Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

What must a firm do within 60 days of designation related to the Taping Rule?

1. File a report with FINRA

2. Assign a compliance officer

3. Implement monitoring procedures

4. Schedule training for employees

The correct answer is: Implement monitoring procedures

The Taping Rule, established by the Financial Industry Regulatory Authority (FINRA), mandates that firms who have been designated as needing heightened supervision must take specific actions within a defined timeframe. One of these critical actions is the implementation of monitoring procedures. By instituting monitoring procedures, the firm ensures ongoing oversight of communications, particularly for those individuals identified as needing additional scrutiny due to past behavior or other risk factors. This is essential for maintaining compliance and protecting investors, as it allows the firm to detect and prevent any potential misconduct before it escalates. While the other actions listed—filing a report with FINRA, assigning a compliance officer, and scheduling training for employees—are certainly important aspects of a compliance framework, they are not specifically required to be completed within the 60-day window mandated by the Taping Rule. Therefore, implementing monitoring procedures stands out as the action that must be undertaken within that timeframe to comply with the rule effectively.