Regulation of Security Markets Flashcards
What is the SEC ?
The SEC protects investors maintain fair and efficient markets, and facilitate capital formation.
What is the function of an SRO ?
The primary function of an SRO is to regulate the activities of its members through the creation and enforcement of industry rules.
What is the role of the MSRB?
is the SRO that regulates the broker-dealers and banks that engage in the municipal securities business. Municipal securities are securities issued by municipalities. This includes state and local government entities, towns, cities, counties, authorities, and school districts.
What is the function of the CBOE?
is the examining authority for broker-dealers engaging in the options market. The CBOE is an exchange that trades in standardized options contracts, including options on stocks, foreign currencies, interest rates, and exchange-traded funds.
What is the FDIC ?
is an independent federal agency protecting bank account deposits in U.S. banks from bankruptcy. The FDIC is the primary regulator of banks and provides each depositor insurance protection for $250,000 per account holder per bank.
What is the role of the FRB ?
The FRB has the responsibility to regulate the short-term supply of money and credit in the United States. It has several important functions, including supervising and regulating banking institutions, and maintaining the stability of the financial system. Most importantly, the FRB is responsible for the nation’s monetary policy.
Function of the IRS ?
is the agency under the treasury department that is responsible for collecting taxes and enforcing tax laws. The IRS has the authority to issue monetary fines and punishment for violating the Internal Revenue Code (IRC). The IRC covers rules concerning taxation including income, gift, estate, and capital gains.
What is the NASAA ?
The NASAA is a representative body made up of securities regulators from the fifty states and the territories of the United States. This association is responsible for creating, updating, and maintaining the state licensing exams. NASAA also creates Model Rules under the Uniform Securities Act and issues Statements of Policy to help interpret the Act. State securities laws are commonly referred to as blue-sky laws.
Whats a retail investor ?
is an individual that purchases securities for their own account. A retail investor is part of the general public.
What is an accredited investor?
an accredited investor as an investor that meets one of the following criteria:
Natural persons with individual or joint net worth of $1 million (including spousal equivalents)
An individual with an annual income of $200,000 for the past 2 years or a couple (including spousal equivalents) with joint income of $300,000 that expects that income level to remain
An individual holding a Series 7, Series 65, or a Series 82
An employee of private funds if deemed knowledgeable (officers, directors, general partners, trustees, advisory board members, and employees that participate in the investment activities)
Investment advisers (federal, state, and exempt reporting)
Rural business investment companies (RBICs)
Any bank, investment company, and insurance company, regardless of assets
Any entity with assets in excess of $5 million including limited liability companies, family offices and their clients, non-profit institutions (501(c)(3) trusts), partnerships, ERISA qualified retirement plans, and corporations with assets over $5 million
An officer or director of the issuer
What is an Institutional Investor ?
is an entity that makes security transactions on a large scale for their own accounts or for institutional clients, such as: insurance or investment companies, trusts, broker-dealers, investment advisers, banks, savings institutions, government agencies, or employee benefit plans.
What is a qualified buyer?
is an institutional investor that owns and invests a minimum of $100 million in securities on a discretionary basis. An individual cannot qualify as a QIB.
Whats an Issuer?
is a legal entity, including a corporation, municipality, or the federal government, offering securities to the public to raise capital.
What is an underwriter or investment banker?
The underwriter (U/W) works with the issuing entity to assist in determining the offering price and may buy the security from the issuer to sell to public investors through a distribution network.
A firm, such as a trust company, commercial bank, or similar financial institution, hired by the issuer to physically safeguard cash and securities for the buying public, is referred to as ?
A custodian
