Unit 16 - Government Regulators and Regulations

16.1 - Federal Regulators

.

All BDs must apply for an receive registration from the…

Securities and Exchange Commission (SEC).

FinCEN safeguards against…

money laundering and terrorist financing.

the IRS is the primary ___ _________ agency

Tax Enforcement

what does the Office of the Comptroller of Currency do?

regulates and supervises national banks and federal savings associations, ensuring their soundness and compliance with banking regulations.

Please note that the exam will use OCC to refer to

The Options Clearing Corporation, not the Comptroller of Currency

When must a BD report with a CTR (Currency transaction Report)

A broker-dealer must report a CTR when a cash transaction exceeds $10,000 in a single day.

Where would a Suspicious Activity Report (SAR) be filed to?

FinCEN

Money Laundering

making illegal money look like it came from a legitimate source

(3) stages of money laundering

1. Placement - funds are placed into the money laundering system

2. Layering - the source of the funds are concealed

3. Integration - illegal funds are commingled with legitimate funds

Every firm must have an ___ officer

AML - Anti Money Laundering

Specifically Designated Nationals (SDN)

maintained by OFAC, individuals on a list that blocks their assets and prohibits US persons and businesses from conducting business with them

The SEC is the primary federal securities industry regulator in the United States. It was created by

A)

the Securities Act of 1933.

B)

the Investment Advisers Act of 1940.

C)

the Securities Exchange Act of 1934.

D)

the Uniform Securities Act.

C

Financial activities and large cash transactions are reported to which of the following federal agencies?

A)

OCC

B)

FinCEN

C)

SEC

D)

Federal Reserve

B

A BD must file a currency transaction report when a customer deposits how much currency?

A)

$10,000 or more

B)

More than $5,000

C)

More than $10,000

D)

$5,000 or more

C

The specially designated nationals (SDN) list is maintained by which of the following organizations?

A)

OFAC

B)

DOJ

C)

FINRA

D)

SEC

A

16.2 - State Regulators

.

What does the Uniform Securities Act (USA) do?

serves as a template for state securities laws to create uniform securities laws throughout the country

BDs must register with a _____ _________ to do business in a state

State Administrator

North American Securities Administrators Association (NASAA)

has no regulatory authority but is a key figure in state regulations and series 63, 65, 66, test registration

Which of the following statements regarding the North American Securities Administrators Association (NASAA) is true?

A)

NASAA regulates the state securities administrators.

B)

NASAA has no regulatory authority.

C)

NASAA coordinates local securities laws for all of North America.

D)

NASAA is a division of the SEC

B

In order to register a broker-dealer firm to do business in a state, you would register with

A)

the administrator.

B)

FINRA.

C)

NASAA.

D)

the SEC.

A

16.3 - SIPC and FDIC protections

.

The Securities Investor and Protection Corporation (SIPC) insures money in….

brokerage accounts

SIPC covers up to

$500,000$ for each customer, including a $250,000$ limit for cash.

SIPC insures cash and securities, but NOT

commodities

the FDIC insures money in…

Bank accounts

the FDIC insures up to $______ for each…

250k for each owner deposit

Example: Gabe has an Individual account with 200k and joint account with 450k. Both accounts would be fully insured by the FIDC (200k for the individual and his 225k ownership (50%) of the joint account

.

A joint account holds securities valued at $350,000, commodities worth $100,000, and cash of $50,000. How much is the SIPC coverage for this account?

A)

$250,000

B)

$350,000

C)

$500,000

D)

$400,000

D

The FDIC insures customer assets held at

A)

banks.

B)

broker-dealers.

C)

investment advisers.

D)

depositary trusts.

A