Regulatory Issues and Ethics

Question 1

What is the dollar amount that reqs reporting for the bank secrecy act

Answer 1

10k

Question 2

What type of payment is the Bank secrecy act about

Answer 2

currency only

Question 3

When must a Currency Transaction report be filed

Answer 3

within 15 days

Question 4

What is the USA PATRIOT ACT

Answer 4

must report suspicious activity called SARs

Question 5

What are the rules for the patriot act

Answer 5

5k transaction one time or aggregate or 3k for wire transfers
OR
funds from illegal activities
signs of trying to evade the CTRs
transaction doesn’t appear to have a business or lawful purpose
requesting the firm to conduct illegal activities on their behalf

Question 6

When do SARs need to be reported

Answer 6

30 days

Question 7

Is a filing of a SAR a secret to the person its about

Answer 7

yes, even if subpoenaed

Question 8

What are requirements for the reporting a wire transfer SAR

Answer 8

held for 5 years
name of sender and recipient
amount transfered
recipients institution

Question 9

What are the red flags that need to be reported to the AML officer

Answer 9

no concerns with risk/costs
frequent or larger deposits of cash
excessive journal entrees in unrelated accounts
Layering

Question 10

Who controls the SDN

Answer 10

Office of Foreign Assets Controls

Question 11

What are the OPAC rules for new clients

Answer 11

we get their ID info
check SDN list before starting relationship

Question 12

Should you periodically check the SDN list for your existing clients

Answer 12

yes

Question 13

What are some ways/signs of market manipulation and insider trading

Answer 13

market rumors
pump and dumps
front running
excessive trading
marking the open or close
freeriding
matching orders

Question 14

What are pump and dumps

Answer 14

using or adding to market rumors to later dump shares on the open market

Question 15

What is front running and give example

Answer 15

knowingly purchasing something before someone else purchases it to get the gains
RR receives order from a mut fund to purchase large volume of a stock, goes to his personal account to purchase some before

Question 16

What is excessive trading

Answer 16

also called churning
excessive trading or excessive size trades to gen commish

Question 17

What is a req for monitoring excessive trading

Answer 17

principals need to monitor, especially dis auth acc

Question 18

What is marking the open or close

Answer 18

markign the open - entering orders or falsly reporting fake orders before the open to influence the opening price

marking the close - same

Question 19

What is freeriding

Answer 19

buying and selling all before the payment is made

Question 20

What is the pen for freeriding

Answer 20

90 day freeze
and cant resume until cash or marginable secs are in acc bef trans

Question 21

What is matching orders

Answer 21

one party sells to another party with intention to repurchase at pretty much the same price
this make the stocks transaction volume look larger than it is

Question 22

Another name for matchign orders

Answer 22

painting the tape

Question 23

Definition of insider trading

Answer 23

material info that isnt available to the public

Question 24

What are the questions, when answered yes, indicate insider trading

Answer 24

Is the info material and nonpub
does the tipper owe a fid resp to a comp or stock holder and has he breached it
does the tipper meet the personal benefits test
Does the tippee know or should the tippee have known the info was inside

Question 25

what are the pens for insider trading

Answer 25

tippee- up to 3 times gains or losses avoided
RR or BD- up to 1 mil or 3 times gain or loss avoided whichever is greater
Employee of a BD - upto 3 times damages or 25 mil which ever is greater

All - criminal charges of 5 mil and 20yrs in jail

Question 26

What are comteporaneous traders

Answer 26

people entering trades on the opposite side of the market as the inside trader at the time they were tradin g

Question 27

What can comtemp traders do

Answer 27

sue the insider up to 5 years after the event

Question 28

What does bona fide mean

Answer 28

sincere, real