Unit 16- Us Gov't And State Rules And Regulations

Front 1

In what way are most securities paid for?

Back 1

by personal checks

Front 2

When is inside information considered public information?

Back 2

when the public has had a chance to evaluate it

Front 3

Thecurrent market in XYZZ stock is 6.12 bid, offered at 6.18. A customer wants tobid 6.125 for 100 shares. How should the buy order ticket read?

Back 3

buy will reflect a bid, not an offer (only stocks priced below $1 can trade in sub penny prices), order ticket must reflect increments of no less that .01 (6.12), customer didn't want to pay more than 6.125, rounding 6.13 would not be permitted

Front 4

MSRB members are required to have what which protects against loss due to employee theft?

Back 4

fidelity bond

Front 5

FINRA rules require member firms to establish written supervisory procedures designed to detect and prevent the misuse of inside information by persons affiliated with members

Back 5

True

Front 6

What act protects investors in corporate bonds in the event the issuing company defaults?

Back 6

The Trust Indenture Act of 1939

Front 7

What does SIPC cover in terms of margin accounts?

Back 7

covers the equity, not the market value

Front 8

What does the SIPC cover?

Back 8

covers each separate customer, each account is covered up to $500,000 in securities and cash (max $250,000 in cash)

Front 9

What act/entity was created to protect securities investors against losses resulting from the financial failure of broker/dealers?

Back 9

The Securities Investor Protection Act of 1970-- Securities Investor Protection Corporation (SIPC) [does not provide protection against securities losses arising from decrease in MV]

Front 10

What kind of debt is not subject to the Trust Indenture Act of 1939?

Back 10

Corporate debt offerings under $50m and exempt issues

Front 11

What act requires all corporate debt issues of $50m or more sold interstate to have a trust indenture (except US gov'ts)?

Back 11

The Trust Indenture Act of 1939

Front 12

When considering SIPC coverage, how is a money market account treated?

Back 12

Treated as a security not cash

Front 13

What act requires that all broker/dealers have written supervisory procedures that address the misuse of inside information?

Back 13

The Insider Trading and Securities Fraud Enforcement Act of 1988?

Front 14

What kind of stock is not allowed to be tendered?

Back 14

Short margin stock

Front 15

Under the Federal Dodd-Frank legislation, are tippers or "whistle blowers" rewarded for giving up info on a successful prosecution of anyone who violates a securities industry law?

Back 15

Yes, may be awarded up to 10-30% of amounts recovered for orig info leading to success. prosecution, no bounty is guaranteed but is based upon the monies recovered and value of info

Front 16

What is a penny stock defined as?

Back 16

Market price below $5 per share that are not traded on any exchange or Nasdaq

Front 17

When can inside info be divulged to a client?

Back 17

Never, violations are punishable with both civil and criminal penalties

Front 18

How often must publicly traded issuers report their financial status to the SEC on form 10K and form 10Q?

Back 18

Annually on 10K and Quarterly on 10Q

Front 19

Under penny stock rules, what is considered an established customer?

Back 19

If they have deposited funds or securities in an account for at least 1 year prior to penny stock transaction OR have purchased at least 3 different penny stocks from the same BD

Front 20

What rule is designed to address severe and sudden price movements and utilizes specified price bands (expressed as percentages depending on the current price of the stock) which prevent trades in stocks from occurring outside of those bands and employs trading pauses or halts for prolonged price movements?

Back 20

The limit up/limit down rule

Front 21

Firms must establish policies that restrict the passing of potentially sensitive material, nonpublic info between a firm's departments by using what?

Back 21

firewall or info barrier

Front 22

When must a BD be registered as an investment adviser?

Back 22

If a BD receives compensation specifically for providing invest advice separate from commissions, markups, or markdowns

Front 23

What act was enacted in response to a number of major corporate and accounting scandals, and enhanced standards for all US public company boards of directors, management, and public accounting firms?

Back 23

The Sarbanes-Oxley Act of 2002 (SOX)

Front 24

When does a violation of insider information occur?

Back 24

when insider info is used to trade for a profit or to avoid a loss (tipper and tippee are liable)

Front 25

A cash or currency transaction totaling more than $10,000 on a singe business day must be reported on FinCEN Form 112

Back 25

True

Front 26

Is giving someone material nonpublic information a violation?

Back 26

While imprudent, it is not a violation unless acted on

Front 27

For penny stocks registered reps must provide disclosure info to all penny stock buyers which they must sign and need to determine suitability based on financial info and other stuff

Back 27

If investor is not considered an established customer, they must sign a suitability statement as well

Front 28

What stage of laundering is it where they attempt to conceal the source of the funds or assets by wiring transfer funds to multiple jurisdictions, depositing cash overseas, and resell assets in multiple jurisdictions?

Back 28

Layering stage-- key is the crossing of several legal and governmental jurisdictions (allows them to take full adv of varying degrees of regulation and bureaucracy of diff gov cooperation laws)

Front 29

To sell an issue in a state, what must happen for it to be allowed?

Back 29

BD, RR, and security must be registered in that state according to blue-sky laws

Front 30

Any customer claims that SIPC does not cover will result in the customer becoming a general (unsecured) creditor of the company

Back 30

True

Front 31

What are the three distinct phases of money laundering identified by the US Treasury Department under Bank Secrecy Act?

Back 31

placement, layering, and integration

Front 32

What report is filed when a transaction or a pattern of transactions is suspicious and a possible indication of money laundering?

Back 32

A suspicious activity report (SAR) filed with FinCEN

Front 33

What form is filed for any cash deposit on a single day of more that $10,000?

Back 33

FinCEN Form 112

Front 34

Does SIPC coverage apply to accounts holding commodities?

Back 34

No

Front 35

Broker/dealersare required to file suspicious activity reports (SARs) involving transactions of$5,000 or more when financial behavior appears commercially illogical andserves no apparent purpose.

Back 35

Acurrency transaction report (CTR) would be triggered for transactions totaling$10,000 or more within a single day.

Front 36

An independent auditor must perform the audit

Back 36

True

Front 37

According to the Insider Trading and Securities Fraud Enforcement Act of 1988, who are corporate outsider who make trades at about the same time as insiders?

Back 37

Contemporaneous traders-- granted the right to sue inside traders for damages sustained

Front 38

What act determines financial failure?

Back 38

The Securities Investor Protection Act of 1970

Front 39

What are the civil penalties for controlling persons such as a RR or a BD under Insider Trading and Securities Fraud Enforcement Act of 1988?

Back 39

greater of $1m or 300% of the profits made or losses avoided

Front 40

What are the criminal penalties for controlling persons such as a RR or a BD under Insider Trading and Securities Fraud Enforcement Act of 1988?

Back 40

up to $5m and carry a jail term of up to 20 years

Front 41

FINRA rules require that anti-money laundering training be conducted how often?

Back 41

ongoing basis

Front 42

The first stage in cleansing illicit funds is placing them in the laundering system with little or no effort to disguise their illegal origins

Back 42

may involve the use of a financial institution but can also take place entirely outside the financial system

Front 43

The Securities Exchange Act of 1934 defines an insider as an officer, director or stockholder owning more than what % of a company's outstanding voting equity?

Back 43

10%--also any professional who takes part in preparing the registration statement is automatically considered to have insider information

Front 44

A BD must contain what coverage to protect the firm's assets from loss due to theft or embezzlement by officers or employees?

Back 44

fidelity bond coverage

Front 45

What act regulates new issues of corporate securities sold to the public?

Back 45

Securities Act of 1933