General Securities Sales Supervisor (Series10) Practice Exam

Notification to FINRA is required for customer disputes when the settlement exceeds what amount?

1. $2,500

2. $15,000

3. Both $2,500 and $15,000

4. No notification is required

The correct answer is: Both $2,500 and $15,000

In the context of customer disputes, FINRA (Financial Industry Regulatory Authority) requires notification when settlements exceed certain thresholds. The requirement is in place to ensure that FINRA can monitor and oversee practices within the financial industry effectively. Specifically, anytime a settlement of a customer dispute is reached that exceeds $2,500, the firm must notify FINRA. This threshold is set to capture smaller claims that may indicate larger issues or problematic patterns in a firm’s handling of customer relationships. In addition to this, any settlement that also exceeds $15,000 requires reporting. This is an important threshold because claims of this magnitude can have significant implications on customer relations and firm reputation. Therefore, monitoring these larger disputes helps ensure that firms are managing customer complaints appropriately and adhering to regulatory standards. Since both thresholds indicate points at which a settlement must be reported, the most comprehensive answer acknowledges that notification is required when settlements exceed either amount. Thus, the correct answer captures both key thresholds for reporting obligations to FINRA.