CRPC CHAPTER 9 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
Trust in the system in Financial Services - (ANSWER)Subprime mortgage crisis - systematic
breakdown in accountability and ethics -Financial crisis inquiry commission
Edelman Trust Barometer - (ANSWER)Various industries level of trust in industries
FI bottom of rankings
Stock market done well
Trust in financial industry remains low despite the recovery since 2008-2009 Great
Recession.
#$
Pershing study and comments from the CFA institute - (ANSWER)Clients concerned about %
fiduciary standard than FAs are ^
Highlight trust issues and concerns &*
()_
CFA Institute a crisis of culture annual report warning after 2008 meltdown - +
(ANSWER)Breakdown in financial industry will have consequences
Occupy Wall Street
Focus on fees and fiduciary standards
Wave 1 - results of crash and Great Depression Securities Act of 1933 - (ANSWER)The first
major federal law regulating the securities industry. It requires firms issuing new stock in a
public offering to file a registration statement with the SEC.
Cover initial public offerings
If SEC finds misleading or inaccurate info it will delay the offering until registration
statement is corrected.
All new issues must be accompanied by a prospectus.
Securities exchange act of 1934 - (ANSWER)Established the securities and exchange
commission and aimed to regulate securities transactions on both organizedabd OTC
MARKETS
Broker dealers to register with SEC
File quarterly financial statements with SEC
Investment advisors act of 1940 - (ANSWER)Requires the registration of investment
advisors who charge fees for investment advice
ADV2B form
Prohibitions re: advertising practices
Inv advisors with $100 million AUM register with the SEC
, CRPC CHAPTER 9 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
Investment company act of 1940 - (ANSWER)provides a definition of "investment
company"
Dealing with mutual funds to detailed regulations
Diversified or non diversified management companies
Custodian to safeguard securities
Proceeds of redeemed shares be sent to shareholders within 7 days of redemption
Wave 2
Securities investor protection act of 1970 - (ANSWER)Protection of brokerage accounts #$
Oversee the liquidation of brokerage firms and insure investor accounts to $500k, $250k %
can be cash balances in case of bankruptcy of a brokerage firm ^
&*
It does not cover market losses due to Inv fraud ()_
Not the same as FDIC +
Cost of ins pd by members
ERISA (Employee Retirement Income Security Act) of 1974 - (ANSWER)Enacted to stem
Company sponsored retirement plans abuses
Fiduciary standard in workplace
5 criteria must be met:
Participation
Vesting
Funding
Reporting
Disclosure
Established the Pension Benefit Guaranty Corp (PBGC)
Securities Acts Amendments of 1975 and May Day - (ANSWER)The major feature of this act
was to mandate a national securities market.
Assumption behind this act was that any national market would use computers and
electronic communications.
May Day - commission rates were de-commissioned, fostered greater competition and
more efficient pricing.
Day in 1975 when commission rates were no longer set by NYSE and firms were free to set
their own commission rates.
RATIONALE |ALREADY GRADED A+
Trust in the system in Financial Services - (ANSWER)Subprime mortgage crisis - systematic
breakdown in accountability and ethics -Financial crisis inquiry commission
Edelman Trust Barometer - (ANSWER)Various industries level of trust in industries
FI bottom of rankings
Stock market done well
Trust in financial industry remains low despite the recovery since 2008-2009 Great
Recession.
#$
Pershing study and comments from the CFA institute - (ANSWER)Clients concerned about %
fiduciary standard than FAs are ^
Highlight trust issues and concerns &*
()_
CFA Institute a crisis of culture annual report warning after 2008 meltdown - +
(ANSWER)Breakdown in financial industry will have consequences
Occupy Wall Street
Focus on fees and fiduciary standards
Wave 1 - results of crash and Great Depression Securities Act of 1933 - (ANSWER)The first
major federal law regulating the securities industry. It requires firms issuing new stock in a
public offering to file a registration statement with the SEC.
Cover initial public offerings
If SEC finds misleading or inaccurate info it will delay the offering until registration
statement is corrected.
All new issues must be accompanied by a prospectus.
Securities exchange act of 1934 - (ANSWER)Established the securities and exchange
commission and aimed to regulate securities transactions on both organizedabd OTC
MARKETS
Broker dealers to register with SEC
File quarterly financial statements with SEC
Investment advisors act of 1940 - (ANSWER)Requires the registration of investment
advisors who charge fees for investment advice
ADV2B form
Prohibitions re: advertising practices
Inv advisors with $100 million AUM register with the SEC
, CRPC CHAPTER 9 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
Investment company act of 1940 - (ANSWER)provides a definition of "investment
company"
Dealing with mutual funds to detailed regulations
Diversified or non diversified management companies
Custodian to safeguard securities
Proceeds of redeemed shares be sent to shareholders within 7 days of redemption
Wave 2
Securities investor protection act of 1970 - (ANSWER)Protection of brokerage accounts #$
Oversee the liquidation of brokerage firms and insure investor accounts to $500k, $250k %
can be cash balances in case of bankruptcy of a brokerage firm ^
&*
It does not cover market losses due to Inv fraud ()_
Not the same as FDIC +
Cost of ins pd by members
ERISA (Employee Retirement Income Security Act) of 1974 - (ANSWER)Enacted to stem
Company sponsored retirement plans abuses
Fiduciary standard in workplace
5 criteria must be met:
Participation
Vesting
Funding
Reporting
Disclosure
Established the Pension Benefit Guaranty Corp (PBGC)
Securities Acts Amendments of 1975 and May Day - (ANSWER)The major feature of this act
was to mandate a national securities market.
Assumption behind this act was that any national market would use computers and
electronic communications.
May Day - commission rates were de-commissioned, fostered greater competition and
more efficient pricing.
Day in 1975 when commission rates were no longer set by NYSE and firms were free to set
their own commission rates.
