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FINRA SIE Securities Industry Essentials
Exam V2 2026/2027 Latest Edition |
Comprehensive Study Guide | Practice
Questions & Detailed Answer Explanations |
Securities Licensing Exam Prep
Securities and Exchange Commission
(SEC) created under the Securities Exchange Act of 1934, this is the security industry's primary
regulatory body. Brokers/Dealers must apply and be approved for registration with the SEC. The
SEC also regulates all exchanges and trading markets.
What is a broker/dealer subject to if they do not comply with SEC rules?
censure, limits on activities, functions, or operations, suspension/revocation of tis registration, or
fine
Self-Regulatory Organizations
(SROs) function under the SEC's oversight. Each SRO is accountable to the Commission for
enforcing federal securities laws, and supervising securities practices within an assigned
jurisdiction.
Financial Industry Regulatory Authority (FINRA)
regulates all matters related to investment banking (securities underwriting), trading in the OTC
market, trading in NYSE related securities, and the conduct of member firms.
,….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
What are FINRA's main purposes and objectives?
1. Promote the investment banking and securities business, standardize principles and practices,
promote high standards of commercial honor, and encourage the observance of federal and state
securities laws.
2. Provide a medium for communication among its members and between its members, the
government, and other agencies.
3. Adapt, administer, and enforce rules designed to prevent fraudulent and manipulative practices
as well as to promote just and equitable principles of trade.
4. Promote self-discipline among members and investigate and resolve grievances.
Chicago Board Options Exchange (CBOE)
regulates all matters related to trading standardized options and related contracts listed on that
exchange
Municipal Securities Rulemaking Board (MSRB)
regulates (but cannot enforce) all matters related to the underwriting and trading of state and
municipal securities. Also has no regulatory power over the municipalities who issue municipal
securities.
The U.S. Department of Treasury (USDT)
executive department and the treasury of the United States federal government. The department
is administered by the secretary of the treasury, who is a member of the cabinet. The department
oversees the collection of taxes and enforcement of tax laws.
,….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
Internal Revenue Service (IRS)
bureau of the Department of the Treasury, its purpose is to collect taxes and enforce tax laws.
North American Securities Administrators Association (NASAA)
voluntary association whose members provide insight from their unique perspective to the SEC
and SROs as they move forward in their rulemaking process. Also advocates pro-investor
policies, provides investor education, and offers resources for the regulatory community and
securities industry professionals.
Federal Reserve Board (FRB)
made up of 12 regional Federal Reserve banks and hundreds of national and state banks that
belong to the system. They determine how much money is available for businesses and
consumers to spend. Also determines the monetary policy and takes actions to implement its
policies such as;
- acting as an agent of the U.S. Treasury
- regulating the U.S. money supply
- setting reserve requirements for members
- supervising the printing of currency
- clearing found transfers throughout the system
- examining members to ensure compliance with federal regulations
Securities Investor Protection Corporation (SIPC)
is a non-profit membership organization created under the Securities Investor Protection Act of
1970, this agency oversees the liquidation of insolvent brokerage firms and members pay
assessments into a general insurance fund that is used to meet customer claims in the event of a
broker-dealer bankruptcy.
, ….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
All broker/dealers registered with the SEC must be SPIC members except:
- banks that deal exclusively in municipal securities
- firms that deal exclusively in U.S. government securities
- firms that deal exclusively in redeemable investment company securities
What is the definition of a customer?
anyone who has cash or securities in the posession of a broker-dealer.
What happens if the SEC or any SRO finds indication that a broker-dealer is in financial
difficulty?
The SPIC will be notified immediately, and if the SPIC determines that the member has failed or
is in imminent danger of failing. The court will issue a protective decree if the broker-dealer is
insolvent and will then promptly appoint a trustee for the liquidation of the broker-dealer's
business, and the member is prohibited from engaging in business
What is the basic coverage under SPIC?
no more than $500,000 per separate customer, this includes no more than $250,000 in cash
- cash and margin accounts for the same customer are combined when determining SPIC
coverage
- only the equity in a margin account is converted, not the full market value
Federal Deposit Insurance Corporation (FDIC)
It is an independent agency of the Untied States federal government created during the Great
Depression in response to widespread bank failures, and massive losses to bank customers. It
FINRA SIE Securities Industry Essentials
Exam V2 2026/2027 Latest Edition |
Comprehensive Study Guide | Practice
Questions & Detailed Answer Explanations |
Securities Licensing Exam Prep
Securities and Exchange Commission
(SEC) created under the Securities Exchange Act of 1934, this is the security industry's primary
regulatory body. Brokers/Dealers must apply and be approved for registration with the SEC. The
SEC also regulates all exchanges and trading markets.
What is a broker/dealer subject to if they do not comply with SEC rules?
censure, limits on activities, functions, or operations, suspension/revocation of tis registration, or
fine
Self-Regulatory Organizations
(SROs) function under the SEC's oversight. Each SRO is accountable to the Commission for
enforcing federal securities laws, and supervising securities practices within an assigned
jurisdiction.
Financial Industry Regulatory Authority (FINRA)
regulates all matters related to investment banking (securities underwriting), trading in the OTC
market, trading in NYSE related securities, and the conduct of member firms.
,….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
What are FINRA's main purposes and objectives?
1. Promote the investment banking and securities business, standardize principles and practices,
promote high standards of commercial honor, and encourage the observance of federal and state
securities laws.
2. Provide a medium for communication among its members and between its members, the
government, and other agencies.
3. Adapt, administer, and enforce rules designed to prevent fraudulent and manipulative practices
as well as to promote just and equitable principles of trade.
4. Promote self-discipline among members and investigate and resolve grievances.
Chicago Board Options Exchange (CBOE)
regulates all matters related to trading standardized options and related contracts listed on that
exchange
Municipal Securities Rulemaking Board (MSRB)
regulates (but cannot enforce) all matters related to the underwriting and trading of state and
municipal securities. Also has no regulatory power over the municipalities who issue municipal
securities.
The U.S. Department of Treasury (USDT)
executive department and the treasury of the United States federal government. The department
is administered by the secretary of the treasury, who is a member of the cabinet. The department
oversees the collection of taxes and enforcement of tax laws.
,….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
Internal Revenue Service (IRS)
bureau of the Department of the Treasury, its purpose is to collect taxes and enforce tax laws.
North American Securities Administrators Association (NASAA)
voluntary association whose members provide insight from their unique perspective to the SEC
and SROs as they move forward in their rulemaking process. Also advocates pro-investor
policies, provides investor education, and offers resources for the regulatory community and
securities industry professionals.
Federal Reserve Board (FRB)
made up of 12 regional Federal Reserve banks and hundreds of national and state banks that
belong to the system. They determine how much money is available for businesses and
consumers to spend. Also determines the monetary policy and takes actions to implement its
policies such as;
- acting as an agent of the U.S. Treasury
- regulating the U.S. money supply
- setting reserve requirements for members
- supervising the printing of currency
- clearing found transfers throughout the system
- examining members to ensure compliance with federal regulations
Securities Investor Protection Corporation (SIPC)
is a non-profit membership organization created under the Securities Investor Protection Act of
1970, this agency oversees the liquidation of insolvent brokerage firms and members pay
assessments into a general insurance fund that is used to meet customer claims in the event of a
broker-dealer bankruptcy.
, ….,,,./.,./.,./../../../…./././././.,.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,./.,.,.,.
All broker/dealers registered with the SEC must be SPIC members except:
- banks that deal exclusively in municipal securities
- firms that deal exclusively in U.S. government securities
- firms that deal exclusively in redeemable investment company securities
What is the definition of a customer?
anyone who has cash or securities in the posession of a broker-dealer.
What happens if the SEC or any SRO finds indication that a broker-dealer is in financial
difficulty?
The SPIC will be notified immediately, and if the SPIC determines that the member has failed or
is in imminent danger of failing. The court will issue a protective decree if the broker-dealer is
insolvent and will then promptly appoint a trustee for the liquidation of the broker-dealer's
business, and the member is prohibited from engaging in business
What is the basic coverage under SPIC?
no more than $500,000 per separate customer, this includes no more than $250,000 in cash
- cash and margin accounts for the same customer are combined when determining SPIC
coverage
- only the equity in a margin account is converted, not the full market value
Federal Deposit Insurance Corporation (FDIC)
It is an independent agency of the Untied States federal government created during the Great
Depression in response to widespread bank failures, and massive losses to bank customers. It
