Function 3: Supervision of Customer-Related Activities (21% Exam Weight)

Series 24 — Function 3: Supervision of Customer-Related Activities

Master the Series 24 — Function 3: Supervision of Customer-Related Activities function of the Series 24 (General Securities Principal) exam with official regulatory rules, quantitative formulas, and targeted practice drills.

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Authoritative Series 24 Study Notes

Key Concepts & Regulatory Highlights

Covers principal supervision of customer-related activities, including FINRA Rule 2210 retail communications approval and new-member pre-use filing, FINRA Rule 4530(a) event reporting and Form U4 settlement thresholds ($15,000 individual / $25,000 firm), FINRA Rule 3260 discretionary account supervision, and FINRA Rule 2165 elder protection temporary holds.

📐 Essential Calculation Formulas

FINRA Rule 4530 Settlement Reporting Thresholds

Individual Rep > $15,000 | Member Firm > $25,000 (Within 30 Calendar Days)

Form U4 must also be amended within 30 days for customer complaint settlements of $15,000 or more.

FINRA Rule 2165 Senior Account Hold Duration

15 Business Days + 10 Business Days + 30 Business Days = 55 Business Days Max

Trusted Contact Person must be notified orally or in writing within 2 business days of placing the hold.

📜 Core Regulatory Rules & Requirements

✓FINRA Rule 2210 New Member Pre-Filing: A broker-dealer in its first year of FINRA membership must file all retail communications (websites, brochures, public media ads) with FINRA at least 10 business days prior to first use.

✓FINRA Rule 4530(a) Prompt Event Reporting: Firms must report to FINRA within 30 calendar days any statutory disqualification, securities-related indictment/conviction, or civil/arbitration complaint settlement exceeding $15,000 for an associated person or exceeding $25,000 for the member firm.

✓FINRA Rule 3260 Discretionary Account Supervision: Requires prior written authorization from the customer, written acceptance by a designated principal BEFORE the first discretionary order, and prompt principal review of every discretionary trade.

✓FINRA Rule 2165 Financial Exploitation of Specified Adults: Allows placing an initial temporary hold of up to 15 business days on suspicious disbursements or transactions for customers age 65+ (or vulnerable adults age 18+), extendable by 10 business days after internal review and an additional 30 business days if reported to a state agency/regulator (55 business days total).

💡 High-Yield Exam Watchouts

•Remember that time and price discretion (e.g., 'Buy 500 shares of XYZ sometime today when the price looks good') is valid ONLY until the end of the single trading day it is given (unless signed in writing for an institutional order).
•Under FINRA Rule 3110(i), a firm generally may not hold a customer's physical mail for more than 3 months without verifying instructions at reasonable intervals and confirming a valid safety or security reason.

Why Study Series 24 — Function 3: Supervision of Customer-Related Activities?

The Series 24 — Function 3: Supervision of Customer-Related Activities portion of the General Securities Principal (Series 24) exam is critical for passing on your first attempt. Understanding these concepts builds both test-day precision and practical regulatory fluency.

Our practice questions and formulas are engineered to mirror the official Series 24 blueprint and statutory complexity you'll encounter at Prometric.

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