SIE Exam- Unit 1 (Knowledge of Capital Markets)Correct 100%
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Course
FINRAS SIE
Institution
FINRAS SIE
SEC- - ANSWER Securities and exchange commission is the securities industry's primary regulatory body.
Which act created the SEC? - ANSWER The securities exchange act of 1934
What is the purpose of registering with the SEC - ANSWER If you conduct securities business with either customers or b...
SIE Exam- Unit 1 (Knowledge of Capital
Markets)Correct 100%
SEC- - ANSWER Securities and exchange commission is the securities industry's
primary regulatory body.
Which act created the SEC? - ANSWER The securities exchange act of 1934
What is the purpose of registering with the SEC - ANSWER If 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 - ANSWER It regulates all exchanges and trading markets
Under the Uniform Securities act, registrations must be renewed how frequently? -
ANSWER Annually
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 - ANSWER Commonly 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 - ANSWER
Censure, limits on activities, functions, or operations.
Suspension or revocation of registration
Fine
Self Regulatory Organizations (SROs) - ANSWER Function 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 - ANSWER Financial 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 - ANSWER 1. 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 - ANSWER Chicago Board options exchange- regulates all matters related to
trading standarized options and related contracts listed on that exchange
, MSRB - ANSWER Municipal securities Rulemaking Board- Regulates all matters
related to the underwriting and trading of state and municipal securities. Regulates but
does not enforce, that's where other SROs like FINRA come in.
What does the FDIC cover? - ANSWER Covers traditional types of bank deposit
accounts (checking, savings, money markets, CDs and self directed IRAs)
What is not covered FDIC? - ANSWER Investment products, mutual funds, life
insurances, stocks, bonds, annuities
Investor - ANSWER Someone who provides money or resournces for an entreprise
such as a corporation
Retail investor - ANSWER an individual who makes investments such as the purchase
of securities for their own personal accounts
Institutional Investor - ANSWER An entity (bank, insurance company, hedge funds etc)
that pools money to purchase securities and other investment assets
Accredited investor - ANSWER Define as someone that has 1 million or more net
assets including house.
Can also be someone that has an income of $200,000 ($300,000 jointly) for the past
two years and is set to make that again this.
OFficer or managers are also considered accredited investors
Broker-Dealers - ANSWER Institutions or person, that buy securities, investment
products(mutual funds, stocks, bonds) for their selves or for their customers
What does the membership agreement of a B/D explain? - ANSWER It explains what
lines of business the broker-dealer undertakes. Some are referred as full-service
offering all types of investment products..
Carrying (Clearing Firm) - ANSWER Carries the customer accounts and accepts funds
and securities from customers.
Clearing firm rank among the larger B/D.
They can do it all, trade execution, clear and settle transaction, handle all back office
tasks such as sending statements and transactions confirmation.
Why is the line of business for Carrying (Clearing firm )considered risky - ANSWER This
is due to the fact that it is handling customers funds and securities. Thus it requires to
maintain levels of net capital higher than other firms that do not accept custody of
funds/security
Fully Disclosed firm (Introducing firm) - ANSWER This firm can solicit customers but it
cannot hold their funds/securities. they introduce the customer to a clearing (carrying
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