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CFP General Principles > Regulatory Requirements > Flashcards

Regulatory Requirements Flashcards

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CFP® flashcards
1
Q

What is arbitration?

A

An impartial panel hears both sides of a case, studies the evidence, and decides how the issue should be resolved

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2
Q

An intermediary that facilitates transactions involving sales of investments or real estate is called?

A

A brokerage company

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3
Q

What is the role of a chief compliance officer?

A

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

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4
Q

What is a credit union?

A

Similar to banks in terms of products offered, they typically have limited membership based on employee or other association

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5
Q

What is the criteria that must be met to register with the state or SEC?

A

A - must provide advice
B - must be in the business of advice
C - must recieve compensation for advice

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6
Q

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
A

Dodd-Frank Wall Street Reform and Consumer Protection Act

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7
Q

What are the exclusions to registration?

A 
L - lawyers
A - accountants
T - teachers
E - engineers
B/D who don't receive compensation
A bank
A bona fide publication
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8
Q

What are the FDIC limits?

A

$250,000 per account type (chk & sav, IRA, mutual savings)

$250,000 per ownership (single & joint)

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9
Q

What does the federal bankruptcy act of 1938 do?

A

Provides for the liquidation of hospitality troubled firms and reorganization of trouble firms that can survive

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10
Q

What is the Financial Industry Regulatory Authority (FINRA)?

A

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.

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11
Q

What is the firm element requirement?

A

Each firm must complete annual training focused on issues that the firm feels need to be addressed

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12
Q

What is the glass-steagall act of 1933?

A

Prevents financial institutions from consolidating and offering and combination of traditional commercial banking, investment banking, and insurance

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13
Q

What is the Gramm-Leach-Bliley Act of 1999?

A

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.

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14
Q

What law specifies what constitutes insider trading and the penalties for doing so?

A

Insider trading and securities fraud enforcement act of 1938

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15
Q

What is an investment advisor?

A

A person or firm who must register with the SEC and/or states they do business under the ABC rule

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16
Q

What is the investor advisors act of 1940?

A

Established the fiduciary standards for RIAs which requires acting in the best interest of the client

17
Q

What is an investment bank?

A

A securities B/D that underwrites new issues

18
Q

What is the investment company act of 1940?

A

Requires registration for and regulates activities of investment advisors

19
Q

What is the Maloney act of 1938?

A

Brought the over-the-counter market under regulation

20
Q

What is the McCarren-Ferguson Act of 1945?

A

States that insurance is to be regulated by the state

21
Q

What is mediation?

A

An informal, voluntary, and non-binding approach to dispute resolution in which the mediator tries to guide the parties to a solution

22
Q

What entity pools money from shareholders and invests the funds in various types of securities?

A

Mutual Fund Company

23
Q

Who is the Office of the Comptroller of the Currency (OCC)?

A

They charter, supervise, and regulate national banks and federal branches of foreign banks in the US

24
Q

What is a Registered Investment Advisor (RIA)?

A

An individual that advises clients on their investments and may manage portfolios

25
Q

What are regulatory elements?

A

Additional training for licenses, within 120 days of your 2nd, 5th, and 10th anniversary’s

26
Q

What is the Sarbanes-Oxley Act of 2002?

A

Prevents auditors from going soft on accounting firms by requiring a companies officers to certify the financial information in its quarterly reports

27
Q

What is a Savings and Loan Association?

A

Accepts savings and provides home loans, No demand deposits (checking). AKA as thrift institution

28
Q

What is the securities act of 1933?

A

“Truth in securities law”. Requires registration of initial public offerings

29
Q

What is the securities investor protection act of 1970?

A

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

30
Q

What is the security exchange act of 1934?

A

Created the SEC
Requires companies with previously issued securities, to keep information current.
Established regulations on insider trading

31
Q

What exam is needed if activity engaged in managing a members securities or investment banking business.

A

Series 24. Series 7 or 62 are pre-req’s

32
Q

What is the series 6 exam?

A

Allows the selling of all open-end investment companies (mutual funds), variable annuities, variable life insurance, and initially offered unit investment trusts.

33
Q

What is the series 63?

A

The state exam to be able to sell securities within the state

34
Q

What is the series 65 exam?

A

Entitles the holder to provide investment advice in the holders primary state of residence. Not needed in most states if a CFP

35
Q

What is the series 66 exam?

A

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

36
Q

What is the series 7 exam?

A

Entitles the sell of any security, including individual stocks and exchange-traded funds

37
Q

What legislation did the 1929 depression create?

A 
Securities act of 1933
Securities exchange act of 1934
Investment advisors act of 1940
Investment company act of 1940
Glass-Steagall act
38
Q

What is a trust company?

A

A company specializing in serving as the trustee for various types of trusts

39
Q

What is the USA Patriot Act of 2001

A

Requires BDs to have internal policies, procedures, and controls in place to know your clients in an effort to fight funding terrorism

CFP General Principles (8 decks)

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