Test questions CRPC Module 9
Securities act of 1933 - ANS-Required that new companies provide full disclosure
through the issuance of a perspective
Securities exchange act of 1934 - ANS-Created the SEC and empowered the
commission to regulate exchanges and broker dealers and to require information from
public companies
Investment company act of 1940 - ANS-The regulation of mutual funds
Investment advisors act of 1940 - ANS-Requires investment advisors to register with the
SEC
Major responsibility of FINRA - ANS-Develop rules and regulations for its members as
the largest securities industry self regulating organization
Industry developments regarding fiduciary advice - ANS-The fiduciary standard is a
higher standard than the suitability standard. This will increase client expectations of
advisors and put downward pressure on fees especially high fee products that have
better, lower fee alternatives available
The Gramm-Leach-Biliey act of 1999 - ANS-Also known as the financial services
modernization act, repealed the part of glass Steagall that had previously prohibited
financial institutions from consolidating and offering a combination of commercial
banking investment banking and insurance services
ERISA - ANS-A direct result of concern over the safety and integrity of workers
company retirement plans
And investment professional who reads investment journals is complying with the -
ANS-Duty to keep current which requires an investment professional to be up-to-date
with subjects relating to his or her job
Duty to disclose - ANS-Requires an investment professional to explain the risks, even
those back by do US government.
, Confidential client information - ANS-May be released only to those authorized to have
access. Presumably one such situation is during a civil dispute between a CFP
certificate and a client
Duty of care - ANS-Provide advice in the best interest of the client
Duty of loyalty - ANS-Requires a fiduciary to always put the client interest ahead of their
own and that all actions be made solely for the benefit of the client
The suitability rule is one of the key roles of the - ANS-FINRA conduct rules
Fiduciary standards versus suitability standards - ANS-Fiduciaries have written
disclosure requirements where as verbal disclosures may be all it is required under the
suitability standard
In 2010 daughter Frank test the SECto study the feasibility of a harmonized fiduciary
standard. In April 2018 the SEC proposed - ANS-Continuing both a suitability standard
for brokers and a fiduciary standard for advisers
Under ERISA - ANS-Prohibited transactions are allowed but an exemption must be met.
Prohibited transactions apply to transactions that have such potential conflicts of
interest that fiduciary advisors must either avoid them or meet the requirements of an
exception
What was the approximate dollar amount of US retirement assets held in an IRA
accounts at the end of 2017 - ANS-$9.2 trillion. Total US retirement assets totaled $28.2
trillion
What is the level of trust in the financial services industry - ANS-Despite the overall
stock market recovery since the market melt down in 2008 trust levels of financial
services remain low. Ever since the great recession in 2008 to 2009. This is according
to the Edelman trust barometer
The advent of advanced technology - ANS-Made management a brokerage firms more
difficult. With increased sophistication of technical specialist, managing and controlling
them has become more difficult for managers at brokerage firm
What was the most important area of concern that was addressed in the Dodd Frank
Wall Street reform act - ANS-Systematic risk and the need to maintain a stable financial
system is the primary issue
Securities act of 1933 - ANS-Required that new companies provide full disclosure
through the issuance of a perspective
Securities exchange act of 1934 - ANS-Created the SEC and empowered the
commission to regulate exchanges and broker dealers and to require information from
public companies
Investment company act of 1940 - ANS-The regulation of mutual funds
Investment advisors act of 1940 - ANS-Requires investment advisors to register with the
SEC
Major responsibility of FINRA - ANS-Develop rules and regulations for its members as
the largest securities industry self regulating organization
Industry developments regarding fiduciary advice - ANS-The fiduciary standard is a
higher standard than the suitability standard. This will increase client expectations of
advisors and put downward pressure on fees especially high fee products that have
better, lower fee alternatives available
The Gramm-Leach-Biliey act of 1999 - ANS-Also known as the financial services
modernization act, repealed the part of glass Steagall that had previously prohibited
financial institutions from consolidating and offering a combination of commercial
banking investment banking and insurance services
ERISA - ANS-A direct result of concern over the safety and integrity of workers
company retirement plans
And investment professional who reads investment journals is complying with the -
ANS-Duty to keep current which requires an investment professional to be up-to-date
with subjects relating to his or her job
Duty to disclose - ANS-Requires an investment professional to explain the risks, even
those back by do US government.
, Confidential client information - ANS-May be released only to those authorized to have
access. Presumably one such situation is during a civil dispute between a CFP
certificate and a client
Duty of care - ANS-Provide advice in the best interest of the client
Duty of loyalty - ANS-Requires a fiduciary to always put the client interest ahead of their
own and that all actions be made solely for the benefit of the client
The suitability rule is one of the key roles of the - ANS-FINRA conduct rules
Fiduciary standards versus suitability standards - ANS-Fiduciaries have written
disclosure requirements where as verbal disclosures may be all it is required under the
suitability standard
In 2010 daughter Frank test the SECto study the feasibility of a harmonized fiduciary
standard. In April 2018 the SEC proposed - ANS-Continuing both a suitability standard
for brokers and a fiduciary standard for advisers
Under ERISA - ANS-Prohibited transactions are allowed but an exemption must be met.
Prohibited transactions apply to transactions that have such potential conflicts of
interest that fiduciary advisors must either avoid them or meet the requirements of an
exception
What was the approximate dollar amount of US retirement assets held in an IRA
accounts at the end of 2017 - ANS-$9.2 trillion. Total US retirement assets totaled $28.2
trillion
What is the level of trust in the financial services industry - ANS-Despite the overall
stock market recovery since the market melt down in 2008 trust levels of financial
services remain low. Ever since the great recession in 2008 to 2009. This is according
to the Edelman trust barometer
The advent of advanced technology - ANS-Made management a brokerage firms more
difficult. With increased sophistication of technical specialist, managing and controlling
them has become more difficult for managers at brokerage firm
What was the most important area of concern that was addressed in the Dodd Frank
Wall Street reform act - ANS-Systematic risk and the need to maintain a stable financial
system is the primary issue
