Unit 9 - The Government Regulators Flashcards
This act was created under the Securities Exchange Act of 1934. It is the securities industry’s primary regulatory body. BDs that transact securities business with customers or with other BDs must apply and receive registration from this. It regulates all exchanges and trading markets. It has regulatory authority over licensing of securities representatives, a role that has been delegated to FINRA.
Securities and Exchange Commission (SEC)
What is a BD subject to if they do not comply with rules from the SEC?
- Censure
- Limits on activities, functions or operations
- Suspension of its registration
- Revocation of registration
- A fine
This act is concerned with secondary markets. It is designed to provide a fair market place for all investors. It was written in conjunction with the Securities Act of 1933.
Securities Exchange Act of 1934
What falls under the 1934 act?
- Regulation of insider transactions, short sales and proxies
- Regulation of client accounts
- A customer protection rule
- A net capital rule and financial responsibility for broker-dealers
- Reporting requirements for issuers
True or False: Although a BD must register with the SEC, the BD may not claim that this registration in anyway implies that the SEC has passed upon or approved the BDs financial standing, business or conduct.
True
The mission of this network if to safeguard the financial system from illicit use, to combat money laundering, and to promote national security through the collection, analysis, and dissemination of financial intelligence.
Financial Crimes Enforcement Network (FinCEN)
This is the primary tax enforcement agency of the federal government. It has significant power to investigate potential tax evasion. It does not make the law, but its enforcement of the law is seen as a vital national interest.
The IRS
This supervises nearly 1,400 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the US. It ensures that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly and comply with applicable law and regulations. It serves as a direction of the Federal Deposit Insurance Corporation and member of the Financial Stability Oversight Council and the Federal Financial Institutions Examination Council.
The Comptroller
Which Act is this?
Governs the new issuance (primary) market, which involves the money raising activities of issuers
Requires issuers to register their securities when selling to the public
Securities Act of 1933
Which Act is this?
Governs trading markets for existing securities and registration requirements of BDs, BD employees and exchanges.
Securities Exchange Act of 1934
Which Act is this?
Governs the regulation of packaged products such as mutual funds, closed end funds and unit investment trusts.
Investment Company Act of 1940
Which Act is this?
Governs the regulation of firms that earn fees for providing investment advice
Investment Advisers Act of 1940
Which Act is this?
Covers the protection thresholds for customers in the event of a BDs bankruptcy
Securities Investor Protection Act of 1970 (SIPA)
Which Act is this?
Defines penalties for the misuse of material, nonpublic information by both firms and individuals
Insider Trading and Securities Fraud Enforcement Act of 1988
Which Act is this?
Covers anti-money laundering policies and procedures that must be followed by financial firms
The USA Patriot Act
This Act established the Federal Reserve System as the central bank of the US to provide the nation with a safe, more flexible and more stable monetary and financial system.
Federal Reserve Act of 1913.
This consists of 12 regional Federal Reserve Banks and hundreds of national and state banks that belong to the system. It determines monetary policy and takes action to implement its policies. It determines how much money is available for businesses and consumers to spend.
Federal Reserve Board (FRB)