Unit 7-Other Relevant Regulations Flashcards

1
Q

SEC Rule 17f-1

A

Established Securities Information Center (SIC)

-This is the central database for reporting lost, stolen, counterfeit, or missing securities

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2
Q

Reporting Rules (missing securities)

A
  • If no criminal activity is suspected, the BD has 2 business days to find securities. On 3rd business day, loss must be reported to SIC as well as transfer agent
  • If criminal activity is suspected, BD has 1 business day to notify SIC, transfer agent, and FBI
  • If securities are later found, all parties previously notified must be contacted within one business day
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3
Q

Securities Inquiries

A

All BDs receiving new securities must reach out to the SIC to inquire about their status unless security is:

  • Received directly from issuer
  • Received from another member firm
  • Part of transaction valued at less than $10K
  • Received from an existing customer of firm that:
    • Is registered in customer name
    • Was previously sold to customer and can be verified by member records
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4
Q

Fidelity Bonding (G-6)

A

Required MSRB members to secure fidelity bonding to protect against theft, embezzlement, etc by its own employees
-Minimum bond is 120% of net cap requirement (must be at least 100K no matter how small net cap)
-Fidelity bond level must be reviewed annually
NOTE: Bank dealers are exempt as they already have insurance under current banking laws

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5
Q

Lifetime Records

A
  • Articles of Incorporation/Partnership Agreements
  • Minutes of Board Meetings
  • Records of stock certs
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6
Q

Six Year Records

A

-Blotters (original entry and trade)
-Cash receipts and disbursement records
-General Ledger
-Customer Ledger (statements)
-Securities Records
-Customer Account Records (6 yrs after account closed)
-Syndicate Settlement Records
-Customer Complaints
-Principal Designation Records
-Political Contributions
-Gifts and Gratuities
-Consultant Agreements
NOTE: All records must be readily available for 2 years
NOTE 2: Bank Dealers do not need to keep records of customer credits/debits. These are only applicable to securities accounts.
NOTE 3: Securities receives and delivered out same day do not need to be recorded

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7
Q

Records not explicitly mentioned as lifetime or 6-year

A

Default for 4 years:
-Trial balances
-CE records
-Correspondence and written communication
-Put options and repurchase agreements
-Customer Confirms
NOTE: Records can be kept on a trade date or settlement date basis. Whichever process is chosen must be applied consistently

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8
Q

Digging into an APs U4

A
  • Hiring firm must look into at least 3 years before date of application to verify info
  • A BD that receives an inquiry from another member regarding a former employee must respond within 10 business days
  • U4s are kept for 3 years after separation (6 for principals)
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