Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
23 Cards in this Set
- Front
- Back
|
Securities Act of 1933
|
Full and Fair Discloure of nonexempt issues.
- Issuers must file registration statements w/ SEC -Prospectuses must be provided to all new purchasers -Fraudulent activity is prohibited. |
|
|
Securities Exchange ACt of 1934 - (The People Act)
|
Adresses Fraudulent practices in the Secondary Market.
-Creation of the SEC -Registration of all persons and firms that trade OTC and public exchanges. -Reg of exchanges & OTC -Reg of credit by FRB -Reg of Trading Activities -Reg of insider transactions, short sales and proxies -Reg of Client Accts -Customer protection rul -Net Capital Rule & Financial Responsibility for B/Ds -Reporting requirements for Issuers. |
|
|
Maloney Act of 1938
|
Amended the Act of 1934 and allowed the SEC to create SROs to monitor Brokers & Dealers not affiliated w/ a stock exchange.
NASD was officially chartered as the SRO of the OTC Market. |
|
|
Trust Indenture Act of 1939
|
Applies to Corp Bonds that:
-Issue size of more than $5M w/in 12 months -Maturity of 9mos or more Passed to protect bondholders and requires that issuers of these bonds appoint a trustee who acts solely for the benefit of the holder. Document is filed at the office of a custodian. |
|
|
Investment Company Act of 1940
|
Defines and regulates investment companies (including Mutual Funds) Requires company to:
-Register w/ the SEC before selling public shares -Clearly state investment objectives in their registration statement & ppm -Have net worth of $100K -Be owned by minimum 100 shareholders -Comply w/ standards on pricing, public sale & reporting |
|
|
Investment Advisers Act of 1940
|
Requires B/D's who provide advice for a fee to pass the Series 65 or Series 66.
Not charging a separate fee does not require registration as an adviser. |
|
|
Securities Investor Protection Act (1970)
|
Created the Securities Investor Protection Corp (SIPC) to protect customers from B/D failure.
|
|
|
SIPC
|
Independent, gov't sponsored corp that collects annual assessments from B/D. The Assessments create a general insurance fund for customer claims from B/D failure.
-All B/D registered w/ the SEC must be SIPC members except those handling only: -Mutual Funds/ Unit Trust -Variable Annuities/ Insurance |
|
|
SIPC Coverage
|
Customer Accts are covered to a max of $500K w/ Cash claims not exceeding $100K of total.
|
|
|
Securities Acts Amendments of 1975
|
Established the MSRB to regulate the issuane & trading of muni securities.
|
|
|
Insider Trading & Securities Fraud Enforcement Act of 1988
|
Specifies penalties for insider trading & Securities Fraud.
|
|
|
Chinese Wall or Firewall
|
Barrier against the free flow of sensitive info between a firm's department.
|
|
|
Insider Trading Penalties
|
-300% of profits made or losses avoided.
-Up to 10 yrs in jail. -Firm could be fined up to treble damages or $1M (whichever is greater). |
|
|
Contermporaneos Trader
|
Enter trades at or near the same time in the same security as a person who has inside info.
They may sue insider traders for damages. |
|
|
Penny Stock Cold Calling Rules
|
Must 1st determine suitability on the basis of info about the buyers financial situation and objectives. The Customer must sign/date this Suitability Statement before the Penny Stock Trades can be effected.
The B/D must also disclose: -The name -# of Shares -Current Quotes -Amount of commission the rep will receive. |
|
|
Established Customers
|
Exempt from Suitability Requirements but not from the disclosure requirements.
-Has held an acct for at least 1 year OR -Made at least 3 Penny Stock purchases on different days. |
|
|
Bank Secrecy Act
|
Establishes the US Treasury Dept. as the lead agency for regs w/ Anti-Money Laundering programs.
-Requires B/Ds to establish internal compliance procedures to detect abuses. |
|
|
3 Stages of Money-Laundering
|
1. Placement: When funds are moved into the laundering system.
2. Layering: Concealing the source of the funds through a series of transactions. 3. Integration: Illegal funds are commingled w/ legitimate funds. This can be done using gront copmanies operating on a cash basis, import/export, etc... |
|
|
Current Money-Laundering Regs Require:
|
-Currency transaction deposits on a single day over $10K must be reported to the IRS.
-B/Ds file Suspicious Acticity Reports (SARs) on financial behaviors which are commercially illogical. |
|
|
Structuring
|
Designing cash deposits to strategically fall below the $10K radar
|
|
|
Red-Flags
|
-Lack of concern for risks, commissions, or other transaction costs.
-Makes frequent or large deposits of currency or cashier's checks. -Making a large number of wire transfers to unrelated 3rd parties. -Excessive journal entries between unrelated accts. -Customer apparing to Structure currency deposits. |
|
|
Blue-Sky Laws
|
State Laws that pertain to the issuance and trading of securites.
|
|
|
Registering Securities in State
|
-Coordination:Issuer files w/ state same time it files w/ SEC
-Filing (Notification): Issuer has met various financial criteria and filed previously in the state, it may notify state it is about to sell securities. If state doesn't reply, registration is effective on the 5th business day. Qualification: Issuer must respond to any requirements made by the state. (Must difficult way to register). |
