Federal Securities Legislation

Question 1

Securities Act of 1933

Answer 1

Requires registration of initial public offerings

Question 2

Glass-Steagall Act of 1933

Answer 2

Prohibited financial institutions from consolidation and offering any combination of traditional commercial banking, investment banking (brokerage firms), and insurance

Question 3

Securities Exchange Act of 1934

Answer 3

1. Requires companies with previously issued securities to keep info current
2. Created the SEC to enforce securities laws
3. Requires brokers and dealers to register with the SEC

Question 4

Maloney Act of 1938

Answer 4

Brought the over-the-counter (OTC) marker under the regulation of the SEC and called for self regulation OTC securities dealers

Question 5

Federal Bankruptcy Act of 1938

Answer 5

As amended in 1978, provides for the liquidation of hopelessly troubled firms and provides for the reorganization of troubled firms that might be able to survive

Question 6

Investment Company Act of 1940

Answer 6

Extended securities laws to investment companies (mutual funds)

Question 7

Investment Advisers Act of 1940

Answer 7

Requires registration for and regulates activities of investment advisers

Question 8

McCarren-Ferguson Act of 1945

Answer 8

Made it clear that insurance was to be regulated at the state level, as long as the states implemented and executed this regulation adequately

Question 9

Security Investor Protection Act of 1970

Answer 9

Established the Securities Investor Protection Corporation (SIPC). Insures customers’ accounts up to $500k in securities and cash, with a limit of $250k of cash coverage (in the event of the failure of a brokerage firm)

Question 10

Insider Trading and Securities Fund Enforcement Act of 1988

Answer 10

Specified what constitutes the insider trading of securities and stiffened the penalties for engaging in such training

Question 11

Gramm-Leach-Bliley Act of 1999

Answer 11

Addresses the manners in which financial institutions manage the private information of individuals; repealed the Glass-Steagall Act of 1933

Question 12

USA PATRIOT Act of 2001

Answer 12

Requires BDs (among others) to have internal policies, procedures, and controls to meet the “Know your customer” mandate as an effort against funding terrorism by money laundering