SIE Regulatory Agencies, Securities Laws & Registration

Securities and Exchange Commission (SEC)

Federal government agency that enforces federal securities laws and oversees securities markets. | | • Regulates securities markets and market participants | • Oversees FINRA and the MSRB | • Protects investors and promotes fair markets | | REMEMBER: SEC = Federal regulator.

Financial Industry Regulatory Authority (FINRA)

Self-regulatory organization (SRO) overseeing member broker-dealers and registered representatives. | | • Writes and enforces member rules | • Administers qualification exams | • Conducts examinations and disciplinary actions | | REMEMBER: FINRA = Broker-dealer regulation.

Municipal Securities Rulemaking Board (MSRB)

Writes rules for municipal securities dealers and municipal advisors. | | • Does NOT enforce its own rules | • Enforcement generally by FINRA, SEC or bank regulators | • Protects investors and municipal entities | | REMEMBER: MSRB writes rules; others enforce.

SIPC vs. FDIC

SIPC: Protects customers if a SIPC-member brokerage fails and customer securities or cash are missing. | • Up to $500,000 total, including $250,000 cash limit | • Does NOT protect against market losses | | FDIC: Insures eligible bank deposits, generally $250,000 per depositor, per insured bank, per ownership category.

Securities Act of 1933

Regulates NEW securities offerings in the PRIMARY market. | | • Requires registration unless exempt | • Requires disclosures through a prospectus | • Designed to prevent fraud in new issues | | REMEMBER: 1933 = New issues.

Securities Exchange Act of 1934

Regulates SECONDARY markets and securities trading. | | • Created the SEC | • Regulates broker-dealers and exchanges | • Addresses market manipulation and insider trading | • Requires ongoing reporting by covered issuers | | REMEMBER: 1934 = Trading.

Investment Company Act of 1940

Regulates registered investment companies, including mutual funds, closed-end funds and UITs. | | • Addresses structure and operations | • Requires investor protections and disclosures | | REMEMBER: 1940 Investment COMPANY Act = Funds.

Investment Advisers Act of 1940

Regulates investment advisers under federal law. | | • Addresses adviser registration, conduct and disclosures | • Investment advisers generally owe fiduciary duties to clients | | REMEMBER: 1940 ADVISERS Act = Advisers.

Blue Sky Laws

STATE securities laws regulating securities offerings and securities professionals. | | • Designed to protect investors from fraud | • State securities administrators enforce them | • Some securities are exempt from state registration, but antifraud laws still apply | | REMEMBER: Blue Sky = State laws.

Form U4

Uniform Application for Securities Industry Registration or Transfer. | | • Used to register associated persons | • Includes employment and disclosure history | • Generally amended within 30 days after learning of a change; certain statutory disqualification events require faster updates | | REMEMBER: U4 = Registration.

Form U5

Uniform Termination Notice for Securities Industry Registration. | | • Filed when registered person leaves a firm | • Generally due within 30 days of termination | • Includes termination reason and required disclosures | | REMEMBER: U5 = Termination.

Rule 144

Provides a safe harbor for resale of restricted and control securities when conditions are met. | | • Restricted securities of reporting issuers generally require 6-month holding period | • Nonreporting issuers generally require 1 year | • Affiliates face additional restrictions | | REMEMBER: 144 = Resale restrictions.

Rule 144A

Provides a registration safe harbor for certain resales of restricted securities to Qualified Institutional Buyers (QIBs). | | • QIBs generally own and invest at least $100 million in eligible securities | • Helps provide liquidity for institutional private placements | | REMEMBER: 144A = Institutional resale.

Regulation D

SEC exemptions used for private securities offerings. | | • Rule 506(b): No general solicitation; permits accredited investors and up to 35 qualifying nonaccredited purchasers | • Rule 506(c): General solicitation allowed if all purchasers are accredited and status is verified | | REMEMBER: Reg D = Private placements.

Regulation FD

Fair Disclosure rule designed to prevent selective disclosure of material nonpublic information by covered public companies. | | • Requires broad public disclosure when applicable | • Intentional selective disclosure: Simultaneous public disclosure | • Unintentional: Prompt public disclosure | | REMEMBER: FD = Fair Disclosure.