Securities Legislation Flashcards
1933 Securities Act or “Paper Act”
“truth in securities” law - requires prospectus, full disclosure filings for all new issues (primary market) of securities considered nonexempt, such as corporate stock and bond offerings. Primary market and new issue disclosures, provide prospectus
1934 Securities Exchange Act or “People Act”
Regulates the trading of securities after they have been issued (secondary market). Created the SEC. Conduct of BD, RR, public communications, established SEC
Maloney Act of 1938
Amendment to the Securities Act of 1934, provided for self-regulation of over-the-counter market and paved the way for self-regulatory organizations, such as FINRA, the Financial Industry Regulatory Authority in (formerly NASD) 1970, established SROs, oversight, registration, discipline
Investment Company Act of 1940
Regulates the organization of investment companies offering packaged products, including mutual funds.
Investment Advisors Act of 1940
Regulates investment advisers, requiring those that are compensated for providing investment advice to register with the SEC
Securities Investor Protection Act of 1970 (SIPA)
Established procedures to protect consumer securities and funds in the event of broker/dealer insolvency
Employee Retirement Income Security Act of 1974 (ERISA)
Minimum standards for retirement, health and other welfare benefit plans
Insider Trading and Securities Fraud Enforcement Act of 1988
Provides clarification on the penalties for violating insider trading rules that prohibit the use of material nonpublic information
USA Patriot Act 2001
Enacted to address homeland security and fight terrorist activities with a focus on anti-money laundering. Stands for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism.
Dodd-Frank Wall Street Reform and Consumer Protection Act 2010
Represents an effort to reshape the U.S. regulatory system in the areas of consumer protection, trading restrictions, credit ratings, regulation of financial products, transparency, and corporate governance and disclosure.
Who is required to register with the SEC?
Broker/dealers and federally covered investment advisers that conduct securities business in the U.S.
The Securities Exchange Commission functions include all of the following EXCEPT
a) Regulate broker/dealers who conduct securities business in the U.S.
b) Promote efficient and orderly markets
c) Provide safe keeping of customer funds and securities
d) Write rules to enforce securities law.
C) provide safe keeping of customer funds and securities. Providing safe keeping of customer funds and securities is a very important part of the securities industry. Although the SEC has rules governing the safe keeping functions to which broker/dealers and investment advisers must adhere, the SEC does NOT provide safe keeping services itself.
T or F
Each state does not regulate securities.
False - Each state has its own state securities regulator that enforces its “blue sky laws”.
What does the North American Securities Administrators Association (NASAA) do?
Organization of securities regulators with the goal of protecting customers from Fraud. Formed in 1919, focused on investor protection. Through the association, NASAA members also participate in multistate enforcement actions and information sharing. NASAA coordinates and implements training and education seminars annually for state/district/provincial and territorial securities agency staff.
What is the purpose of SROs?
SROs or self-regulatory organizations or FINRA Designated Examining Authority (DEA) write rules and regulations used to enforce securities laws imposed by the SEC.
Levels of governance of securities
SEC=laws
and SROs (self-regulatory organizations) over FINRA (Financial Industry Regulatory Authority), MSRB (Municipal Securities Rule Making Board) and CBOE (Chicago Board Options Exchange)
