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SEC > PART 1 SRC > Flashcards

PART 1 SRC Flashcards

1
Q

All corporations whose securities are registered under the Securities Regulation Code are required to

A

Register first with the security of exchange commission

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2
Q

Approval of the stockholders must be secured within how many days upon the declaration of the stock dividend by the board of Directors

A

30 days

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3
Q

Application for increase in authorized capital stock and for the registration of the securities must be filed w/ SEC w/in how many days from the date of approval by the stockholders

A

45 days

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4
Q

Record of declaration shall not be less than how many days nor more than how many days after clearances and approval by the commission

A

Less than 10 days nor more than 30 days

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5
Q

Sanctions for violation of any off the provision of the rules

A
  • Fine less than 200php nor more than 50,000php plus not more than 500php for each dag continuing violation
  • suspension and revocation of certificate of registration or permit to offer securities
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6
Q

Considered as a qualified individual buyer if he has registered as such with entities that are authorized by the commission to as registrar of qualified buyers

A

Natural person

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7
Q

Annual gross income of qualified individual buyer

A

At least 10M pesos at least 2 years prior to registration

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8
Q

Total portfolio investment of qualified individual buyers (in securities registered with the SEC)

A

At least 10,000,000 pesos

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9
Q

Personal net worth of qualified individual buyer

A

Not less than 30M pesos

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10
Q

Minimum period qualified individual buyers must be engaged in securities trading personally or through a fund manager

A

1 year

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11
Q

Qualified individual buyers must hold at least how many years in position of responsibility in any professional business entity w/ knowledge/ expertise in securitis trading

A

2 years

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12
Q

Expertise in securities trading example

A

Legal consultant
Financial Adviser
Sales person
Associated Person of a broker - dealer
Bank finance/ treasury officer
Trust office4

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13
Q

Qualified Gross asset if the buyer is a Juridical Person

A

At least 100,000,000php

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14
Q

Qualified Total Portfolio Investment if the buyer is a Juridical Person

A

At least 60,000,000php

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15
Q

Requirements of an individual buyer

A

Total Portfolio of Securities
Annual Gross Income
Net Worth
Treshold Risk

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16
Q

The registration as qualified buyer shall be valid for how many years if qualifications provided are continuously complied with?

A

3 years

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17
Q

Application for renewal of qualified buyer is subject to

A

New evaluation by the registrar and accompanied by updated information sheets

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18
Q

The registrar shall maintain this book of qualified buyers that shall be open for inspection of Commission

A

Registry Book

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19
Q

Registration Requirements for a Broker Dealer, Investment Company Adviser/ Fund Manager, Associated Person, Compliance Officer, Certified Investment Solicitor and Salesman are under what Department

A

CRMD or Company Registration and Monitoring Department

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20
Q

Market participants are regulated by what institution?

A

MSRD or Market and Securities Regulation Department

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21
Q

Who are the different Market Participants/ Professionals?

A

Broker
Dealer
Associated Person
Salesman
Settlement officer

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22
Q

A natural person hired to buy and sell securities on a salary or commission basis endorsed to the Commission by the employing Broker Dealer

A

Salesman

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23
Q

Any person who buys and sells securities for his/her own account in the ordinary course of business

A

Dealer

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24
Q

A person engaged in the business of buying and selling securities for the account of others

A

Broker

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25
Q

Any person employed full time by the Broker Dealer whose responsibilities include internal control supervision of other employees, agents, salesman, officers, directors, clerks and stockholders of such Broker Dealer for compliance with the SRC and its IRR

A

Associated Person

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26
Q

A person or entity engaged in buying or selling government securities such as Treasury Bills, Treasury Nites, and Treasury Bonds.

A

GSED or Government Securities Eligible Dealers

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27
Q

A corporation which engages in the underwriting of securities of another person, including securities of the government or its instrumentalitist

A

Investment House/ Underwriters of Securities

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28
Q

Any person who engages on behalf of an issuer of securities in, among others, registering the transfer of such securities

A

Transfer Agent

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29
Q

Is an organized marketplace that brings together buyers and sellers and executes trades of securities and/ or commodities

A

Exchange

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30
Q

Any person who acts as an intermediary in making deliveries upon payment to effect settlement in securities transactions

A

Clearing Agency

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31
Q

No person shall engage in the business of buying or selling securities in the philippines as a broker or dealer or act as a salesman or an associated person of any broker or dealer unless registered as such with the commission

No registered broker or dealer shall employ any salesman or any associated person who is not registered as such with the commission.

A

Registration of Brokers and Dealers Section 28 - SRC

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32
Q

This person must satisfactorily pass a written examination as to his proficiency and knowledge in the area of activity for which registration is sought

A

Natural person

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33
Q

This person must satisfy a minimum of what requirement as prescribed by the commission and provide a bond or other security as the commission may prescribe to secure compliance with the provisions of this code

A

RBCA Requirement

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34
Q

This refer to the minimum levels of capital that has to be maintained by firms which are licensed or securing a broker dealer license taking into consideration the firm size complexity and business risk

A

Risk-based Capital Adequacy Requirement/Ration

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35
Q

These are the risk that are considered in determining the capital requirement

A

Operation
Position
Counterparty
Large Exposure
Underwriting
Margin Financing Risk

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36
Q

Registration of broker dealer license shall remain valid unless otherwise revoked for cost or suspended or voluntarily surrendered by the broker dealer.

A

True

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37
Q

Broker dealer shall pay the annual fee every what month of each year of registration?

A

November

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38
Q

No sale or transfer of assets and liabilities of an existing broker dealer to an entity or any form of reorganization or change in management of a broker dealer the facto or otherwise shall be affected without prior approval by the commission

A

Registration of Success to broker dealer

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39
Q

Request for withdrawal of business and or cancellation of registration as a broker dealer shall be filed on what sec form

A

SEC Form 28-BDW

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40
Q

Capitalization requirement of broker and dealers

A

100,000,000php

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41
Q

The firm that manages the funds of an investment company

A

Investment company adviser or fund manager

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42
Q

A company that pulls funds from numerous investors through the insurance of its shares to the public

A

Investment company

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43
Q

Two types of investment company

A

Open end investment company or mutual fund and close end investment company

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44
Q

Distribute shares or units of an investment company as either principal distributor or subdistributor

A

Mutual fund distributor

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45
Q

Agent are employee of an investment company advisor or fund manager or distributor who solicits or procures investments or applications for investment in an investment company or mutual fund company

A

Certified investment solicitor

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46
Q

Registration requirements for capital market professionals

A

SEC Form
Proof of Examination (SEC Cert Exam.)
Valid ID
Letter from Employer

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47
Q

Not only natural persons can apply and be employed by a capital market institution

A

False, only natural persons

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48
Q

Applicants for salesman or certified investment solicitor shall be at least what age?

A

18 years old

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49
Q

Applicants for an associated person or compliance officer shall be at least what age?

A

21 years old

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50
Q

Any applicant applying for registration for the first time has have taken and pass the applicable examination within the last 5 years immediately preceding the date of his application

A

False, should be 3 years

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51
Q

Applicant for registration as capital market professional shall be registered even though he or she has not completed the certification requirement yet

A

False

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52
Q

The registration of a capital market professional shall sees when he is no longer employed by the capital market institution identified in his registration application of how many days after the skin to new ones of employment

A

5 business days

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53
Q

Objectives of securities regulation

A
  • protect the investors
  • ensure that markets are fair, efficient and transparent
  • reduce systematic risk
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54
Q

SRC rule 28.1.1

A

Registration of broker dealer

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55
Q

SRC Rule 28.1.5

A

Registration of salesman and associated person of broker dealers

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56
Q

SRC Rule 36.4

A

Registration of transfer agents and clearing and settlement

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57
Q

SRC 40.1

A

Approval of registration of self regulatory organization

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58
Q

In the conduct of business the registered person shall observe high standards of commercial honor and just and equitable principles of trade

A

Ethical Standards Rule SRC rule 30.2.1

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59
Q

IOSCO standard

A

Honesty and fairness, diligence, capabilities, information about client, information for clients, conflicts of interest, compliance.

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60
Q

All communication by registered persons with the public shall be based on principles of fair dealing and good faith and should provide a sound basis for facts; no material fact shall be omitted; no exaggerated, unwarranted or misleading statements or claims.

A

Rule on advertisements and communication with the public SRC rule 24.1(d).1

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61
Q

What SRC Rule?

  • minimum information needed in account opening for individuals, corporate and institutional customers.
  • special rules for trust accounts more than one party is named in the account and numbered accounts
  • reference must also be made to the account opening information requirements of amla as amended
A

SRC rule 52.1.6

Customer account information

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62
Q

Registered person shall have reasonable grounds for believing that the recommendation is suitable for customer upon the basis of the facts disclosed by such customer as to his security holdings and his financial situation and needs

A

SUITABILITY RULE SRC Rule 30.2.4

63
Q

What SRC Rule?

  • registered person shall ensure that a client agreement is entered into before any service is provided
  • the client agreement shall be in a language understood by the client and the contents explained to the client
A

Client agreement rule SRC Rule 30.2.3

64
Q

Unlawful activities of any person acting for himself or through broker or dealer directly and indirectly. Examples of prohibited conduct: painting the tape, marking the close, improper matched orders hype and dump.

A

Manipulative practices src rule 24.1.1

65
Q

Obtain money or property by means of any untrue statement of a material fact or any omission

A

Fraudulent transactions src rule 26

66
Q

Civil liability for manipulation of security prices is under what src rule?

A

SRC Rule 59

67
Q

Civil liability on account of insider trading is under what SRC Rule?

A

SRC Rule 61

68
Q

Types of offerings

A
  • primary ( initial public offering or ipo)
  • secondary ( sale of previously owned securities)
  • follow on ( stocks rights offering means new shares are issued out of the capital stock of the company and are being offered to the existing shareholders who have preemptive rights.
69
Q

What law regulates the offer or sale of securities in the philippines?

A

Securities regulation code ra 8799

70
Q

What is registration?

A
  • act of filing a registration statement or prospectus
  • required prior to any public offer or securities
  • precedes listing at the philippine stock exchange
71
Q

Signatories to the rs?

A

Principal executive officer
Principal operating officer
Principal financial officer
Comptroller
Principal accounting officer
Corporate secretary

72
Q

Sale of security shall commence within how many business date from the date of the effectivity of the rs until the end of the offering period or until the sale is terminated by the issuer

A

10 business days

73
Q

If rs not comments within 10 business days what will happen?

A

Rs shall be cancelled and all feast paid thereon forfeited

74
Q

Securities which are intended to be issued in crunches at more than one instance after the rs has been rendered effective by the commission

A

Shelf Registration

75
Q
  • parameters or standards are set
  • maybe interpreted as an endorsement
A

Merit system

76
Q

Disclosure of information required
- financial disclosures for the last 3 years
- for ipos-audited interim fs
- non-financial disclosures
- bases of intelligent investment decision

A

Full disclosure regime

77
Q

Who are the qualified buyers?

A

-Bank
-Investment houses
-Insurance companies
-Pension fund or retirement plan maintained by the GOP
-other persons determine on the basis of financial sophistication network and experience in financial and business matters or amount of assets under management

78
Q

What must be declared by corporation in securing approval of stockholders within 45 days from such declaration by the board directors?

A

Stock or property dividends

79
Q

Qualified individual buyers registered as such with entities that are authorized by the commission to act as a registrar or qualified buyers

A

Natural person

80
Q

Qualified gross annual income of natural person buyer

A

At least 10,000,000 at least 2 years prior to registration

81
Q

Qualified total portfolio investment of natural person buyer

A

At least 10,000,000php

82
Q

Qualified personal net worth of natural person buyer

A

Not less than 30,000,000php

83
Q

Qualified gross asset of juridical person buyer

A

At least 100,000,000php

84
Q

Qualified total portfolio investment of juridical person buyer

A

At least 60,000,000php

85
Q

4 DEC Departments

A
  • market regulation department
  • corporation finance department
  • non traditional securities and investment department
  • compliance and enforcement department
86
Q

Develops criteria for market participants and supervises them to ensure compliance with registration requirements

A

Market regulation department

87
Q

Register pre needs plans commodity features contracted proprietor or non proprietor membership certification

A

Non traditional securities and investment department

88
Q

Registers securities before being sold and ensure compliance by issuer with the code of conduct

A

Corporation finance department

89
Q

Natural person hired to buy and sell securities on a salary commission basis endorsed by the commission by the broker dealer

A

Salesman

90
Q

The person employed the full time by the broker dealer whose responsibilities include internal control supervision of other employees agents salesman officers directors of such broker dealer for compliance with the code and rules and regulation

A

Associated person

91
Q

When does dissociated person shall submit a sworn statement to pdex

A

First five days of the month

92
Q

Ensures compliance of all markets

A

The compliant and enforcement department

93
Q

Participants that buys or sells securities for its own account

A

Dealing participant

94
Q

A dealer shall not

A

Deal with a non-qualified investor except through a broker

95
Q

An organization that enforces fair ethical and sufficient practices in the securities and commodities

A

Self regulatory organization

96
Q

Participants that buy or sell securities for the account of others

A

Brokering Participants

97
Q

They may participate through the service of a broker investment house or bank

A

Non-qualified investors

98
Q

Src rule number 28.1.5

A

registration of salesman and associated person

99
Q

Technology infrastructure that provides the trading participant with automated deal capture and price discovery to transact and conclude their trades

A

Pdex or philippine dealing and exchange corporation

100
Q

Member of sro who are recognized by a broker or dealer and bound by the pertinent agreement and or the internal rules prescribed by the otc market

A

Qualified investor participants

101
Q

Fees and penalties of first second entered violation of broker or dealer

A

First 100,000 pesos
Second 150,000 pesos
Third 200,000 pesos

102
Q

Execution of negotiation on pdex trading system

A

1 minute

103
Q

Fees and penalties for the first second and third violation of salesman or associated person

A

First 50,000 pesos
Second 75,000 pesos
Third 100,000 pesos

104
Q

If the order is mentioned by the customer regardless of who initiated the phone call or other communication

A

Unsolicited

105
Q

Registered personnel governing otc market

A

Traders
Salesman
Sec registered associated person
Representative officer
Counterparty limit officer

106
Q

If order is mentioned or ordered first by salesman

A

Solicited

107
Q

Designated and authorized by trading participants to enter counterparty limits

A

Counterparty limit officer

108
Q

Broker dealer affecting transaction on behalf of the client without the client’s specific authorization but shall be specified on the client agreement obtaining such authorization

A

Discretionary account

109
Q

Period of all records concerning orders shall kept and maintained a separate file of all advertisements and sale literature

A

5 years

110
Q

Period of telephone call in the file or record shall be made available for pdex inspection

A

6 months

111
Q

Frequency of sending a statement to the customer by broker dealer

A

Monthly

112
Q

A broker dealer may issue statement whose accounts have?

A

Have not been traded for 1 year or inactive

A written request made by the customer

113
Q

Refers to a market where new securities are sold

A

Primary market

114
Q

Refers to a market where outstanding securities are bought and sold

A

Secondary

115
Q

A trading participant shall submit written request within how many days prior to the intended effectivity

A

60 calendar days

116
Q

Pdex shall write within how many days for a notice to the trading participant to suspend or terminate his participation

A

30 calendar days

117
Q

What SRC Rule?

Promptly execute clients order, fairly allocated, act diligently

A

SRC Rule 30.2.13

Best Execution Rule

118
Q

When such broker dealer is not a member of an exchange

A

The commission shall notify the affected customers of such suspension or revocation and require that they transfer their account to another broker dealer

119
Q

Should always prioritize their orders even though member broker stockholder officers directors associated person and salesman order is pre-existing

A

Customer first policy on clients order

120
Q

What is c a i f

A

Customer account information

121
Q

What are included in caif?

A

Name
Address
Telephone
Date and place of birth
Nationality
Signature
Specimen signature

122
Q

What SRC Rule?
- registered person shall observe high standards

A

SRC Rule 30.2.1
Ethical Standards Rule

123
Q

The broker dealer shall send the customer a written confirmation as promptly as possible during office hours on the day of the transactions that not later than the next business day after transaction

A

Confirmation of customer order rule src rule 30.2.2

124
Q

Send at least once a month containing a description of any securities position money balances or account activity for trades during the period

A

Customer account statement rule src rule 52.1.8

125
Q

Client orders shall be handled fairly and in the order in which they are received and shall have priority over orders for the account of the registered person

A

Customer first policy src rule 30.2.1.2.6.1

126
Q

Make keep current and maintain in the principle office preserve for a period of not less than 5 years in an easily accessible

A

Books and records rule src rule 52.1.1

127
Q

Count should be at least once a month physically examine and count all securities held and compare the result with its record account and verify the discrepancies noted

A

Monthly securities count rule src rule 5.2.10

128
Q

Maintain and preserve separate files of all complaints from customers received and the action by the broker dealer

A

Customer complaint rule src rule 52.1.9

129
Q

Unlawful for an insider to sell or buy a security of the issuer while in the possession of material information with respect to the issuer or the security that is not generally available to the public

A

Insider trading src rule 27

130
Q

After due notice in hearing when there is violation the commission may spend or revoke any registration impose a fine of no less than 10,000 nor more than 1 million thousand plus not more than 2,000 for each day of continuing valuation

A

Administrative sanctions src rule 54

131
Q

The commission may investigate as it deems necessary to determine whether any person has violated or is about to violate any provision of the src its rule regulation or order order rule of the exchange etc

A

Investigations injunctions and prosecutions of offense src rule 53

132
Q

What are the self regulatory organizations

A

Cmic
Pse
Pdex
Sccp

133
Q

CMIC

A

Capital markets integrity corporation

134
Q

PSE

A

Philippine stock exchange

135
Q

PDEX

A

Philippine dealing and exchange

136
Q

SCCP

A

Securities cleaning corp of the philippines

137
Q

GSED

A

Government securities eligible dealers

138
Q

GSB

A

Government securities broker

139
Q

MFD

A

Mutual fund distributors

140
Q

ICA

A

Investment company advisers

141
Q

Who are the professionals?

A

The market participants

142
Q

Who are the market intermediaries?

A

The capital market institutions

143
Q

What are the capital market institutions

A

Exchanges
Clearing agency or depository
Self regulatory organizations
Securities companies or intermediaries
Supporting institutions

144
Q

SRD

A

Securities registration division

145
Q

What are the institutions in exchanges

A

Pse and p d e x

146
Q

Who are the clearing agency or depository

A

Sccp or pdtc

147
Q

Who are the self regulatory organizations

A

Cmic
Pse
Pdex
Sccp

148
Q

Who are the securities companies or intermediaries

A

Brokers dealers
Gsed
Gsb
Underwriters
Mfd
Ica

149
Q

Who are the supporting institutions

A

Transfer agents
Securities custodian
Trustee
Registrar of quibs

150
Q

2 special offices of SEC

A

Office of the General Council
Office of the General Accountant

151
Q

Category i violation (PDEX trading)

A

1st violation - warning
2nd violation - reprimand
3rd violation - 5k php

152
Q

SRC

A

Securities regulation code

153
Q

IRR

A

Implementing rules and regulation

SEC (8 decks)

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