SIE Exam- Unit 1 (Knowledge of Capital
Markets)100% Correct!!
SEC- - ANSWERSecurities and exchange commission is the securities industry's primary regulatory
body.
Which act created the SEC? - ANSWERThe securities exchange act of 1934
What is the purpose of registering with the SEC - ANSWERIf you conduct securities business with
either customers or broker dealers; you must be apply and be approved for registration with the SEC
Additional role of the SEC - ANSWERIt regulates all exchanges and trading markets
Under the Uniform Securities act, registrations must be renewed how frequently? - ANSWERAnnually
The statement "These securities have not been approved or disapproved nor have any
representations been made about the accuracy or the adequacy of the information" is found where -
ANSWERCommonly known as the Securities and Exchange Commission's disclaimer, the SEC
mandates that it be found in the final prospectus.
What happens a when a broker dealer does not comply with SEC rules - ANSWERCensure, limits on
activities, functions, or operations.
Suspension or revocation of registration
Fine
Self Regulatory Organizations (SROs) - ANSWERFunction under SEC's oversight. Each SRO is
accountable to the commission for enforcing federal securities as well as supervising securities
practices within assigned jurisdiction (FINRA, CBOE, MSRB)
FINRA - ANSWERFinancial Industry Regulatory Authority- More or less they regulate all matters
related to investment banking (securities underwriting, trading in the OTC Market, trading in NYSE-
listed securities and conduct of their member firms
, Purpose and objective of FINRA - ANSWER1. Promote the investment banking and securities business
2.promote high standards of commercial honor
3. Provide a medium for communication among its members and between members, the govt/other
agencies
4. Enforce rules to prevent fraud and manipulative practices
CBOE - ANSWERChicago Board options exchange- regulates all matters related to trading standarized
options and related contracts listed on that exchange
What is the role of FRB - ANSWERThe federal reserve board
1. acts as an agent of the U.S treasury
2.Regulates the U.S money supply
3.Supervise the printing of currency
4. Make sure members are compliant with federal regulations
Which act created the SIPC - ANSWERSecurities Investor Protection Corp. was created under the
securities investor protection act of 1970
SIPC - ANSWERSecurities Investor Protection Corp- is a nonprofit membership organization. protects
the clients of brokerage firms that are forced into bankruptcy.
Basic coverage under SIPC - ANSWERNo more than $500,000 per separate customer not per account.
Of that $500,000 total SIPC covers no more than $250,000 in cash
What happens if a broker dealer fails and a customer with claims that are in excess of SIPC coverage -
ANSWERThe customer becomes a general creditor of the broker-dealer
Why was the FDIC created - ANSWERIt was created in response to widespread bank failures and
massive losses to bank customers. Federal Dept. insurance corporation
How are the funds for this agency created? (FDIC) - ANSWERPremiums are paid by all participating
institutions
Markets)100% Correct!!
SEC- - ANSWERSecurities and exchange commission is the securities industry's primary regulatory
body.
Which act created the SEC? - ANSWERThe securities exchange act of 1934
What is the purpose of registering with the SEC - ANSWERIf you conduct securities business with
either customers or broker dealers; you must be apply and be approved for registration with the SEC
Additional role of the SEC - ANSWERIt regulates all exchanges and trading markets
Under the Uniform Securities act, registrations must be renewed how frequently? - ANSWERAnnually
The statement "These securities have not been approved or disapproved nor have any
representations been made about the accuracy or the adequacy of the information" is found where -
ANSWERCommonly known as the Securities and Exchange Commission's disclaimer, the SEC
mandates that it be found in the final prospectus.
What happens a when a broker dealer does not comply with SEC rules - ANSWERCensure, limits on
activities, functions, or operations.
Suspension or revocation of registration
Fine
Self Regulatory Organizations (SROs) - ANSWERFunction under SEC's oversight. Each SRO is
accountable to the commission for enforcing federal securities as well as supervising securities
practices within assigned jurisdiction (FINRA, CBOE, MSRB)
FINRA - ANSWERFinancial Industry Regulatory Authority- More or less they regulate all matters
related to investment banking (securities underwriting, trading in the OTC Market, trading in NYSE-
listed securities and conduct of their member firms
, Purpose and objective of FINRA - ANSWER1. Promote the investment banking and securities business
2.promote high standards of commercial honor
3. Provide a medium for communication among its members and between members, the govt/other
agencies
4. Enforce rules to prevent fraud and manipulative practices
CBOE - ANSWERChicago Board options exchange- regulates all matters related to trading standarized
options and related contracts listed on that exchange
What is the role of FRB - ANSWERThe federal reserve board
1. acts as an agent of the U.S treasury
2.Regulates the U.S money supply
3.Supervise the printing of currency
4. Make sure members are compliant with federal regulations
Which act created the SIPC - ANSWERSecurities Investor Protection Corp. was created under the
securities investor protection act of 1970
SIPC - ANSWERSecurities Investor Protection Corp- is a nonprofit membership organization. protects
the clients of brokerage firms that are forced into bankruptcy.
Basic coverage under SIPC - ANSWERNo more than $500,000 per separate customer not per account.
Of that $500,000 total SIPC covers no more than $250,000 in cash
What happens if a broker dealer fails and a customer with claims that are in excess of SIPC coverage -
ANSWERThe customer becomes a general creditor of the broker-dealer
Why was the FDIC created - ANSWERIt was created in response to widespread bank failures and
massive losses to bank customers. Federal Dept. insurance corporation
How are the funds for this agency created? (FDIC) - ANSWERPremiums are paid by all participating
institutions
