Securities Industry Regulations Flashcards
Selling away
When RRs are selling investments that the BD does not offer
Political contributions
G-37
SEC- contributions are max is 350, 150 if the associate is not allowed to vote
MSRB is max is $250 per election
One exception de minimize rule.
How long must a customer complaint be kept for?
4 years
Finra rules. Complaints need to be reported 30 days of the event
Member firms are required to provide quarterly reports
Report is due on the 15th of the month following the calendar quarter.
Gifts
Max is $100 pp per year
Dinner is ok
Sporting event tickets ok but must attend with
Considered as business expense
Business continuity plans
Finra rules that all customers are provided with a document that explains how a business interruption will be handled
Must be delivered to every customer in writing at account opening, available on website, mailed to customers if requested, available upon request
Reviewed annually
Disclosure of financial condition
Must be disclosed every 6 months semiannually and annually at anytime with the most recent balanced sheet if asked
Customer confirmations
Member firms must provide customers with confirmations of each transaction
Must include price, number of shares, date of transaction, time of execution, capacity of the firm, commission, mark up or down, price and yield and the settlement date.
May only be sent to 3rd party with written consent
Regulation S-P-
Implement policies that restrict a financial institutions ability to disclose non public personal information.
PRIVACY
BDs, investment companies, investment advisers must provide customers with privacy initial notice and annual notice every year after
Bank secrecy act
AML
Authorized the treasury to require firms to keep records and file reports about the source, volume and movement of funds in and out of country thru domestic firms
Ex money orders, cashiers checks, between 3k to 10k for up to 5 years record
Currency transaction report CTR
AML
Must be completed by firm to file report
More than $10k cash
Must be filed within 15 days
Anti money laundering
USA patriot act
Prevent and prosecute money laundering and financing of terrorism :
Compliance program
Ongoing employee training program
Annual independent audit
Development of internal policies
Money laundering 3 independent simultaneous steps
Placement- introducing finds to be laundered
Layering- separating proceeds thru complex financial transaction to hide source
Integration- reintroducing new clean funds back into financial system by providing legitimate explanation
Office of foreign assets control (OFAC)
Publishes list of individuals and companies associated with certain targeted countries.
- terrorists and narcotic traffickers, individuals called Specially designated nationals (SDNs) must block or freeze assets and report incidents within 10 days occurrence
SAR
Suspicious activity report
Report known or suspected violations of law observed by financial institutions to the bank secrecy act
Report must be filed with FINCEN - financial crimes enforcement network within 30 calendar days of $5k or more
SIPA - act
Securities investor protection corporation (SIPC)
Protect customer accounts in the event BD goes bankrupt. Insurance coverage on customer accounts held in “street name”
Non profit organization
Protect up to $500k only 250k in cash
Disclosure for SIPC
Member firms must advice all new customers in writing at the time of opening an account they can obtain more info by contacting SIPC.
Provide website and phone number
Provide at least once per year
Institutional communication
At least 100 participants
Banks, trust companies, insurance companies
Not required to be filed with FINRA
Retail communication
Any printed or electronic communication directed to more than 25 retail investors in 30 day period
Sales literature and Ads, emails, text messages, form letters research reports and brochures
Must be approved by principal prior to use and must be kept on file for 3 years. Finra requires to be filed within 10 days of first use , not beforehand
Correspondence
Written or electronic communication targeted to one individual 25 or fewer retail customers within 30 days
Independent prepared reprints
Any reprint or excerpt of article written by publisher that is not affiliated of underwriter or issued of a security.
Must be less than 25 or less investors
