SIE Section 1: Capital Markets

What is FINRA?

Self regulatory organization for the securities industry

What is an SRO?

Self-Regulatory Organization

What are the boundaries of an Accredited investor?

1,2,3 Net worth of $1,000,000 exclusive of primary residence 200,000 w. expectation of making again 300,000 w. partener

Suspicious Activity Report (SAR)

A report that must be filed whenever a firm suspects that transactions of $5000 or more may be related to illegal activities

What is rule G-37?

About campaign contributions. You have to be able to vote if you are going to give a contribution. If you are, you can not give more than $250 per election cycle.

What are the three types of investors?

Accredited, Retail, and Institutional

What is the Banks Secrecy Act trying to prevent?

Anti-Money Laundering

QIB?

Qualified Institutional Buyer, allowed to buy foreign and domestic unregistered securities

What is the Primary Market?

Receiving securities directly from the issuer, ex: getting securities directly from Walmart

Securities Investor Protection Corporation (SIPC)

Broker Dealers have fiscal responsibility rules. If not followed, SIPC will liquidate the firm and protect the customer up to $500,000. Can not be more than $250,000 cash.

What is the Act of 1934? (People and Places Act)

Creates the SEC

What is the Uniform Practice Code?

Enforces all those in the securities industry to follow the same procedures

What is the Code of Conduct?

Enforces the practice of ethical behavior in the sec. industry

What is the biggest example of an SRO?

FINRA

FINCEN

Financial Crimes Enforcement Network, Founded by the Department of Treasury

What is the Act of 1933 (Prospectus and Paper Act)?

If there are new securities being sold to the public, they must be registered beforehand

What is the Code of Procedure?

It handles trade practice complaints.

What is the Code of Arbitration? Who is it under?

It is under FINRA. Used to settle civil disputes and is the final word.

What is the third market?

Listed securities trading over the counter ex: trading

What will QIBs invest in?

PIPES

What are the three stages of Anti-Money laundering?

Placement, Layering, Integration (PLI)

What does PIPES stand for?

Private Investment in Public Company ex: unregistered stock (means private investment) in public company

What is the SEC?

Regulation organization which protects against fraud, deception and insider trading of the stock market

What are blue sky laws?

State regulation of the sale of securities to protect investors against fraud

What is the MSRB?

The SRO for firms that transact business in municipal securities. Writes the rules and regulations that are enforced by other regulatory entities.

what is a prime broker?

also a clearing firm, but provide custody and financing for a hedge fund

What are accredited investors?

an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities.

what are the three issuers?

corporations, municipalities, and US Gov

Banks Secrecy Act

gives banks the cover to send documents to the department of treasury, ex: if you are sending a cash transaction (CTR) of $10,000 or more, you need to file a CTR with FINCEN

What is the secondary market?

previous owner receives the proceeds

FDIC (Federal Deposit Insurance Corporation)

protects depositors of insured banks located in the United States against the loss of their deposits if an insured bank fails up to $250,000

private placement reg D

unregistered investment offerings limited to a small pool of investors (Accredited and institutions) and not open to the general investing public.