SIE Unit 11 Flashcards
3 Stages of Money Laundering
Placement, Layering, Integration
FinCEN
Bureau of Treasury Department that collects and analyzes information about financial transactions to prevent crimes
Currency Transaction Reports
Broker-dealers must report currency received in the amount of $10,000 on a single day
Suspicious Activity Reports
Firms must report any transaction that involves at least $5000 or it falls under 1 of 4 categories
Specially Designated Nationals List
Used to identify persons involved in illegal activities
Front Running
Placing orders on one’s own account ahead of others in order to take advantage of price movement that is likely to occur
Churning
Excessive trading in a customer’s account to generate commissions rather than helping them achieve their stated interest objectives
Free-Riding
When securities are purchased and then sold before payment is made for the purchase
Matching Orders (Painting the Tape)
Manipulation where one party sells stock to another with the understanding that the stock will be repurchased later at virtually the same price
Penalty for Insider Trading
$1 million fine or three times profit made/gains avoided
Who Isn’t A Restricted Person According To Rule 5130
Grandparents, aunts, uncles
Who Broker Dealers Report Questionable Transactions To
FinCEN
How Soon Must Broker Dealers Respond To Regulatory Requests
Promptly
Firms Can Choose To Hold Mail When Requested To
Yes
Business Continuity Plan
Establishes protocols and creates prevention and recovery systems in case of cyber attack or natural disaster
When Firms Must Report BCP To Customers
Account Opening, Firm’s Website, When Requested
When A Customer Must Notify Broker Dealer Of New Position
Within 30 Days
Office of Foreign Assets Control
Enforces economic sanctions programs against countries and groups of individuals
When A Broker Dealer Must Update Trusted Contact Person Information For A Senior Customer
Opening an account and updating account info
Who Has Restrictions Against Buying In At IPO
Associates of firms and portfolio managers
Exemptions From Telephone Consumer Protection Act of 1991
Non-profits, pollers, legitmate attempts to collect debt
What Rule 2210 Applies To
Written communication
Contemporaneous Traders
People who enter trades at or near the same time, in the same security as a person who has inside information
Penalties For Acting on Insider Trading
Fine up to 3x investment made, 20 years in prison
