17340377
Description
Flashcards by Kris Heller, updated more than 1 year ago
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Created by Kris Heller
over 5 years ago
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| Question | Answer |
| Securities & 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 |
| Mission of SEC | Protect Investors Maintain Fair, Orderly & Efficient Markets Facilitate Capital |
| Consequences of SEC Violations | Revocation of registration or Referral to judicial system |
| Responsibility 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 |
| 1934 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. |
| Overseen by SEC | Capital Markets overseen by |
| SEC Board is called | The Commission |
| Number of SEC members | 5 members |
| SEC Board Terms | 5 year terms staggered so only 1 ends every year |
| How SEC Board members acquired | Appointed by US President |
| Rules about SEC Board | No more than 3 members can be of the same political party |
| 1933 Securities Registration Act | Paper Act Required prospectus (full disclosure filings for all new issues of securities considered non exempt) ex of non exempt securities: Corp Stock & bonds |
| Maloney Act of 1938 | Provided 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) |
| 1940 Addition to Maloney Act | Added rules for Investment Companies & investment Advisors |
| American Depositary Receipt (ADR) | A negotiable instrument issued by a US bank that trades in the US Financial markets & represents shares of a foreign stock |
| Muncipal 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 |
| NASDAQ National Assoc. of Securities Dealers Automated Quotation System | Created in 1971 Along with CBOE Revolutionized the trading of OTC equities & Standard Equity options |
| Chicago Board Options Exchange (CBOE) | Created in 1971 Along with NASDAQ Revolutionized the trading of OTC equities & Standard Equity options |
| Self Regulating Organization (SRO) | An Organization that is authorized to enforce standards and requirements related to securities trading and brokerage |
| 2010 Dodd - Frank Wall Street Reform and Consumer Protection Act | Reshaped regulatory in areas of consumer protection, trading restrictions, credit ratings, regulation of financial products, transparency, corporate governance & disclosure. |
| Legislation passed in 1990's & 2000-2002 | Analysts 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. |
| Mutual Fund | A professionally managed open-ended investment company issuing redeemable securities in a continuous offering of shares |
| Beneficiary | A person who receives the benefits of an insurance policy |
| Bid Price | Price a buyer is willing to pay for a security |
| Option | A security giving the holder the choice to either purchase or sell a security at a set price for a specific period |
| Prospectus | A full & fair risk disclosure required by the SEC for all new offerings of non exempt securities. |
| Security | A financial instrument that may trade for value |
| Broker/Dealer | A firm that effects securities transactions for its own account or for the accounts of others |
| Futures Contract | A standardized commodities or securities contract to deliver a certain quantity at a predetermined future price and date |
| Underwriter | A broker/dealer or investment bank that assists a company in offering and distributing securities to the public |
| Member Firm | Broker/dealer belonging to an SRO such as FINRA or NYSE or both |
| Ask Price | The Price the seller is willing to accept for a security |
| Bond | A debt obligation in which the borrower promises to pay a set coupon rate until the issue matures at which time the principle is repaid |
| Stock | A type of security that represents ownership in a Corp |
| Margin Account | A brokerage account that allows investors to purchase securities with borrowed funds using credit from the broker/dealer |
| Electronic Data Gathering Analysis and Retrieval (EDGAR Database) | Electronic system for companies to submit required filings with SEC |
| Blue Sky Laws | State laws covering securities sales and who sells them in state specific boundaries |
| North 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 |
| SEC vs SRO | SEC writes laws that govern the securities industry SRO write rules and regs used to enforce SEC laws |
| SRO'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 |
| Uniform Practice Code | Relates to deals between broker/dealers in non exempt securities Requires orderly Completion of dealer to dealer transactions |
| Rules of Conduct | Also known as Rules of Fair Practice Outlines rules for public impression by broker/dealers |
| Code of Procedure | The process of handling violations of trade practice rules. |
| Code of Arbitration | Code used to settle disputes between broker/dealers and public |
| MSRB Board consists of | Board consists of 21 members 11 reps from the public 10 from regulated entities All have deep expertise with securities markets |
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