SIE Employee Conduct

Employee conduct covers the obligations a registered person owes their firm: outside business activities require prior written notice, private securities transactions require notice and often approval, and gifts to influence business are capped at $100 per person per year.

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Overview of the Regulatory Framework · 9%110 questions10% hard

9%of the exam is Overview of the Regulatory Framework, the section this topic sits in.

110questions on this topic in the PrepScore bank.

25%are understand-level questions — the dominant cognitive demand here.

5are EXCEPT / NOT items, where the answer is the odd one out.

What the SIE asks

What you actually need to know

Outside business activities: prior written notice to the firm, whatever the industry.
Private securities transactions and selling away.
The $100 annual gift limit, and what falls outside it as business entertainment.
Political contribution limits and the resulting pay-to-play restrictions.

How this topic behaves

What 110 questions on it look like

The questions here sit close to the exam average for difficulty, with 10% rated hard. Most are understand-level: 25% of the topic.

scenario33%

concept29%

compliance judgment28%

comparison10%

Question-type mix across the 110 questions in this topic.

From the bank

Three real employee conduct questions

With the explanation — which is the part that teaches.

compliance judgment · easy · recall

A registered representative wants to begin working evenings as a paid bartender at a local restaurant. What must the representative do before starting this work?

AFile an amended Form U4 disclosing the second job before the first shift
BObtain prior written approval directly from FINRA
CNothing, because the activity is unrelated to securities
DProvide prior written notice of the activity to the employing member firmcorrect

Why D is correct

Under FINRA Rule 3270, an associated person must provide prior written notice to the employing member before engaging in any outside business activity, even one unrelated to securities. The notice goes to the firm, not directly to FINRA.

scenario · easy · apply

A newly hired representative is applying for securities industry registration through a member firm. Which form is used for the registration application and background disclosure?

AForm U4correct
BForm U5
CA margin agreement
DA customer new account form

Why A is correct

Form U4 is the Uniform Application for Securities Industry Registration or Transfer and is used for registration application and background disclosure.

concept · easy · recall

A registered representative leaves a member firm. Which form is associated with reporting the termination of that registration?

AForm U5correct
BForm U4
CA proxy statement
DAn option disclosure document

Why A is correct

Form U5 is the Uniform Termination Notice for Securities Industry Registration and is used to report termination from a member firm.

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FAQ

Employee Conduct questions

Does a second job need to be disclosed?

Yes. Outside business activity requires prior written notice to the firm even when it has nothing to do with securities — bartending included.

What is the gift limit?

$100 per person per year for gifts given in relation to the business of the recipient’s employer.

What is selling away?

Participating in a securities transaction outside the regular course of employment with the firm, without giving the required written notice.

Last reviewed 2026-08-28. Exam facts sourced to FINRA’s SIE exam page and the FINRA SIE content outline. Question counts describe the PrepScore bank, not the exam.

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