Fichas
Chapter 1 Notes SIE Prep
Fichas del conjunto (45)
- 1Securities & Exchange Commission (SEC)Created in 1934 as part of the "People Act"
Governs the individuals & firms doing business in the Financial Services Industry
Regulates exchanges & broker/dealers - 2Mission of SECProtect Investors
Maintain Fair, Orderly & Efficient Markets
Facilitate Capital - 3Consequences of SEC ViolationsRevocation of registration
or
Referral to judicial system - 4Responsibility of SEC-Interpret & enforce federal securities laws
-Issue new rules & amend existing
-Oversee inspection of firms, brokers, investment advisors & auditing fields
-Coordinate US Securities regulations with Fed, State and Foreign authorities - 51934 Securities Exchange Act"People Act"
Created the SEC to establish a fair & orderly market
Gave authority to SRO's to enforce standards & requirements related to security trading & brokerage bus. - 6Overseen by SECCapital Markets overseen by
- 7SEC Board is calledThe Commission
- 8Number of SEC members5 members
- 9SEC Board Terms5 year terms staggered so only 1 ends every year
- 10How SEC Board members acquiredAppointed by US President
- 11Rules about SEC BoardNo more than 3 members can be of the same political party
- 121933 Securities Registration ActPaper Act
Required prospectus (full disclosure filings for all new issues of securities considered non exempt)
ex of non exempt securities: Corp Stock & bonds - 13Maloney Act of 1938Provided OTC self regulation by NASD (National Assoc. of Securities Dealers) which combined with the NYSE dept of regulations to form FINRA (Financial Industry Regulatory Authority)
- 141940 Addition to Maloney ActAdded rules for Investment Companies & investment Advisors
- 15American Depositary Receipt (ADR)A negotiable instrument issued by a US bank that trades in the US Financial markets & represents shares of a foreign stock
- 16Muncipal Securities Rulemaking Board (MSRB)Created in 1975 after 1969-1974 crash
Provided for industry nonprofit Insurance for customer accounts. SPIC (Securities Investor Protection Corp)
Mandated national market system of consolidated quotations - 17NASDAQ National Assoc. of Securities Dealers Automated Quotation SystemCreated in 1971
Along with CBOE Revolutionized the trading of OTC equities & Standard Equity options - 18Chicago Board Options Exchange (CBOE)Created in 1971
Along with NASDAQ Revolutionized the trading of OTC equities & Standard Equity options - 19Self Regulating Organization (SRO)An Organization that is authorized to enforce standards and requirements related to securities trading and brokerage
- 202010 Dodd - Frank Wall Street Reform and Consumer Protection ActReshaped regulatory in areas of consumer protection, trading restrictions, credit ratings, regulation of financial products, transparency, corporate governance & disclosure.
- 21Legislation passed in 1990's & 2000-2002Analysts must disclose if they or affiliated persons have a conflict of interest in recommendations
Any losses or potential losses must be disclosed by corps along with any securities they acquire. - 22Mutual FundA professionally managed open-ended investment company issuing redeemable securities in a continuous offering of shares
- 23BeneficiaryA person who receives the benefits of an insurance policy
- 24Bid PricePrice a buyer is willing to pay for a security
- 25OptionA security giving the holder the choice to either purchase or sell a security at a set price for a specific period
- 26ProspectusA full & fair risk disclosure required by the SEC for all new offerings of non exempt securities.
- 27SecurityA financial instrument that may trade for value
- 28Broker/DealerA firm that effects securities transactions for its own account or for the accounts of others
- 29Futures ContractA standardized commodities or securities contract to deliver a certain quantity at a predetermined future price and date
- 30UnderwriterA broker/dealer or investment bank that assists a company in offering and distributing securities to the public
- 31Member FirmBroker/dealer belonging to an SRO such as FINRA or NYSE or both
- 32Ask PriceThe Price the seller is willing to accept for a security
- 33BondA debt obligation in which the borrower promises to pay a set coupon rate until the issue matures at which time the principle is repaid
- 34StockA type of security that represents ownership in a Corp
- 35Margin AccountA brokerage account that allows investors to purchase securities with borrowed funds using credit from the broker/dealer
- 36Electronic Data Gathering Analysis and Retrieval (EDGAR Database)Electronic system for companies to submit required filings with SEC
- 37Blue Sky LawsState laws covering securities sales and who sells them in state specific boundaries
- 38North American Securities Administration Association (NASAA)-Formed in 1919 with goal of protecting consumers of securities from fraud.
-Org of volunteer members who are admins of 50 states.
-They license firms, investigate violations, file enforcement, educate public - 39SEC vs SROSEC writes laws that govern the securities industry
SRO write rules and regs used to enforce SEC laws - 40SRO's are responsible for :Establishing business standards for their members
Monitor members business conduct
Ensure compliance of laws by members
Execute discipline of members who violate - 41Uniform Practice CodeRelates to deals between broker/dealers in non exempt securities
Requires orderly Completion of dealer to dealer transactions - 42Rules of ConductAlso known as Rules of Fair Practice
Outlines rules for public impression by broker/dealers - 43Code of ProcedureThe process of handling violations of trade practice rules.
- 44Code of ArbitrationCode used to settle disputes between broker/dealers and public
- 45MSRB Board consists ofBoard consists of 21 members
11 reps from the public
10 from regulated entities
All have deep expertise with securities markets