Regulatory Requirements Flashcards
What is arbitration?
An impartial panel hears both sides of a case, studies the evidence, and decides how the issue should be resolved
An intermediary that facilitates transactions involving sales of investments or real estate is called?
A brokerage company
What is the role of a chief compliance officer?
A corporate official in charge of overseeing and managing compliance issues within an organization, ensuring for example, that a company is copying with regulatory requirements and that the company and its employees are complying with internal policies and procedures
What is a credit union?
Similar to banks in terms of products offered, they typically have limited membership based on employee or other association
What is the criteria that must be met to register with the state or SEC?
A - must provide advice
B - must be in the business of advice
C - must recieve compensation for advice
This created the consumer financial protection bureau and the financial stability oversight council.
Changed the thresholds for registration with the SEC
- Small advisor: less than $25M AUM
- Midsize adv: btw $25M - $100M AUM
- Large adv: more than $100M AUM
Dodd-Frank Wall Street Reform and Consumer Protection Act
What are the exclusions to registration?
L - lawyers A - accountants T - teachers E - engineers B/D who don't receive compensation A bank A bona fide publication
What are the FDIC limits?
$250,000 per account type (chk & sav, IRA, mutual savings)
$250,000 per ownership (single & joint)
What does the federal bankruptcy act of 1938 do?
Provides for the liquidation of hospitality troubled firms and reorganization of trouble firms that can survive
What is the Financial Industry Regulatory Authority (FINRA)?
An industry self-regulation authority which conducts reviews of members business activities, discipline violators, and designs, operates, and regulates securities markets and service to benefit and protect the investor.
What is the firm element requirement?
Each firm must complete annual training focused on issues that the firm feels need to be addressed
What is the glass-steagall act of 1933?
Prevents financial institutions from consolidating and offering and combination of traditional commercial banking, investment banking, and insurance
What is the Gramm-Leach-Bliley Act of 1999?
Repealed the glass-stegall act of 1933. Addresses the way financial institutions manage the private information of clients. It also repealed the law that banks could not combine investments and insurance.
What law specifies what constitutes insider trading and the penalties for doing so?
Insider trading and securities fraud enforcement act of 1938
What is an investment advisor?
A person or firm who must register with the SEC and/or states they do business under the ABC rule
What is the investor advisors act of 1940?
Established the fiduciary standards for RIAs which requires acting in the best interest of the client
What is an investment bank?
A securities B/D that underwrites new issues
What is the investment company act of 1940?
Requires registration for and regulates activities of investment advisors
What is the Maloney act of 1938?
Brought the over-the-counter market under regulation
What is the McCarren-Ferguson Act of 1945?
States that insurance is to be regulated by the state
What is mediation?
An informal, voluntary, and non-binding approach to dispute resolution in which the mediator tries to guide the parties to a solution
What entity pools money from shareholders and invests the funds in various types of securities?
Mutual Fund Company
Who is the Office of the Comptroller of the Currency (OCC)?
They charter, supervise, and regulate national banks and federal branches of foreign banks in the US
What is a Registered Investment Advisor (RIA)?
An individual that advises clients on their investments and may manage portfolios
What are regulatory elements?
Additional training for licenses, within 120 days of your 2nd, 5th, and 10th anniversary’s
What is the Sarbanes-Oxley Act of 2002?
Prevents auditors from going soft on accounting firms by requiring a companies officers to certify the financial information in its quarterly reports
What is a Savings and Loan Association?
Accepts savings and provides home loans, No demand deposits (checking). AKA as thrift institution
What is the securities act of 1933?
“Truth in securities law”. Requires registration of initial public offerings
What is the securities investor protection act of 1970?
Established the securities investor protection corporation. Insures customers:
Up to $500,000 in securities cash and $250,000 of cash in case of brokerage firm failure
What is the security exchange act of 1934?
Created the SEC
Requires companies with previously issued securities, to keep information current.
Established regulations on insider trading
What exam is needed if activity engaged in managing a members securities or investment banking business.
Series 24. Series 7 or 62 are pre-req’s
What is the series 6 exam?
Allows the selling of all open-end investment companies (mutual funds), variable annuities, variable life insurance, and initially offered unit investment trusts.
What is the series 63?
The state exam to be able to sell securities within the state
What is the series 65 exam?
Entitles the holder to provide investment advice in the holders primary state of residence. Not needed in most states if a CFP
What is the series 66 exam?
It is the combination of the series 63 & 65 exams to be able to provide investment advice and self securities within the state. Series 7 is a pre-req
What is the series 7 exam?
Entitles the sell of any security, including individual stocks and exchange-traded funds
What legislation did the 1929 depression create?
Securities act of 1933 Securities exchange act of 1934 Investment advisors act of 1940 Investment company act of 1940 Glass-Steagall act
What is a trust company?
A company specializing in serving as the trustee for various types of trusts
What is the USA Patriot Act of 2001
Requires BDs to have internal policies, procedures, and controls in place to know your clients in an effort to fight funding terrorism
