Question 1

The SEC and Jurisdiction -- What is the '34 Act known as and what does it regulate?

Accepted Answer

A). The ’34 Act is also known as “the people act” and regulates the Secondary Market.

Question 2

The SEC and Jurisdiction -- What did the '34 Act do?

Accepted Answer

created the SEC and gave it the jurisdiction to regulate 5 entities.

Question 3

The SEC and Jurisdiction -- What are the 5 entities does the SEC have jurisdiction to regulate under the '34 Act?

Accepted Answer

1) . the Securities Exchanges 2) . the Over-the-Counter (OTC) Market 3) . Registered Self-Regulatory Organizations (SROs) 4) . Transfer Agents 5) . B-Ds and their associated persons

Question 4

The SEC and Jurisdiction -- What are transfer agents?

Accepted Answer

Transfer Agents cancel old certificates and issue ones.

Question 5

The SEC and Jurisdiction -- Do Transfer Agents include clearing agencies?

Accepted Answer

No. Transfer Agents do not include clearing agencies. Clearing Agencies handle the processing of settlements of securities trades (transactions).

Question 6

The SEC and Jurisdiction -- A Registrar— maintains the

Accepted Answer

stock record book and must account for all shares.

Question 7

The SEC and Jurisdiction -- Did the '34 Act give the SEC jurisdiction to regulate B-Ds and their associated persons?

Accepted Answer

Yes. Remember: The ’34 Act created the SEC and gave it jurisdiction to regulate B-Ds and their associated persons.

Question 8

The SEC and Jurisdiction -- Did the '34 Act give the SEC jurisdiction over national banks?

Accepted Answer

No. The SEC does NOT have jurisdiction over national banks. Banks are regulated under a different regulatory authority.

Question 9

SEC Commissioners -- How many commissioners are there?

Accepted Answer

There are five (5) commissioners.

Question 10

SEC Commissioners -- How did they get their job?

Accepted Answer

They are appointed by the President.

Question 11

SEC Commissioners -- Can they participate or have any other employment besides being a commissioners?

Accepted Answer

No. They can have NO other business or employment.

Question 12

SEC Commissioners -- Do they trade the markets?

Accepted Answer

No. They do NOT trade the markets which are subject to their regulation. They are not allowed to trade the markets.

Question 13

SEC Commissioners -- What are their terms?

Accepted Answer

5 years. They have staggered five-year terms. Memory device: 5 commisioners -- staggered, 5 year-terms.

Question 14

SEC Commissioners -- Can they be reimbursed by the SEC for expenses?

Accepted Answer

Yes. They may be reimbursed by the SEC for expenses.

Question 15

Scope of the Act -- Does the '34 Act require exchanges, listed securities, and B-Ds to register with the SEC?

Accepted Answer

Yes. Exchanges, listed securities, and B-Ds must register with the SEC under the '34 Act. D). The ’34 Act requires: 1). That exchanges, listed securities, and B-Ds REGISTER with the SEC.

Question 16

Scope of the Act -- Does the '34 Act require that publicly held companies and B-Ds file periodic reports with the SEC (e.g. Form 10-K, Form 10-Q)?

Accepted Answer

Yes. Publicly-held companies and B-Ds must file periodic reports under the '34 Act. D). The ’34 Act requires: 2). That publicly held companies and B-Ds file PERIODIC reports with the SEC (e.g. Form 10-K, Form 10-Q)

Question 17

Scope of the Act -- What does the '34 Act require persons to do when they become owners of more than 5% of outstanding stock listed on a national exchange?

Accepted Answer

such persons must file a REPORT with the SEC within 10 days. (Rule 13d.) “Insiders” own 10% or more.

Question 18

Scope of the Act -- Under the '34 Act, who sets the rules for the extension of credit on securities transactions?

Accepted Answer

the Federal Reserve Bank.

Question 19

Scope of the Act -- Regarding Reg T 50% — if we wanted that requirement in a margin account to be changed, who would have to change it?

Accepted Answer

the Federal Reserve Bank.

Question 20

Scope of the Act -- Do you become a principal stockholder if you own more than 5% of outstanding stock listed on an exchange?

Accepted Answer

No. but you'd have to file a report with the SEC.

Question 21

Scope of the Act -- When do you become a "Principal" stockholder?

Accepted Answer

Upon owning more than 10% of the outstanding stock of a company. Own more than 5% — file with the SEC. Own more than 10% — you become a Principal stockholder. (aka. insider: owns 10% or more).

Question 22

Security Registration -- E). To register a security listed (and traded) on an exchange, information must be filed regarding:

Accepted Answer

1). The issuer 2). Any person who directly or indirectly controls or is controlled by the issuer 3). The issuer’s balance sheet for the last 3 years. 4). The names of officers, directors, and underwriters. 5). Organization, financial structure, and nature of the business.

Question 23

B-D Registration -- What form is required to be filed to register a B-D with the SEC?

Accepted Answer

Form B/D. F). Registration of Broker/Dealers is accomplished by filing Form B/D. B/D for broker-dealer.

Question 24

B-D Registration -- If the B-D changes its name or moves to a different location (such as moving to a larger or smaller officer, etc.), it must PROMPTLY file an

Accepted Answer

amended Form B/D with the SEC showing those changes.

Question 25

SEC Handling of Violations -- G). The SEC may investigate

Accepted Answer

ANY situation to determine if any federal securities law or rule has been, or is about to be, violated, AND may also go into court to seek temporary or permanent injunctions.

Question 26

SEC Handling of Violations -- What is an injunction?

Accepted Answer

an authoritative warning or order.

Question 27

SEC Handling of Violations -- The SEC may investigate and override

Accepted Answer

FINRA, MSRB, or any national securities exchange.

Question 28

SEC Handling of Violations -- H). A person who has been convicted of a securities misdemeanor in the last 10 years is subject to

Accepted Answer

statutory disqualification which effectively BARS that person from the securities industry.

Question 29

SEC Handling of Violations -- How would a person convicted of a securities misdemeanor in the last 10 years re-enter the industry?

Accepted Answer

To re-enter the industry, that person would need SEC approval.

Question 30

SEC Handling of Violations -- If B-D is sued by a client, could the B-D's registration be suspended?

Accepted Answer

No. I). If a B-D has been SUED by a client, that alone would NOT be grounds for suspension of the B-D’s registration.

Question 31

Penalties / IA Fees -- J). The penalty for trading on material non-public information is

Accepted Answer

three times (3X) the profit gained or losses avoided.

Question 32

Penalties / IA Fees -- If an investment advisor representative trades on material non-public information, who may be liable to pay civil penalties?

Accepted Answer

BOTH the Investment Advisor Representative AND the Advisory Firm Employer (BOTH) may be liable to pay civil penalties.

Question 33

Penalties / IA Fees -- Can IA fees be excessive compared to other IAs providing similar services?

Accepted Answer

No. K). IA fees: 1). Cannot be excessive compared to other IAs providing similar services.

Question 34

Penalties / IA Fees -- Can IA fees be conditional or waived if the account value declines?

Accepted Answer

No. K). IA fees: 2). May NOT be conditional -or- waived if the account value declines.

Ch 06(10) Federal Acts | The Securities Exchange Act of 1934 (The '34 Act) Flashcards

Define & Discuss The Securities Exchange Act of 1934

Brainscape's Knowledge GenomeTM

Ch 06(10) Federal Acts | The Securities Exchange Act of 1934 (The '34 Act) Flashcards

Define & Discuss The Securities Exchange Act of 1934

Brainscape's Knowledge Genome^TM