FBLA Securities and Investments Rules & Regulations Deck

regulation T

set by the FRB and requires you put at least 50% of the purchase price when you buy on margin

Regulation Best Interest ( Reg BI )

Requires broker-dealers to act in the client's best interest, especially when recommending investments.

Rule 2210

cannot make misleading information available to the public

SEC Rule 15c-1

Makes sure broker-dealers have enough capital to stay solvent

where does suitability apply to

broker-dealers

where does fiduciary duty apply to

investment advisers & retirement plans

What is Regulation D?

A regulation allowing some companies to sell securities without having to register the offering with the SEC.

Who can invest under Regulation D?

Only accredited investors or capped amounts.

accredited investors under Reg D.

Individuals with an annual income of $200,000, regardless of net worth

Rule 144

Permits sale of restricted and control stock ( ex insider or private stock )

Rule 144A

Allows a qualified institutional buyer (QIB) to purchase restricted (unregistered) securities

Regulation M

Prohibits underwriters and insiders from pumping up stock prices while offering new shares

Form ADV

investment advisors must file with SEC

Securities Act of 1933

deals only with the reporting requirements for companies issuing new securities, including the information in registration statements and prospectuses.

Securities Exchange Act of 1934

A federal law dealing with securities regulation that established the Securities and Exchange Commission to regulate and oversee the securities industry.

Investment Company Act of 1940

Governs the regulation of packaged products such as mutual funds, closed-end funds, unit investment trusts & ETFs and advisors managing over $100M in assets

Securities Investor Protection Corp ( SIPC )

Protects the customer against broker dealer bankruptcy up to $500K for each separate customer asset (securities and cash) of which no more can than $250K can be cash. A private, non profit organization created by the gov. The investor becomes a general creditor of the form for the amount owed over these limits.

FDIC (Federal Deposit Insurance Corporation)

insured bank deposits up to $5,000

Rule 10b-5

Anti-fraud rule prohibiting deceptive practices in the buying or selling of securities.

Regulation S

Allows U.S. companies to offer securities offshore without registering with the SEC

Regulation FD (Fair Disclosure)

Requires public disclosure of material information shared with select investors or analysts

Regulation S-K

covers all nonfinancial items, such as management's discussion and analysis of the company's operations, financial position, management and risk factors

Regulation S-X

Filing requirements for public companies

Rule 2111

Suitability Rule: reps must make suitable recommendations based on client profile

Rule 3110

Requires firms to implement supervisory procedures to monitor employee conduct and compliance

Rule 3270

Prohibits "outside business activities" without written disclosure to the firm ( like owning a business )

Rule 3280

Forbids private securities transactions without firm approval — also known as selling away

Rule 5130

restricts broker-dealers from selling newly issued securities (IPOs)

Rule 3240

Governs borrowing/lending between reps and clients — requires written approval

Rule 15c3-1

Requires broker-dealers to maintain minimum capital to protect clients in firm failure

Rule 15c3-3

Requires segregation of customer funds and securities from the firm's own assets

FINRA's TRACE

Trade Reporting and Compliance Engine for transparency in bond market transactions

DOL Fiduciary Rule

Requires fiduciary conduct for retirement account advisers

Patriot Act

A controversial law overwhelmingly passed by Congress in October 2001, after the terrorist attacks of September 11 on the World Trade Center and the Pentagon. It greatly expanded the power of federal law enforcement authorities to move against suspected terrorists.

Know Your Customer

Anti-money laundering policies and procedures used to determine the true identity of a customer and the type of activity that is "normal and expected," and to detect activity that is "unusual" for a particular customer.

Regulation NMS (National Market System)

Improves market transparency and execution; includes Order Protection Rule to avoid inferior pricing

What does the Order Protection Rule prohibit?

A trade-through

What is a trade-through?

A trade taking place for a customer order at a price that does not represent the best price available at that time.

Rule 605 & 606

Requires brokers to disclose order execution quality and routing practices by publishing reports on how they handle orders

Rule 147 / Rule 147A

Allows intrastate securities offerings—must be sold only to residents of the issuer's state

Regulation Crowdfunding

Allows small businesses to raise up to $5M from the public online, with limits on investor contributions

Rule 506(c) of Reg D

Allows general advertising in private placements—but only verified accredited investors can buy

FINRA Rule 4512

Requires firms to maintain customer account records (name, DOB, investment profile, etc.)

FINRA Rule 4530

Requires firms to report violations, complaints, legal issues, and internal reviews to FINRA

FINRA Rule 4370

Requires firms to create and maintain a written business continuity plan (BCP) that addresses an emergency or serious business disruption and how the firm plans to respond to such.

Rule 1250 - Continuing Education

Registered reps must complete Firm Element and Regulatory Element training regularly

Firm Element and Regulatory Element

regulatory element: keeping up to date with rules, regulations and ethical standards

firm element: address specific training needs

Rule 2040 - Political Contributions (Pay-to-Play)

prohibits members and associated persons from making political contributions to government officials or candidates in exchange for business from government entities

Rule 12b‑1

Allows mutual funds to charge marketing and distribution fees (12b‑1 fees)

Rule 22c‑1

NAV of mutual funds must be calculated daily and trades executed at next calculated NAV

Rule 18f‑1

Permits mutual funds to offer multiple share classes within the same fund

Rule 30b1‑5

Mutual funds must report monthly portfolio holdings to the SEC (Form N‑PORT)

Form N‑CSR

Filed semiannually by mutual funds to disclose financial reports and shareholder commentary

Rule 17a‑3 & 17a‑4

Requires broker-dealers to maintain and preserve books and records (orders, trades, account info)

SEC Rule 204-2

Investment advisers must keep all client communications, ads, and agreements for at least 5 years

Rule 10b5‑1 Plans

Pre-arranged trading plans that allow insiders to sell stock legally without violating insider trading laws

Regulation SHO

Governs short sales; includes locate and close-out rules to prevent abusive shorting.

Rule 17g-5

Ensures transparency and independence in credit rating agencies' methodology

ERISA (Employee Retirement Income Security Act)

Sets standards for retirement plans — fiduciary duty, funding, and disclosure

Uniform Securities Act

Model act that state securities laws are based on. Designed to prevent fraud and maintain faith in capital markets through registration of securities, agents, broker-dealers, and investment advisers. Main purpose is to provide necessary protection to investors.

Form CRS (Customer Relationship Summary)

Firms must ensure delivery of this whenever they offer a new type of account or strategy to a customer.

Rule 206(4)-1

Governs advertising by investment advisers — prohibits misleading performance claims and no testimonials

Rule 204A‑1

Advisers must maintain Codes of Ethics and report personal securities transactions

Regulation SCI

Requires critical market participants to maintain robust IT systems and incident response plans

CAT (Consolidated Audit Trail)

SEC rule requiring comprehensive tracking of all equity and options orders across markets

Rule 13f‑1

Requires institutional investors with $100M+ AUM to file quarterly holdings reports

Regulation ATS

Governs Alternative Trading Systems, like dark pools, to ensure fair access and disclosure

MSRB Rule G‑37

Municipal advisors cannot do business with issuers for 2 years after political contributions

volcker rule

A federal regulation that prohibits banks from conducting certain investment activities with their own accounts, and limits their ownership of and relationship with hedge funds and private equity funds, also called covered funds.

SEC Rule 15Ba1-1

Regulation that requires municipal advisors to register with the SEC and comply with standards of conduct.