Chapter 3 Flashcards
Identify the responsibility of the Office of the Superintendent of Financial Institutions.
A. Provincial securities commissions.
B. Harmonization of the Canadian capital markets.
C. Federally regulated pension plans.
D. Investment dealers and trading activity in Canadian equity marketplaces.
Federally regulated pension plans
Select the type of organization the Canadian Investor Protection Fund provides protection to for eligible investors in the event of insolvency.
A. Canadian Credit Union.
B. Canadian federally-regulated banks.
C. Life insurance companies.
D. SRO member firms.
D
The Fund covers customers’ losses of securities and cash balances, in the event of the insolvency of an SRO member firm.
A client has the following accounts with an investment dealer who becomes insolvent: $0.5 million in a cash account, $0.6 million in a margin account, $0.55 million in RRSP “A”, $0.65 million in RRSP “B”, $0.70 million in trust for a daughter. Calculate the total amount of her coverage under the Canadian Investor Protection Fund.
A. $2.0 million.
B. $2.7 million.
C. $2.9 million.
D. $3.0 million.
$2.7 million
The client would have coverage for $1.0 million for the general account (which includes the cash and margin accounts), $1.0 million for the total of the RRSP accounts, $0.70 million for the daughter’s trust.
Identify the Canadian Self-Regulatory Organizations (SRO) and an organization that would oversee the SRO.
Ombudsman for Banking Services and Investments (OBSI). Ontario Securities Commission (OSC). Office of the Superintendent of Financial Institutions (OSFI). Canadian Investment Regulatory Organization (CIRO).
A. 2 and 4.
B. 2 and 3.
C. 1 and 3.
D. 3 and 4.
The Canadian Investment Regulatory Organization (CIRO) is Canada’s national SRO, and the provinces, including the Ontario Securities Commission (OSC) would oversee the SRO.
Choose the main responsibility of the Canadian Investment Regulatory Organization.
A. Arbitrating disputes brought against its members.
B. Enacting securities laws.
C. Regulating the distribution side of the mutual funds industry.
D. Providing protection for eligible customers of insolvent mutual fund firms.
Regulating the distribution side of the mutual funds industry.
CIRO is the mutual fund industry’s self-regulatory organization responsible for regulating the distribution and sales side of the mutual funds industry.
Select a function of the National Registration Database (NRD).
A. Used exclusively to file registration forms for approval with the TSX.
B. Single submission of registration for all Canadian jurisdictions.
C. Reporting suspicious transactions in client accounts.
D. Tracking money-laundering activities through the banking system.
The National Registration Database (NRD) is a web-based system used by investment dealers and employees to file registration forms electronically when applying for approval by any one or more of the stock exchanges, the CSA or CIRO. The NRD is designed to enable a single electronic submission to satisfy all jurisdictions in Canada.
Choose the organization that is ultimately responsible for the regulation of the securities industry in Canada.
A. Canadian Securities Administrators.
B. Canadian Investment Regulatory Organization.
C. Office of the Superintendent of Financial Institutions.
D. Each province and territory.
D. Each province and territory.
The securities industry in Canada is regulated by the provinces and territories. In several provinces, the day-to-day regulation is delegated to Securities Commissions. In other provinces, securities regulators are appointed by the province.
Identify the general principle underlying the requirement for information contained in a prospectus.
A. Full, true and plain disclosure of material facts.
B. Continuous disclosure of material facts.
C. Timely disclosure of relevant information.
D. Uniform application of listing requirements.
The prospectus must contain full, true and plain disclosure of all material related to the issue.
Mia has approached her Investment Advisor and her dealer member with her claim that the IA has provided inappropriate investment advice resulting in a $50,000 loss. The dispute has not been resolved to Mia’s satisfaction. Select the next step she can take if she wants to obtain a binding decision without going to court.
A. Request arbitration.
B. Utilize the Ombudsman for Banking Services and Investments.
C. Request reimbursement through the Canadian Investor Protection Fund.
D. File a complaint with the Office of the Superintendent of Financial Institutions.
There are times when clients feel they have been treated unfairly by a dealer that is a member of an SRO. If, after discussing the problem with the dealer member, they still feel mistreated, clients have the option of suing the dealer or requesting arbitration. Arbitration is binding and less expensive than pursuing the matters through the courts.
Monique asks her Investment Advisor for information about the insurance protection available to her for her Canadian chartered bank-issued Guaranteed Investment Certificates (GICs). Choose the organization’s brochure that her IA should send her.
A. Canadian Investor Protection Fund (CIPF).
B. Ombudsman for Banking Services and Investments (OBSI).
C. Canadian Deposit Insurance Corporation (CDIC).
D. Canadian Investment Regulatory Organization (CIRO).
C. Canadian Deposit Insurance Corporation (CDIC).
CDIC is the organization that insures GIC’s issued by Canadian banks. If her IA sends her a CDIC brochure, she will have information regarding the protection offered to GIC holders.
Sharif, an Investment Advisor, listens to a business report about positive growth for ABC Corporation. He reviews the information and decides to purchase 1,000 shares for his personal account. Before he places the trade, a client calls with a request to purchase shares in ABC Corporation. Identify the action Sharif must take.
A. Ask another IA to enter his (Sharif’s) order.
B. Enter his client’s order for the shares before he enters his own order.
C. Enter the order for his client’s shares at the same time as he enters his order.
D. Ensure that both he and the client receive the same purchase price for the shares.
Enter his client’s order for the shares before he enters his own order.
Effecting a trade for the advisor’s own account prior to effecting a trade for a client (front running) is an unethical practice. He must enter the client order first.
Select the term used to refer to the securities industry role in monitoring and reporting suspicious transactions.
A. Ombudsman.
B. Protection Fund.
C. Client Relationship Management.
D. Gatekeeper.
The gatekeeper role is the guarding of markets from possible wrongdoing by unscrupulous clients, and includes collecting and recording client information that is accurate and complete, monitoring activity in client accounts, and reporting any suspicious transactions or proposed transactions in client accounts.
Identify the document that a dealer member must provide to all clients that includes details of reporting timelines, product offerings, and terms of the client’s account.
A. Prospectus.
B. Relationship disclosure.
C. Client statement.
D. Accounting Opening Agreement.
B. Relationship disclosure.
Dealer members must provide to all clients a relationship disclosure document that includes, among other items, terms of account relationships, details of suitability assessment, fees, charges, complaint handling procedures and details of reporting.
Bethany decides to quit her job as an Investment Advisor and return to school full-time. She does not intend to work for another dealer member. Identify the notification requirement for her dealer member regarding her departure from employment.
A. Immediate report to administrators and the self-regulatory organization.
B. Notification to the administrators.
C. Notification is not required by dealer-member.
D. Communication to all of Bethany’s clients of reason for her departure.
A dealer member is required to immediately report to the administrators and SRO to which it belongs the termination of an IA.
Indicate the organization that all employees of investment dealer members of the Canadian Investment Regulatory Organization (CIRO) who deal with the investing public must register with.
A. Autorité des marchés financiers (AMF).
B. Ombudsman for Banking Services and Investments (OBSI).
C. Office of the Superintendent of Financial Institutions (OSFI).
D. Applicable administrator.
D. Applicable administrator.
In the case of investment dealer members of the Canadian Investment Regulatory Organization (CIRO), employees who deal with the investing public must register with the applicable administrator as well as CIRO.
