Chapter 1 - Section 3

Question 0

What is rule 10b-5?

Answer 0

Catch-all rule

Question 1

What are the general provisions of 1934 Act?

Answer 1

Manipulation
Insiders
SEC created
Short sale rules
Proxy rules
Exchanges
Reports
Margin
Stabilization

Question 2

What are prohibited manipulation activities?

Answer 2

Wash trades
Trading pools
Trading by underwriters of a primary offering before effective date
Short tendering

Question 3

What is a 13D filing?

Answer 3

Report required to be filed by anyone who accumulates a 5% position in a company

Question 5

What is Reg T?

Answer 5

Controls credit from broker to customer

Question 6

What is Reg U?

Answer 6

Controls credit from bank to broker

Question 7

What’s a 10K?

Answer 7

Audited, annual reports corporations file with SEC

Question 8

What’s a 10Q?

Answer 8

Unaudited, quarterly reports corporations file with SEC

Question 9

What’s an 8K?

Answer 9

Reports of special events corporations file with SEC

Question 10

What’s rule 10b-2?

Answer 10

Prohibits issuers and underwriters from influencing the price of a new issue in the aftermarket

Question 11

What’s the short tendering rule?

Answer 11

Tenders can only be made of net long positions of shares (no short tendering)

Question 12

What’s an insider?

Answer 12

Officer, director, or 10% shareholder in a company

Question 13

What are the insider rules?

Answer 13

No trades based on insider info
Short swing (6 mo) profits paid back
No selling short (but can short against the box at year-end if position closed within 20 days)
Tipper & tippee liable

Question 14

What does the SEC regulate?

Answer 14

Securities only

Question 15

What is Regulation SHO?

Answer 15

Every order must be marked long or shot

Question 16

When must proxy materials be filed with SEC?

Answer 16

10 days before sent to shareholders

Question 17

What’s the net capital rule?

Answer 17

Firms must meet minimum “liquid capital” standards

Question 18

How must a firm treat fully paid customer securities?

Answer 18

Segregated and placed in safekeeping

Question 19

What are excess margin securities?

Answer 19

Those with more than 140% of debit balance

Question 20

What is a free cash balance?

Answer 20

Uninvested cash balances held at brokerage firms

Question 21

What notification is required of free credit balances?

Answer 21

Quarterly, with amount, FYI that funds available and not segregated

Question 22

What notification is required of B/D financial condition?

Answer 22

Semi-annual financial statements, including statement of financial condition & net capital computation

Question 23

What are stabilization rules?

Answer 23

One bid
At or below POP
Notice of Stabilization must appear
Bid withdrawn when syndicate disbands

Question 24

What’s rule 10b-4?

Answer 24

Short tender rule - can only tender if long position

Question 25

What’s a long position?

Answer 25

Owns stock
Owns convertible stock
Owns rights, warrants or call options

Question 26

What’s a net 0 postion?

Answer 26

No ownership; can’t tender

Question 27

What’s rule 10b-9?

Answer 27

Prohibits misrepresentation of “all or none” underwritings

Question 28

What’s rule 10b-13?

Answer 28

Prohibits purchase of security in market after tender offer is announced

Question 29

What’s rule 10b-18?

Answer 29

To buy their own shares, issuers must:
Use 1 B/D per day
No opening transactions
Not within 10 mins of close (actively traded)
Priced at current highest ind. bid OR last reported sale
Less than 25% of daily trading

Question 30

What’s Regulation M?

Answer 30

FIX