Review the supervisory systems, conduct, compensation, disciplinary, records, financial-responsibility, and operational controls that dominate Series 24.
The second Series 24 chapter is the largest because it covers the broad supervisory infrastructure of a broker-dealer. This is where the exam tests whether the principal can build, enforce, test, document, and escalate the firm’s day-to-day compliance system rather than simply recognize isolated rules.
Work through this chapter as a management workflow. Start with supervisory systems and inspections, then move into associated-person conduct, compensation and referral controls, business-line and product approvals, dispute handling, record retention, and the financial-responsibility rules that keep the firm operationally sound.
| Section | Focus |
|---|---|
| 2.1 WSPs, Supervisory Controls, and Business Continuity | Written procedures, branch supervision, inspections, supervisory testing, technology controls, BCP, and reasonable review. |
| 2.2 Supervising Associated Person Conduct | Conflicts, standards of conduct, outside business activities, private securities transactions, customer funds, personal trading, and investigations. |
| 2.3 Compensation, Referrals, Gifts, and Networking | Referral payments, networking arrangements, cash and non-cash compensation, gifts, variable-product incentives, and conflict surveillance. |
| 2.4 Product and Service Supervision | New product approval, product risk, training, suitability, DPPs, variable annuities, investment companies, exemptions, and approved parameters. |
| 2.5 Disciplinary Actions and Dispute Resolution | Complaints, reportable events, regulatory matters, sanctions, corrective action, arbitration, mediation, expungement, and BrokerCheck accuracy. |
| 2.6 Books, Records, and Record Retention | Required records, electronic storage, communications retention, off-channel use, tape recording, legal holds, retrieval, and recordkeeping audits. |
| 2.7 Financial Responsibility and Customer Protection | Net capital, customer protection, clearing arrangements, margin, Reg T, hypothecation, short interest, financial reporting, SIPC, and cash controls. |
| Skill | Exam use |
|---|---|
| Apply WSP and control logic | Identify the written procedure, testing, inspection, and escalation path required by the facts. |
| Supervise conduct and compensation | Recognize conflicts, gifts, referrals, outside activities, private transactions, and compensation-risk facts. |
| Manage business-line changes | Connect product approvals, new activity, and firm changes to supervisory review. |
| Protect records and financial responsibility | Choose evidence, retention, net capital, reserve, possession, or control responses when operational facts require them. |