CSC Chapter 3 Flashcards
Who protects clients if the bank goes bankrupt
CDIC on insurable deposits up to $100,000
What is a client loses money because an investment firm goes bankrupt? Who would protect them?
CIPF (Canadian Investor Protection Fund) eligible for up to $1 million in coverage
What if the investment declines in value, is there any protection?
No protection
Which activity is required for the Gatekeeper role?
Collect client information that is accurate and complete
Jagmeet is unhappy with the way he has been treated by his IA. He feels he lost close to $400,000 due to trades suggested by his IA. He has been unable to resolve this with the IA or his IA’s firm and has asked for arbitration. Neither his IA nor the IA’s firm are willing to agree to arbitration. How will this be resolved?
The IA’s firm is obliged to accept arbitration
Shelly has just been hired by an investment firm. Identify what she has to do to register in order to begin working with the investing public.
Register through the National Registration Database (NRD)
Identify the general principle underlying Canadian Securities Legislation
Full, true and plain disclosure
Eva feels that her IA and the dealer have not adequately resolved her issue. She does not want to incur the costs of pursuing the matter in the courts but does want restitution of her funds in a way that is binding on the firm. What can Eva do?
Request Arbitration
Eva asks, “Who would help me as an investor if there is a dispute with my investment dealer?” What response should Eva receive from her IA?
OBSI (Ombudsman for Banking Services and Investments)
How much protection does an investor get?
Cash, Margin, Short Sale, Options, Futures and foreign currency accounts are combined and treated as a single general account that’s covered up to $1 Million. Other accounts, such as registered accounts and trusts are generally treated separately and each covered up to $1 Million, though some types of separate accounts may be combined.
Office of the Superintendent of Financial Institutions (OSFI)
Federal regulatory agency whose main responsibilities regarding insurance companies and segregated funds are to ensure that the companies issuing the funds are financially solvent.
gatekeeper
Role of dealers and all of their employees who are responsible for protecting the markets from potentially illegal client activities; Universal Market Integrity Rules set out specific rules.
National Registration Database (NRD)
A web-based system that permits mutual fund salespersons and investment advisors to file applications for registration electronically.
investment representative
A person who is licensed to sell securities but is not permitted to give investment advice.
front running
Making a practice, directly or indirectly, of taking the opposite side of the market to clients, or effecting a trade for the advisor’s own account before effecting a trade for a client.
Ombudsman for Banking Services and Investments (OBSI)
Independent organization that investigates customer complaints against financial services providers.
full, true, and plain disclosure
The general principle underlying Canadian securities legislation. All pertinent facts by those offering securities for sale to the public must be disclosed.
Canadian Investor Protection Fund (CIPF)
Protects eligible customers in the event of the insolvency of an SRO dealer member.
Canadian Securities Administrators (CSA)
Forum for the 13 securities regulators of Canada’s provinces and territories to co-ordinate and harmonize the regulation of the Canadian capital markets.
arbitration
A method of dispute resolution in which an independent arbitrator is chosen to assist aggrieved parties recover damages.
self-regulatory organization (SRO)
Recognized by Securities Administrators, with powers to establish and enforce industry regulations to protect investors and to maintain fair, equitable, and ethical practices in the industry.
National Do Not Call List
A list, administered by the CRTC, where Canadians can register their telephone numbers to prohibit telemarketers and clients of telemarketers from calling the number.
Canada Deposit Insurance Corporation (CDIC)
A federal Crown Corporation providing deposit insurance against loss (up to $100,000 per depositor) when a member institution fails.
Autorité des marchés financiers (AMF)
Administers the regulatory framework surrounding Québec’s financial sector including securities, distribution of financial products and services, and financial institutions.
Identify the responsibility of the Office of the Superintendent of Financial Institutions.
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.
SRO Member Firms
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.
2.7 Million
Identify the Canadian Self-Regulatory Organizations (SRO) and an organization that would oversee the SRO.
1) Ombudsman for Banking Services and Investments (OBSI).
2) Ontario Securities Commission (OSC).
3) Office of the Superintendent of Financial Institutions (OSFI).
4) Canadian Investment Regulatory Organization (CIRO).
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.
Regulating the distribution side of the mutual funds industry.
Select a function of the National Registration Database (NRD).
Single registration for all Canadian jurisdictions
Choose the organization that is ultimately responsible for the regulation of the securities industry in Canada.
Each province and territory
Identify the general principle underlying the requirement for information contained in a prospectus.
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.
Request arbitration
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.
Canadian Deposit Insurance Corporation (CDIC).
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.
Enter his client’s order for the shares before he enters his own order.
Select the term used to refer to the securities industry role in monitoring and reporting suspicious transactions.
Gatekeeper
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.
Relationship disclosure
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 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.
Applicable administrator.
