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Regs > Chapter 3 Associated Legislation and Regulation > Flashcards

Chapter 3 Associated Legislation and Regulation Flashcards

1
Q

Instruments covered under Insider Dealing Criminal Justice Act ?

Penalty?

A
  • Shares, ADRs, warrants
  • Tradeable debt
  • Options, futures and CFD
    Excludes commodity and etc

10 years and or unlimited fine. LSE monitors transaction and FCA prosecutes

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2
Q

Misleading statements and impressions penalty

A

Crown Court: 10 years and/or unlimited

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3
Q

UK Market Abuse Regulation (MAR) instruments covered?

Penalties?

A

Civil offence

Trading on regulated market, MTF, OTF, OTC, emissions allowance, commodity spot and derivative markets

Sanctions:
Withdrawal of regulated status
Financial penalties
Public statements
Apply for injunction/restitution to court

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4
Q

MAR PDMR

What

A

Breach is civil offence - FCA take action

Persons discharging managerial responsibility (PDMRs) dealing in own company shares must disclose to both their company and FCA within 3 business days of transaction

No dealing during closed periods: 30 days prior announcement of year end or half-yearly results

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5
Q

How long is Money Laundering Regulations (admin one) requiring people to keep records

A

5 years

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6
Q

Money Laundering Regulations penalties for directors/ senior managers

A

Failure to comply with reg- 2 years and/or unlimited fine

Recklessly making statement of money laundering which is false or misleading- 2 years and or unlimited fine

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7
Q

POCA General offences and penalties

A
  1. Concealing
  2. Assisting
  3. Acquiring ML money

Above all 14 years and/or unlimited fine

Knowingly prejudicing investigation - 5 years and/or unlimited fine

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8
Q

POCA Regulated offences and penalties

A

Failure to report- 5 years and/or unlimited fine

Tipping off- 2 years and/or unlimited fine

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9
Q

What is MLRO

A

Money Laundering Reporting Officer - reports to NCA National Crime Agency

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10
Q

Terrorism Act 2000 and Anti-terrorism crime Security Act 2001

What
penalties

A

Obligation to report suspicions to nominated officer

Failure to report - 5 years and/or unlimited fine

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11
Q

Counter Terrorism act 2008

What

A

Gives extra powers to His Majesty’s Treasury (HMT)

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12
Q

Key diff between Counter Terrorism and Money laundering

A

CT- money can be small amounts and from elgit source.

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13
Q

Bribery act max penalty

A

Individual - 10 years jail term and/or unlimited fine

Company- unlimited fine

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14
Q

Data protection higher penalty

A

Obvious breach

Up to 17.5million or 4% of global turnover

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15
Q

Data protection standard penalty

A

Admin failure

Up to 8.7 million or 2% of global turnover

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16
Q

EU Transparency Directive thresholds

A

5,10,15,20,25,30,50,75%

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17
Q

UK Disclosure rules

A

Requires disclosure to issuer within 2 business days when

  • reach 3%
  • (Above 3%) change up or down to next whole % point
  • Fall below 3%
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18
Q

Companies Act 2006 S793 Letter

A

Requires disclosure of shares held

  • At present time
  • In last 3 years
19
Q

Diff between trade report and transaction report

A

Trade report
- For MIFID post trade transparency
- Reported by more senior person/ if both same then selling firm
- Automatic or in 3 min
- REPORT TO EXCHANGE

Transaction report
- For market surveillance
- Both counterparties report
- By T+1
- REPORT TO REGULATOR via approved reporting mechanism eg TRAX

20
Q

Diff between POCA and Criminal Justice act

A

POCA is for money laundering and criminal justice act is for insider dealing

21
Q

Which of the following is an inter-governmental body which sets international standards that aim to prevent money laundering and terrorist financing activities and the harm they cause to society?

A

Financial Action Task Force

22
Q

EMIR sets out requirements for reporting and risk management in the OTC derivative markets. Which firms are covered by this regulation?

A

The rules apply to all EEA-incorporated and established entities, catching for the first time non-financial corporate entities and not just financial entities, such as banks

Covers financial and non financial counterparties

23
Q

A chairman has access to price sensitive information about his company’s shares. In which of the following circumstances could a director in the company trade?

A

Director follow PDMR rules NOT need permssion from FCA thats wrong

24
Q

Which does the Capital Requirement Directive require? All firms:

A

Under the scope of MiFID should have MORE than the amount of regulatory specified capital

NOT AT LEAST EQUAL TO

25
Q

Which of the following requires immediate notification by the firm to the PRA?

A

When it has breached the financial resources requirement

IIWhen it believes that it may shortly breach the financial resources requirement

When a systems failure means that the firm is unable to produce accounting records which disclose the financial position of the company

26
Q

The Transparency Directive defines a notifiable interest as:

A

5%

The ‘Transparency Directive’ refers to EU rules, and these set 5% as the level of notifiable interest. The equivalent UK rules are called ‘Disclosure and Transparency Rules’, and under the UK rules the level of notifiable interest would be 3%.

27
Q

Which of the following gives the FCA the power to prosecute insider dealing offences?

A

Financial Services and Markets Act 2000

Criminal justice act is legislation unrelated to FCA powers

28
Q

Under Data Protection Principle 1, information must be processed:

A
  • Lawfully and fairly
29
Q

The MLRO must report to senior management at least:

A

Once every 12 months

30
Q

Market abuse involving manipulating devices would cover:

A

Investment trust shares are secondary market traded and are therefore covered.

31
Q

Which of the following is an insider according to the Criminal Justice Act 1993?

A

An employee whose work involves inside information

Not people who pay, observe etc. Its people who actually work with it are insiders

32
Q

Which of the following would not be considered a suspicious transaction under the Money Laundering Regulations?

A

The customer is unable to prove his identity through the usual means, but is willing to offer other forms of identification

33
Q

The purpose of a transaction report is:

A

To allow the FCA to review transactions

34
Q

Which activity is the subject of the defence in relation to distorting market prices of ‘acting in accordance with the rules of’?

A

Price stabilisation

35
Q

Unexpected breach of MAR

A

A firm unintentionally submits incorrect trade details, which leads to a significant move in the market

36
Q

All of the following represent data protection principles under DPA 2018, except:

A

Processed in a manner which is clear, fair and not misleading

Accurate and kept up to date is part of it
Lawful and fair is part of it
Not kept for longer tha necessary part of it

37
Q

Who does SFTR relate to

A

Security financing transactions must be reported to a repositary

APPLIES TO FINANCIAL COUNTERPARTIES only in UK

UK form of EMIR basically

38
Q

Under the European Markets Infrastructure Regulation, which of the following is not a requirement on those that trade derivatives?

A

To ensure the orderly functioning of markets- objective of regulator

Below are requirements :

Risk management procedures must be adopted for OTC derivatives

BCertain OTC derivatives must be cleared through a qualifying central counterparty

CTo report all OTC derivative transactions to a trade repository

39
Q

Which of the following best describes the purpose of the ‘Persons Discharging Managerial Responsibility’ (PDMR) regime?

A

It is designed to protect directors from the appearance of insider dealing

NOT
It prevents directors from buying shares in their company

40
Q

Under article 19 of UK MAR, where an individual is subject to persons discharging managerial responsibilities (PDMR) and wishes to trade within 30 calendar days prior to the announcement of the company’s annual financial report, which of the following BEST describes the process?

A

The company is required to make information on these trades public

The closed period is defined as being 30 calendar days before the announcement of the company’s interim or annual financial report. The company is required to make these periods public as a condition of listing or under national law. This restriction may be lifted to permit a trade in the closed period in exceptional circumstances such as severe financial difficulty requiring the immediate realisation of funds. It also allows transactions under employee share schemes or similar transactions where there is no change in the beneficial ownership of those shares.

41
Q

According to the JMLSG’s guidance notes, for what length of time should client verification records be kept?

A

Five years from the date the account was closed

42
Q

Graham accepts regular deposits from the director of a small overseas company. Which of the stages of money laundering could Graham find himself under suspicion of under the Money Laundering Regulations?

A

Placement

43
Q

According to Money Laundering Regulations, how long should a firm keep records

A

The firm must keep records for five years.

44
Q

Under UK MAR where a person has reasonable suspicion regarding an order or a transaction in a financial instrument when placed on any trading venue, they should notify the FCA:

A

once a full investigation has been completed to assess the nature of the event

Regs (6 decks)

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