THE FEDERAL REGULATIONS SBE 2026/2027 QUESTIONS
AND ANSWERS RATED A+
✔✔Pay to play exceptions - ✔✔1. contributions of $350 or less per election, per
covered associate, for any election in which that covered associate is entitled to vote
2. contributions of $150 or less per election, per covered associate, for any election in
which the covered associate is NOT entitled to vote
3. there is a new covered associate exception if a natural person made a contribution
more than 6 months prior to becoming a covered associate
✔✔Suspicious Activity Report (SAR) - ✔✔must be filed when any transaction conducted
through a broker dealer involving funds or assets of $5,000 or more where the broker-
dealer detects any known or suspected federal criminal violation
✔✔Bank Secrecy Act - ✔✔Federal anti-money laundering and counter-terrorism statue
✔✔anti-fraud provisions - ✔✔apply to ALL securities and transactions
✔✔Money laundering - ✔✔the acceptance of large amounts of cash from individuals or
businesses where the money is suspected of being derived from or used for illegal
purposes
✔✔how long do you have to hold restricted stock? - ✔✔must be fully paid for and
owned for at least 6 months
✔✔Currency Transaction Report (CTR) - ✔✔broker-dealers must file them for
transactions involving currency (cash) over $10,000
✔✔CIP (Customer Identification Program) requires customer account records must be
kept for __ years after the account is closed - ✔✔5
✔✔3 stages of money laundering - ✔✔1. Placement - cash enters the financial system
2. layering - funds are moved into other accounts
3. integration - funds are reintroduced into the economy to purchase legitimate assets
✔✔Regulation D Offering - ✔✔provision under the '33 Act for exempting private
companies from filing requirements under certain conditions
✔✔The PATRIOT Act (Providing Appropriate Tools Required to Intercept & Obstruct
Terrorism) plays a key role to deter, detect, and prevent terrorism. A summary of the
PATRIOT Act includes: - ✔✔1. Allows investigators to use tools to investigate organized
crime and drug trafficking
2. Facilitates information sharing and cooperation among government agencies so that
they can better connect the dots
, 3. Updated the law to reflect new technologies and new threats
4. Increases the penalties for those who commit terrorist crimes
5. Requires firms to obtain a new customer's social security number or tax ID
✔✔FinCen - ✔✔Financial Crimes Enforcement Network is a bureau of the US
department of the treasury. their mission is to safeguard the financial system from illicit
use and combat money laundering and promote national security through the collection,
analysis, and dissemination of financial intelligence and strategic use of financial
authorities
✔✔Insider - ✔✔- an Officer, Director, or Principal Stockholder
- Affiliated Persons
- Control Persons
✔✔under SEC Rule 144, how much control stock can an individual sell within a 90 day
window? - ✔✔1. 1% of the outstanding stock; OR
2. the average trading volume for the previous 4 weeks
(whichever is greater)
✔✔Which of the following is NOT a requirement under Regulation S-P?
[A] Maintaining the confidentiality of aggregated firm data such as the total volume of
trades executed by the firm and total assets handled by the firm.
[B] Maintaining the confidentiality of personally identifiable financial information that the
firm collects and maintains to better service client accounts.
[C] Delivery of an initial privacy notice to each client upon opening an account with the
firm.
[D] Delivery of a privacy notice to clients a minimum of annually after clients open an
account and receive the initial privacy notice. - ✔✔[A] Maintaining the confidentiality of
aggregated firm data such as the total volume of trades executed by the firm and total
assets handled by the firm.
Under Regulation S-P, a firm is not required to maintain privacy related to aggregated
firm data that contains no personal information. Information such as the total number of
trades executed by a firm or the total assets managed or handled by a firm is
aggregated and need not be kept private under Reg S-P. Personally-identifiable
financial information related to clients must be kept confidential under Reg S-P. As well,
a privacy notice must be delivered upon opening the account (initial) and a minimum of
once per year following the opening of the account
✔✔Under the Securities Act of 1933, which of the following are regulated by the anti-
fraud provisions?
U.S. Government securities
Corporate bonds
AND ANSWERS RATED A+
✔✔Pay to play exceptions - ✔✔1. contributions of $350 or less per election, per
covered associate, for any election in which that covered associate is entitled to vote
2. contributions of $150 or less per election, per covered associate, for any election in
which the covered associate is NOT entitled to vote
3. there is a new covered associate exception if a natural person made a contribution
more than 6 months prior to becoming a covered associate
✔✔Suspicious Activity Report (SAR) - ✔✔must be filed when any transaction conducted
through a broker dealer involving funds or assets of $5,000 or more where the broker-
dealer detects any known or suspected federal criminal violation
✔✔Bank Secrecy Act - ✔✔Federal anti-money laundering and counter-terrorism statue
✔✔anti-fraud provisions - ✔✔apply to ALL securities and transactions
✔✔Money laundering - ✔✔the acceptance of large amounts of cash from individuals or
businesses where the money is suspected of being derived from or used for illegal
purposes
✔✔how long do you have to hold restricted stock? - ✔✔must be fully paid for and
owned for at least 6 months
✔✔Currency Transaction Report (CTR) - ✔✔broker-dealers must file them for
transactions involving currency (cash) over $10,000
✔✔CIP (Customer Identification Program) requires customer account records must be
kept for __ years after the account is closed - ✔✔5
✔✔3 stages of money laundering - ✔✔1. Placement - cash enters the financial system
2. layering - funds are moved into other accounts
3. integration - funds are reintroduced into the economy to purchase legitimate assets
✔✔Regulation D Offering - ✔✔provision under the '33 Act for exempting private
companies from filing requirements under certain conditions
✔✔The PATRIOT Act (Providing Appropriate Tools Required to Intercept & Obstruct
Terrorism) plays a key role to deter, detect, and prevent terrorism. A summary of the
PATRIOT Act includes: - ✔✔1. Allows investigators to use tools to investigate organized
crime and drug trafficking
2. Facilitates information sharing and cooperation among government agencies so that
they can better connect the dots
, 3. Updated the law to reflect new technologies and new threats
4. Increases the penalties for those who commit terrorist crimes
5. Requires firms to obtain a new customer's social security number or tax ID
✔✔FinCen - ✔✔Financial Crimes Enforcement Network is a bureau of the US
department of the treasury. their mission is to safeguard the financial system from illicit
use and combat money laundering and promote national security through the collection,
analysis, and dissemination of financial intelligence and strategic use of financial
authorities
✔✔Insider - ✔✔- an Officer, Director, or Principal Stockholder
- Affiliated Persons
- Control Persons
✔✔under SEC Rule 144, how much control stock can an individual sell within a 90 day
window? - ✔✔1. 1% of the outstanding stock; OR
2. the average trading volume for the previous 4 weeks
(whichever is greater)
✔✔Which of the following is NOT a requirement under Regulation S-P?
[A] Maintaining the confidentiality of aggregated firm data such as the total volume of
trades executed by the firm and total assets handled by the firm.
[B] Maintaining the confidentiality of personally identifiable financial information that the
firm collects and maintains to better service client accounts.
[C] Delivery of an initial privacy notice to each client upon opening an account with the
firm.
[D] Delivery of a privacy notice to clients a minimum of annually after clients open an
account and receive the initial privacy notice. - ✔✔[A] Maintaining the confidentiality of
aggregated firm data such as the total volume of trades executed by the firm and total
assets handled by the firm.
Under Regulation S-P, a firm is not required to maintain privacy related to aggregated
firm data that contains no personal information. Information such as the total number of
trades executed by a firm or the total assets managed or handled by a firm is
aggregated and need not be kept private under Reg S-P. Personally-identifiable
financial information related to clients must be kept confidential under Reg S-P. As well,
a privacy notice must be delivered upon opening the account (initial) and a minimum of
once per year following the opening of the account
✔✔Under the Securities Act of 1933, which of the following are regulated by the anti-
fraud provisions?
U.S. Government securities
Corporate bonds
