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FINRA - SIE Exam > Chapter 1 - What is Regulation? > Flashcards

Chapter 1 - What is Regulation? Flashcards

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SIE Exam flashcards
1
Q

What is the role of the SEC?

A

protect investors

maintain fair, orderly, efficient markets

facilitate capital formation

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2
Q

Who does FINRA regulate?

A

Brokers

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3
Q

Who does the MSRB regulate?

A

Dealers, Issuers, municipal advisers

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4
Q

What is the role of the Federal Reserve?

A

stabilize prices, maximize employment, moderate long term interest rates

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5
Q

How much does the FDIC cover?

A

$250,000 per investor

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6
Q

What types of accounts does the FDIC insure?

A

checking accounts, saving accounts, CDs, IRAs, money market accounts, trust accounts, employee benefit plans

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7
Q

What types of accounts does the FDIC - NOT - insure?

A

Annuities, mutual funds, life insurance, bonds, stocks

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8
Q

What are blue sky laws?

A

State level anti fraud laws that require issuers to DISCLOSE verifiable details of their offerings (varies state to state)

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9
Q

What is the role of the NASAA?

A

to PROTECT clients seeking investment ADVICE, and safeguard investors against ANTI-FRAUD

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10
Q

What led to the creation of the Securities Act of 1933?

A

Stock Market Crash of 1929

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11
Q

What is the goal of the Securities Act of 1933?

A

to make public companies disclose business details and description of securities offered in an easily accessible manner

to create transparency in financial statements

to prohibit misrepresentation and fraud

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12
Q

What is the goal of the Securities Exchange Act of 1934?

A

to regulate securities in the SECONDARY market
to promote ACCURACY and TRANSPARENCY

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13
Q

What law established the SEC?

A

Securities Exchange Act of 1934

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14
Q

To comply with the Securities Exchange Act of 1934 you must:

A

Register Securities listed on the stock exchange

Disclose company financial statements

participate in Proxy voting

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15
Q

What types of securities have to comply with Securities Exchange Act of 1934?

A

Stocks traded in the stock exchange

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16
Q

Examples of breaches of Securities Exchange Act of 1934 (SEA) include:

A

Insider trading
Sale of unregistered stock
Misappropriation of client’s funds
Violation of trust

17
Q

Who enforces Investment Advisers Act of 1940?

A

The SEC

18
Q

What is the goal of the Investment Advisers Act of 1940?

A

FEDERAL statute requiring advisers to provide ACCURATE and COMPLETE info

To maintain MARKET-INTEGRITY

19
Q

Who enacted Securities Investors Protection Act - and - the Securities Investors Protection Corporation?

A

Congress

20
Q

What is the goal of the Securities Investors Protection Corporation?

A

To safeguard clients of brokerage firms that go bankrupt

21
Q

When does SIPC insurance apply?

A

ONLY when SIPC intervenes, and oversees liquidation of the firms assets

22
Q

How much does SIPC cover in CASH?

A

up to $250,000

23
Q

What is a penny stock?

A

Stock that trades for less than $5.00 per share

24
Q

How much does SIPC cover in SECURITIES?

A

up to $500,000

25
Q

What is the goal of the Penny Stock Reform Act of 1990?

A

To prevent fraud in non-exchange listed stocks

26
Q

What is ITSFEA (Insider Trading and Securities Fraud Enforcement Act of 1988)?

A

To update SEA and increase liability penalties to all involved parties of insider trading

27
Q

What is the goal of the Investment Company Act of 1940?

A

Educate investors on the risk of securities

28
Q

What is FINRA Conduct Rule 2266?

A

requires SIPC Member firms to provide written notice to customers about SIPC Protection

29
Q

What is FINRA Conduct Rule 2269?

A

requires firms to DISCLOSE any CONFLICT OF INTEREST in a primary or secondary market distribution

30
Q

What is FINRA Conduct Rule 5250?

A

Prohibits market makers from accepting payments from issuers or promoters of a security that they are a market maker for

FINRA - SIE Exam (4 decks)

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