All RE5 questions
Fit & Proper FSP License (Fit & Proper/Operational Ability)
A key individual is found liable for fraud in a civil case. He decides not to tell the FSP's board or the Authority, because the judgment is under appeal. Which statement is correct?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) He need not disclose it, because civil findings are relevant only to financial soundness.
- b) He need disclose it only if a client of the FSP was a party to the civil case.
- c) He must disclose it, and the FSP must inform the Authority of the finding.Correct
- d) He need not disclose it until the appeal is finally decided, because the finding is not yet final.
Why this is the answer
Fit and proper compliance is continuous. A person must be candid about anything relevant to honesty, integrity and good standing, and an FSP must notify the Authority when it or a key individual may no longer comply. A civil finding of fraud is prima facie evidence against honesty; the pending appeal can be explained, but it does not justify concealment.
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