A

Add the fund's 5- and 10-year rankings in the same category from the same ranker: Correct. Rule 2212(d)(2)(B) requires a total-return ranking to be accompanied by 1-, 5- and 10-year rankings (for a fund in existence at least 10 years) supplied by the same ranking entity for the same investment category; the 12-year-old fund needs all three.

Replace it with a since-inception ranking, because 1-year rankings are prohibited: Incorrect. Only rankings for periods shorter than one year are prohibited (other than yield-based); 1-year rankings are required.

Remove the headline, because a #1 ranking may not appear in a headline: Incorrect. A headline may state that a fund is the best performer if it actually ranked first in that category.

File the ad at least 10 business days before use, because it contains a ranking: Incorrect. Pre-use filing applies to rankings in categories that are not generally published or were created by the fund or an affiliate; this is an independent entity's ranking.

Total-return rankings must be shown with 1-, 5- and 10-year rankings (as the fund's life allows) for the same category, current to the most recent calendar quarter.

Answer: A

She must notify the firm, and the firm must approve the loan in writing beforehand: Correct. A loan based on a personal relationship that exists outside the broker-customer relationship is a permitted type under Rule 3240(a)(2)(D), but Rule 3240(b)(1) requires notice to the firm and the firm's written pre-approval.

Nothing, because loans from personal friends are exempt from notice and approval: Incorrect. Only loans from immediate family (and from financial institutions in the business of lending) are exempt from notice and approval; a personal-relationship loan needs both.

Nothing further, provided the loan is made on commercial terms available to the public: Incorrect. The commercial-terms exemption applies to customers that are financial institutions or credit providers, not to a friend.

She may not borrow from this customer at all while the account remains open: Incorrect. Rule 3240 permits borrowing from a customer in the listed relationships when the firm's procedures allow it and the notice and approval conditions are met.

Rule 3240 allows borrowing from or lending to customers only in listed relationships permitted by firm procedures; personal-relationship, business-relationship and same-firm loans need notice and written pre-approval.

Answer: A

A compliance principal outside Oakmere who does not report to Ms. Varnum: Correct. The inspection may not be done by the office's manager, by anyone in the office with supervisory duties, or by anyone those people supervise. An outside compliance principal is independent.

Oakmere's operations principal, who supervises that OSJ's cashiering staff: Incorrect. Rule 3110(c)(3)(A) bars any person within the office who has supervisory responsibilities there from conducting its inspection.

Ms. Varnum herself, if the firm documents that its size requires it: Incorrect. The limited-size exception is for firms that cannot comply because of size or structure; a 14-office firm with a compliance department can assign an independent inspector.

An Oakmere rep with a principal license and no supervisory duties: Incorrect. He is supervised by Ms. Varnum, and Rule 3110(c)(3)(A) bars anyone supervised by the branch manager from conducting the inspection.

Inspections must be done by someone independent of the office: not its manager, its supervisors, or anyone they supervise. The limited-size exception requires documentation.

Answer: D

Mapleton: This is a branch office because sales take place there, but no OSJ function is performed on site.

Newbury: A location used only for back-office functions, with no sales and not held out to the public, is excluded from the branch office definition.

Pelton: Having an on-site manager does not make an office an OSJ. None of the listed OSJ functions (final account approval, order review and endorsement, final approval of communications, supervising other branches) happens there.

Ridgeway: Correct. Final acceptance of new accounts and responsibility for supervising persons at other branch offices are both OSJ functions under Rule 3110(f)(1).

An OSJ is any location where OSJ functions occur: order execution or market making, structuring offerings, custody of customer assets, final acceptance of new accounts, review and endorsement of orders, final approval of retail communications, or supervision of other branches.

Answer: D

Monday, October 19: $9,500 does not exceed $10,000. Amounts just under the threshold are a structuring red flag for SAR review, but they do not require a CTR.

Tuesday, October 20: This adds Monday and Tuesday together. CTR aggregation is per business day, not across days.

Wednesday, October 21: $9,800 is below the threshold. It is a red flag, but no CTR is due for that day alone.

Thursday, October 22: Correct. Same-day currency deposits by the same person are aggregated across the firm's branches: $5,200 + $5,300 = $10,500, which is over $10,000. The CTR is due within 15 days.

CTRs cover currency over $10,000 in one business day by or for the same person, aggregated across all of the firm's offices. Near-threshold patterns are a separate SAR question.

Answer: A

Morgan Pratt and Rhea Tanner as owners, with Pratt also as the control person: Correct. The CDD rule (31 CFR 1010.230) requires each individual who owns 25% or more (Pratt at 40% and Tanner at 30%) plus one individual with significant control (Pratt, the managing member, may fill both roles).

All four owners, because each one holds an equity interest in the company: The rule does not require every equity holder. Only owners at 25% or more count under the ownership prong.

Only Morgan Pratt, as the largest owner and the company's managing member: Rhea Tanner, at 30%, is above the 25% ownership threshold and must also be identified.

Morgan Pratt, Rhea Tanner and Sven Ulrich, as owners of 20% or more each: The ownership threshold is 25%, not 20%. Sven Ulrich, at 20%, is below it.

For legal entity customers, firms identify and verify each 25%-or-more owner plus one control person. One individual may fill both roles.