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

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How long must a member firm reduce its business if net capital falls below 125 percent of the minimum requirement?

10 consecutive business days
15 consecutive business days
20 consecutive business days
30 consecutive business days

The correct answer is: 15 consecutive business days

When a member firm finds itself with net capital falling below 125 percent of the minimum requirement, it is required to take corrective actions to stabilize its financial condition. According to regulations, the firm must reduce its business for a period of 15 consecutive business days. This reduction is necessary to help ensure that the firm regains compliance with the required net capital levels and to protect the stability of both the firm and the overall financial market. Staying within this threshold is critical for maintaining liquidity and financial solvency and preventing further regulatory sanctions. The 15-day requirement serves as a defined period that balances the need for corrective action while allowing the firm a reasonable timeframe to adjust its operations.