Series 28 Practice Questions (2026) — Free Sample Questions with Answers

Answer: C

Permitted, since it is under 30% of excess net capital: Staying under the 15c3-1(e) notice thresholds avoids SEC notice, but it does not lift the one-year treatment of contributed equity.

Permitted without approval below 10% of excess net capital: The 10%-in-35-days approval test is FINRA Rule 4110(c)(2), which applies only to carrying or clearing members; it is not a safe harbor for a one-year-old contribution.

Not permitted within one year without written DEA approval: Correct. Under SEA Rule 15c3-1(c)(2)(i)(G)(2), equity withdrawn within one year of contribution is deemed to have been intended to be withdrawn, so it must be treated as a liability (deducted) unless the firm's designated examining authority approves in writing; FINRA Rule 4110(c)(1), which applies to all members, likewise bars the withdrawal within one year without FINRA's written permission. The contribution is ten months old.

Permitted after two business days' notice to the SEC and FINRA: Two business days' prior notice is the 15c3-1(e)(1) mechanism for large withdrawals; it does not lift the one-year restriction.

Contributed equity stays in the firm for one year: SEA 15c3-1(c)(2)(i)(G)(2) deems an earlier withdrawal intended unless the DEA approves in writing (and FINRA 4110(c)(1) requires FINRA's written permission). This is separate from the 15c3-1(e) notice tests.

Answer: A

1. 1. Requirement = greater of $50,000 or AI ÷ 15 = $310,000 ÷ 15 = $20,667, so $50,000.
2. 2. 17a-11 early-warning level = 120% × $50,000 = $60,000.
3. 3. Net capital $58,000 < $60,000 but > $50,000: early warning, not a deficiency.
4. 4. AI ratio = $310,000 ÷ $58,000 ≈ 534%, below the 1200% trigger.
5. 5. FINRA 4120(a) (150%) covers carrying or clearing members only, so Fenwick files the 17a-11 notice within 24 hours.

A 17a-11 early-warning notice within 24 hours: Correct. Required net capital is the greater of $50,000 and 1/15 of AI ($20,667), so $50,000. Net capital of $58,000 is below 120% of that ($60,000), which triggers the SEA Rule 17a-11(b)(3) early-warning notice within 24 hours. AI is only about 534% of net capital.

A 17a-11 deficiency notice the same day: Same-day notice is for net capital below the minimum. Fenwick is $8,000 above its $50,000 minimum.

Notices under both 17a-11 and FINRA Rule 4120(a) within 24 hours: The 4120(a) notice at 150% of the minimum applies to carrying or clearing members, not to a fully disclosed introducing firm like Fenwick.

No notice, because net capital exceeds the minimum: Being above the minimum is not enough; 17a-11 gives early warning once net capital falls below 120% of it.

Every broker-dealer must give 17a-11 notice within 24 hours when net capital is below 120% of its minimum or AI exceeds 1200%. FINRA's 4120 thresholds bind carrying and clearing members.

Answer: C

Every two years, by its AML compliance person: The two-year cycle is only for firms with no customer accounts that also do not act as introducing brokers, and the AML compliance person may not test the program.

Every two years, by a qualified tester independent of AML functions: The tester is right, but the frequency is not: introducing customer accounts brings Ashbury into the annual-testing group.

Each calendar year, by someone independent of AML functions: Correct. FINRA Rule 3310(c) requires annual (calendar-year) independent testing, except for firms that do not execute customer transactions, hold customer accounts or act as introducing brokers. Under .01, the tester may not be the AML compliance person, someone who performs the functions tested, or anyone reporting to either.

Each calendar year, by its AML compliance person with CEO sign-off: Annual is right, but the designated AML compliance person is barred from testing the program.

Introducing firms with customer accounts test their AML programs every calendar year, using a tester independent of the AML officer and of the functions tested.

Answer: C

2: Two is under 7% of a 30-person staff; no 3170 tier for a firm of this size is that low.

4: Four is the threshold for firms with 10 to fewer than 20 registered persons, not for a 30-person firm.

6: Correct. For a firm with 20 or more registered persons, FINRA Rule 3170(a)(5)(A) sets the taping threshold at 20% of registered persons: 20% × 30 = 6. A taping firm must record all telephone calls between its registered persons and existing or potential customers and keep the tapes for three years.

12: This applies the 40% threshold for firms with 5 to fewer than 10 registered persons.

Taping thresholds: 40% at 5-9 registered persons, four persons at 10-19, and 20% at 20 or more. Taping firms record customer calls and keep the tapes three years.

Answer: A

Make no 4530(a) report, as the settlement does not exceed $25,000: Correct. Under FINRA Rule 4530(a)(1)(G), a settlement must be reported within 30 calendar days when it exceeds $15,000. When the member itself is the respondent, the threshold is more than $25,000, so a $22,000 settlement is not reportable under 4530(a).

Report within 30 calendar days, as it exceeds $15,000: $15,000 is the general threshold (for example when an associated person is the respondent); the member-as-respondent threshold is $25,000.

Report it with the quarterly complaint data by the 15th: The 4530(d) quarterly statistics cover written customer complaints; they are not where a reportable settlement goes, and this one is below the threshold anyway.

Report within 10 business days of signing the settlement: Ten business days is not a 4530 deadline; reportable events go in within 30 calendar days.

4530(a) settlements are reportable above $15,000, or above $25,000 when the member is the respondent, within 30 calendar days.

Answer: B

1. 1. Regular way settlement is T+1: trade Thursday June 11, settles Friday June 12.
2. 2. Interest runs from the last coupon (March 1) up to but not including settlement (June 12).
3. 3. 30/360 days: March, April and May count 30 each = 90, plus June 1 to June 12 = 11, total 101 days.
4. 4. Interest = $10,000 × 0.06 × 101 ÷ 360 = $168.33.

$166.67: This counts 100 days, stopping at trade date. Interest runs up to but not including settlement on June 12.

$168.33: Correct. On a 30/360 basis, March 1 to June 12 is 3 months (90 days) plus 11 days = 101 days. $10,000 × 6% × 101/360 = $168.33.

$171.67: This uses 103 actual days (actual/360). Corporate bonds use 30-day months under Rule 11620(b).

$173.33: This counts to June 15, a T+2 settlement. Regular way is now T+1, so settlement is June 12.

UPC accrued interest on corporate bonds uses 30-day months and a 360-day year, running from the last coupon date up to but not including settlement date.

Answer: D

1. 1. Net worth $250,000.
2. 2. Add the satisfactory subordination: $350,000.
3. 3. Deduct non-allowables: $350,000 − $70,000 = $280,000 tentative net capital.
4. 4. Haircuts: 15% × $80,000 = $12,000; 2% × $50,000 = $1,000. Net capital = $267,000.
5. 5. Requirement = greater of $5,000 and $600,000 ÷ 15 = $40,000. Excess = $267,000 − $40,000 = $227,000.

$17,000: This uses the $250,000 carrying-firm minimum. Talbot is on the $5,000 tier, where 1/15 of AI governs.

$127,000: This leaves out the satisfactory subordinated loan, which is added to net worth.

$192,000: This uses 1/8 of AI ($75,000), the first-year test. The firm's requirement is 1/15 of AI.

$227,000: Correct. Net capital = $250,000 + $100,000 − $70,000 − $12,000 (15% equities) − $1,000 (2% MMF) = $267,000. Requirement = greater of $5,000 and $600,000 ÷ 15 = $40,000. Excess = $227,000.

Follow the worksheet order: net worth, plus subordinations, minus non-allowables, minus haircuts. Then compare with the greater of the dollar minimum and 1/15 of AI.

Answer: B

1. 1. Base haircuts: Q $60,000 × 15% = $9,000; R $30,000 × 15% = $4,500.
2. 2. Concentration threshold = 10% × $400,000 = $40,000. Q exceeds it by $20,000; R does not exceed it.
3. 3. Add-on = 50% × 15% × $20,000 = $1,500.
4. 4. Total = $9,000 + $4,500 + $1,500 = $15,000.

$13,500: This applies 15% to both positions but leaves out the concentration add-on for Issuer Q.

$15,000: Correct. Base haircuts are $9,000 + $4,500. Issuer Q exceeds 10% of net capital before haircuts ($40,000) by $20,000, which adds 50% of 15% (7.5%) × $20,000 = $1,500. Total $15,000 (15c3-1(c)(2)(vi)(M)).

$16,500: This charges the full 15% again on the $20,000 excess. The add-on is only 50% of the haircut percentage.

$18,000: This applies the add-on to all of Issuer Q, not just the part above 10% of net capital.

When one issuer's position exceeds 10% of net capital before haircuts, an extra 50% of the normal haircut percentage applies to the excess only.

Answer: B

1. 1. Include accounts payable and accrued expenses: $75,000.
2. 2. Add the guarantee of the affiliate's loan: $75,000 + $60,000 = $135,000.
3. 3. Exclude the deferred tax liability and the subordinated loan.
4. 4. AI ratio = $135,000 ÷ $12,000 = 11.25, or 1125%. That is below the 1200% SEA 17a-11 trigger, so no early-warning notice is due (FINRA 4120 levels do not apply to an introducing firm).

625%: This leaves out the guarantee. Guarantees are generally included in AI.

1125%: Correct. AI = $40,000 + $35,000 + $60,000 = $135,000. $135,000 ÷ $12,000 = 1125%. That is below the 1200% SEA 17a-11 early-warning trigger, the one that applies to an introducing firm.

1250%: This adds the deferred tax liability, which 15c3-1(c)(1) excludes from AI.

2083%: This adds both the deferred tax liability and the satisfactory subordinated loan. Both are AI exclusions.

Off-balance-sheet guarantees push the AI ratio toward the 1200% SEA 17a-11 trigger. Deferred taxes and satisfactory subordinations stay out of AI.

Answer: B

1. 1. Allowable: cash, the receivable from the clearing broker, and the clearing deposit (PAB, not subordinated).
2. 2. Non-allowable: $8,000 + $6,000 + $14,000 + $5,000.
3. 3. Total deduction = $33,000.

$25,000: This treats the 45-day concessions receivable as allowable. Under 15c3-1(c)(2)(iv)(C), receivables of this kind become non-allowable after 30 days.

$33,000: Correct. Non-allowable: the aged concessions ($8,000), the prepaid insurance ($6,000), the fixed assets ($14,000) and the unsecured advance ($5,000), for $33,000. The clearing deposit and the receivable from the clearing broker are allowable.

$58,000: This also deducts the clearing deposit. A deposit held under a PAB agreement that is not subordinated is allowable.

$94,000: This also deducts the clearing deposit and the receivable from the clearing broker. Both are allowable for an introducing firm.

An introducing firm's balances at its clearing firm are generally allowable. Prepaids, fixed assets, unsecured advances and receivables aged over 30 days are not.

Answer: C

$5,000: Forwarding securities promptly does not mean the firm never receives them. And the trading for its own account is ignored.

$50,000: This is right for receiving-but-not-holding alone. It overlooks the proprietary trading, which makes the firm a dealer.

$100,000: Correct. A broker-dealer that makes more than ten transactions a calendar year for its own investment account is a dealer under 15c3-1(a)(2)(iii), with a $100,000 minimum. The firm must meet its highest applicable tier.

$250,000: The $250,000 minimum applies to firms that carry accounts or hold customer funds or securities. Quillon promptly forwards, so it does not hold.

Apply the highest tier the firm's activities trigger. More than ten own-account trades a year makes the firm a dealer, at $100,000, even if it introduces all of its customer business.

Answer: A

1. 1. Equities: $220,000 × (1 − 30%) = $154,000.
2. 2. Treasury notes: $50,000 × (1 − 3%) = $48,500.
3. 3. Collateral value = $202,500, which is at least the $200,000 unpaid principal, so the shortfall is $0.

$0: Correct. Collateral value = $220,000 × 70% + $50,000 × 97% = $154,000 + $48,500 = $202,500. That covers the $200,000 principal, so there is no shortfall and no notice is triggered.

$11,000: This applies the 30% equity reduction to the Treasury notes as well ($154,000 + $35,000 = $189,000); the stem gives them 3%.

$41,500: This values the equities at their 50% Reg T loan value ($110,000 + $48,500 = $158,500); SDN collateral uses the Appendix D valuation.

$46,000: This ignores the Treasury notes ($200,000 − $154,000); government securities are eligible SDN collateral.

Test SDN collateral at its Appendix D value (equities reduced 30%, other securities by their 15c3-1 haircuts) against the unpaid principal; a shortfall triggers notice and a cure.

Answer: B

The customer's net worth, verified with tax returns: Rule 4512 requires certain customer information, but not verification of net worth with tax returns.

The name and contact details of a trusted contact person: Correct. FINRA Rule 4512(a)(1)(F) requires a member to make a reasonable effort to obtain the name of and contact information for a trusted contact person age 18 or older for each non-institutional customer account.

The customer's written consent to arbitrate disputes: A predispute arbitration agreement is optional and governed by Rule 2268; Rule 4512 does not require one.

The customer's consent to share data with the clearing firm: Sharing information with the clearing firm to service the account falls under a Regulation S-P exception; Rule 4512 does not require consent.

Rule 4512 sets the customer account information to be kept, including a reasonable effort to obtain a trusted contact person for each non-institutional account.

Answer: A

(k)(1): Correct. (k)(1) covers firms whose business is limited to investment company shares, interests in insurance company separate accounts (variable contracts) and similar products, with prompt transmission.

(k)(2)(i): (k)(2)(i) is for firms that carry no margin accounts and keep a Special Account for the Exclusive Benefit of Customers.

(k)(2)(ii): (k)(2)(ii) is for firms that clear all transactions through another broker-dealer on a fully disclosed basis.

(k)(3): (k)(3) is an exemption granted by SEC order on application, not one that is self-claimed for fund business.

Mutual fund and variable contract firms use (k)(1). Fully disclosed introducers use (k)(2)(ii).