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Flashcards in Securities Laws Deck (17)
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1
Q

Securities Act of 1933

A
  • All new issues must register and are subject to full disclosure
  • prohibits fraud and deception in security dealings
2
Q

Securities Exchange Act of 1934

A
  • established the SEC
  • the SEC has full authority and oversight duties for IPOs and extends registration and full disclosure to existing stocks
  • requires B/D to register with the SEC and regulates their activities through the SEC and NASD
  • requires filling of annual 10-k report and quarterly 10-Q report
3
Q

Securities and Exchange Rule 145

A
  • Shelf Rule
  • permits large companies to file “short-form registration and place the securities on the shelf” to be sold piecemeal over the next two years.
4
Q

Public Utilities Holding Company Act of 1935

A
  • limited the use of debt financing of the utility industry

- required better financial accounting methods

5
Q

Maloney Act of 1936

A
  • extended SEC control to the OTC market
  • provides self regulation of the OTC dealers through the NASD
  • SEC has authority over the NASD
6
Q

Trust Indenture Act of 1939

A

-set requirements for corporate issuers of debt securities for greater than $1 MM

7
Q

Investment Company Act of 1940

A

-authorized SEC to regulate investment companies

8
Q

Investment Advisors Act of 1940

A
  • established regulation of investment advisers with the SEC

- 3 prong test: Advice, Business, Compensation

9
Q

Securities Investors Protection Act of 1970

A
  • established SIPC to act as an insurance company to protect investors from brokerage firm bankruptcies
  • limited protection afford by the act: total coverage is $500,000 of which only $250,000 can be cash, securities must be held in street name
10
Q

Securities Act Amendments of 1975

A
  • promoted the establishment of a national market system for securities trading
  • abolished fixed brokerage commissions
11
Q

Insider Trading and Securities Fraud Enforcement Act of 1988

A

-authorized treble (3x) damages for individuals found guilty of fraudulent insider trading

12
Q

Investment Advisors Supervision Coordination Act of 1996

A

-eliminated the need for investment managers to register with the SEC if they are regulated as such by state and do not manage $25 MM or more of client assets

13
Q

Securities Exchange Commission

A
  • Executive - seeks to enforce the laws for which it is responsible
  • Legislative- enact various formal regulations and rules in the process of upholding the laws
  • Judicial- decides civil cases under its jurisdiction
14
Q

National Association of Securities Dealers

A

-responsible for licensing and monitoring securities brokers

15
Q

Due Diligence

A

-both the ‘33 and ‘34 acts require the registered representative investigate any security before recommending it to a client.

16
Q

Blue Sky Laws

A
  • state laws dealing with the regulation of the securities business
  • set standard that must be met by every new security before it is sold
17
Q

Glass-Steagall Act of 1933

A
  • legislation passed by congress authorizing deposit insurance and prohibiting commercial banks from owning brokerage firms
  • the purpose of the act was to insulate bank depositors from the risk involved when a bank engaged securities activities and to prevent a bank collapse similar to the one that happened in the great depression.

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