Regulations: Securities Exchange Act of 1934
All of the following individuals would be considered an insider EXCEPT: A - A person who uses public information to trade in that company's stock for a profit B - A person who uses non-public information to trade in that company's stock for a profit C - A Chairman of a corporation who uses non-public information to trade in that company's stock for a profit D - A wife of a Chairman of a corporation who uses non-public information to trade in that company's stock for a profit
A - A person who uses public information to trade in that company's stock for a profit
An officer of a company has been invited by a large mutual fund company to give a talk to the fund company's analysts about its business plans and prospects. At the talk, the officer inadvertently discloses material information that could affect the stock's price. Which statement is TRUE? A - A public announcement of the news must be made within 24 hours B - A public announcement of the news must be made within 10 business days C - A public announcement of the news must be made within 5 business days D - No public announcement of the news is required
A - A public announcement of the news must be made within 24 hours
Who is NOT required to be fingerprinted at a broker-dealer? A - Administrative assistant B - Accounting supervisor C - Registered representative D - Registered principal
A - Administrative assistant
The Securities Exchange Act of 1934 regulates trading of all of the following EXCEPT: A - Commodities Futures B - Options C - Corporate Bonds D - Corporate Stock
A - Commodities Futures
When is a foreign broker-dealer permitted to solicit U.S. based clients? A - If the foreign broker-dealer establishes an SEC-registered U.S. subsidiary B - If the foreign broker-dealer only offers exempt securities C - If the foreign broker-dealer only deals with Non-U.S. citizens who are residing within U.S. borders D - If the foreign broker-dealer only deals with accredited individual investors
A - If the foreign broker-dealer establishes an SEC-registered U.S. subsidiary
All of the following publicly held issuers must report to the SEC under the Securities Exchange Act of 1934 EXCEPT: A - Municipalities B - Unit investment trusts C - Mutual funds D - Corporations
A - Municipalities
The director of a public corporation wishes to sell stock of that company in compliance with Rule 144. Which statement is FALSE? A - Registered control stock must be held for 6 months, fully paid, before it can be sold B - Unregistered restricted stock must be held for 6 months, fully paid, before it can be sold C - If the sale is for 5,000 shares or less, worth $50,000 or less, no SEC filing is required D - Any short swing profits (within 6 months) from trading the stock must be returned to the corporation
A - Registered control stock must be held for 6 months, fully paid, before it can be sold
All of the following are covered under the Securities Exchange Act of 1934 EXCEPT: A - Registration of new issues B - Stabilization of new issues C - Registration of exchanges D - Registration of broker/dealers
A - Registration of new issues
The provisions of the Securities Exchange Act of 1934 cover all of the following activities EXCEPT: A - Trading rules for exempt securities B - Trading rules for non-exempt securities C - Anti-fraud provisions for exempt securities D - Anti-fraud provisions for non-exempt securities
A - Trading rules for exempt securities
All of the following statements are true about listed securities EXCEPT: A - listed securities trade in the Second Market B - under Regulation T, all listed securities are marginable C - listed securities are subject to Regulation SHO D - listed companies must be registered with, and report their results to, the SEC
A - listed securities trade in the Second Market
Under Rule 10b-5-1, pre-arranged trading plans by insiders are: A - permitted only if the provisions cannot be altered during the plan's life B - permitted only if the plan has been voted on and agreed to by the majority of disinterested shareholders C - given a safe harbor to officers and directors against an "insider trading" under all circumstances D - given a right of rescission for any trades that are deemed to be a violation of the insider trading rules
A - permitted only if the provisions cannot be altered during the plan's life
Under the "penny stock rule," a customer is considered to be "established" and does not have to sign a suitability statement to buy a penny stock if that customer has bought how many penny stock issues previously from that broker-dealer? A - 2 B - 3 C - 5 D - 10
B - 3
Margins on government and municipal securities are set by (the): A - MSRB B - FINRA C - FRB D - SEC
B - FINRA
A registered representative solicits a new customer to purchase a "penny stock." Prior to effecting the transaction, which procedure is required? A - Have the customer sign a letter of intent B - Prepare and have the customer sign a suitability statement C - Have the branch manager approve the initial order and then fill the order in the same manner as with any other security D - No special procedures are required
B - Prepare and have the customer sign a suitability statement
Issuers that wish to give "earnings guidance" to research analysts must conform with the provisions of SEC: A - Regulation SB B - Regulation FD C - Regulation SK D - Regulation SP
B - Regulation FD
The Securities and Exchange Commission was created by the: A - Securities Act of 1933 B - Securities Exchange Act of 1934 C - Trust Indenture Act of 1939 D - Investment Company Act of 1940
B - Securities Exchange Act of 1934
Under Federal law, stock may NOT be tendered from which of the following accounts? A - Restricted margin account B - Short margin account C - Long margin account D - Cash account
B - Short margin account
Which statement is FALSE about stabilizing bids? A - A stabilizing bid is placed by the syndicate manager B - Stabilization is permitted during the 20-day cooling off period C - Only 1 stabilizing bid is permitted at any time D - A stabilizing bid can be placed at or below the Public Offering Price
B - Stabilization is permitted during the 20-day cooling off period
An officer of a listed company calls his registered representative and tells him to buy a large block of that stock. Prior to placing the order to buy, the registered representative calls ten of his customers and tells them to buy that company's stock. Which statement is TRUE? A - This action is permitted under SEC rules B - This action is a violation of the insider trading rules C - This action is an ethical business practice D - This action is beneficial to the customer, and thus is allowed
B - This action is a violation of the insider trading rules
A "penny stock" is a designation that applies to a: A - debt security B - equity security C - long call option D - mutual fund share
B - equity security
SEC Rule 10b-5-1: A - is the "catch all" fraud rule that makes any deceptive or manipulative practice in connection with the sale of a security potentially fraudulent under the Securities Exchange Act of 1934 B - gives officers of publicly held companies a safe harbor from being charged with an insider trading violation if they establish a pre-arranged trading plan for that issuer's securities C - prohibits the purchase or sale of an issuer's securities based on material nonpublic information in breach of duty of trust owed to the issuer or shareholders of that security D - prohibits any person, in connection with a tender offer for securities, to bid for or purchase the security which is subject of the tender offer through any means other than via the offer
B - gives officers of publicly held companies a safe harbor from being charged with an insider trading violation if they establish a pre-arranged trading plan for that issuer's securities
A broker-dealer may hold fully paid customer securities: A - when authorized in writing by the customer B - if the securities are segregated and held in safekeeping C - if the firm notifies the customer every 3 months as to the amount of securities and the fact that they are "not segregated" D - only if the customer is traveling
B - if the securities are segregated and held in safekeeping
SEC Regulation FD covers: A - notification to customers of a member firm's privacy policies and practices B - selective disclosure of material non-public information by issuers C - standardization of disclosure of financial and non-financial information by issuers D - registration filings with the SEC by small business issuers
B - selective disclosure of material non-public information by issuers
The civil penalty for being found guilty of insider trading is: A - double damages B - treble damages C - quadruple damages D - quintuple damages
B - treble damages
An investor who accumulates a 5% or greater position in the common stock of a registered issuer must file which of the following forms with the SEC? A - 8K B - 10K C - 13D D - 144
C - 13D
Under Regulation M, which statement is TRUE regarding stabilizing bids entered by market makers? A - Stabilizing bids may only be maintained for 5 consecutive business days B - Stabilizing bids may be maintained by multiple market makers C - A stabilizing bid cannot be placed unless a "Notice of Stabilization" is included in the prospectus D - A stabilizing bid cannot be placed unless an "Official Notice of Sale" is published in a national publication
C - A stabilizing bid cannot be placed unless a "Notice of Stabilization" is included in the prospectus
Who is NOT required to be fingerprinted at a broker-dealer? A - Registered representative B - Cage clerk C - ACATs clerk D - Registered principal
C - ACATs clerk
The Chairman of XYZ Corporation, while playing golf with a neighbor, casually mentions that this quarter's earnings are likely to be lower than expected. Based on this information, the neighbor sells short XYZ stock the next day. Which statement is TRUE? A - Only the Chairman has violated insider trading rules B - Only the neighbor has violated insider trading rules C - Both the neighbor and the Chairman have violated insider trading rules D - Neither the Chairman nor the neighbor has violated insider trading rules
C - Both the neighbor and the Chairman have violated insider trading rules
An issuer is required to make an 8K filing with the SEC for all of following events EXCEPT: A - Election of new members of the Board of Directors B - Declaration of bankruptcy C - Declaration of a cash dividend D - Proposal of a merger with another corporation
C - Declaration of a cash dividend
All of the following statements are true about a tender offer for common shares EXCEPT: A - The offer must remain open for at least 20 business days B - Each "sweetening" of the offer must extend the offer for an additional 10 business days C - During the life of the offer, the issuer can buy the stock in the market in addition to buying shares via the offer D - During the life of the offer, any subscribing investors' shares that are tendered are held in escrow pending the outcome of the offer
C - During the life of the offer, the issuer can buy the stock in the market in addition to buying shares via the offer
Which statement is TRUE about a tender offer for common shares? A - The offer must remain open for at least 10 business days B - The offer must remain open for at least 30 business days C - Each "sweetening" of the offer must extend the offer for an additional 10 business days D - Each "sweetening" of the offer must extend the offer for an additional 20 business days
C - Each "sweetening" of the offer must extend the offer for an additional 10 business days
Which statement is FALSE regarding a broker-dealer holding margin and fully paid securities? A - Margin securities can be commingled with the securities of other customers and rehypothecated B - Margin securities are hypothecated by the customer to the broker dealer C - Fully paid securities can be commingled with the securities of other customers and rehypothecated D - Margin securities are often lent to short sellers
C - Fully paid securities can be commingled with the securities of other customers and rehypothecated
Stabilization rules for new issues are: A - set by FINRA B - covered under the Securities Act of 1933 C - covered under the Securities Exchange Act of 1934 D - covered under the Securities Investor Protection Act of 1970
C - covered under the Securities Exchange Act of 1934
The provisions of the Securities Exchange Act of 1934 apply to all of the following activities EXCEPT: A - trading of corporate bonds B - trading of municipal bonds C - issuance of municipal bonds D - issuance of corporate financial statements
C - issuance of municipal bonds
The Self Regulatory Organizations (SROs) are: A - private companies B - government sponsored enterprises C - membership organizations D - publicly traded companies
C - membership organizations
If a person is convicted of insider trading: A - the amount of any profit achieved or loss avoided must be paid B - two times the amount of any profit achieved or loss avoided must be paid C - payments are made to the Department of Treasury D - payments are made to the Securities and Exchange Commission
C - payments are made to the Department of Treasury
Pre-arranged trades by insiders are: A - prohibited B - permitted under Rule 10b-5 C - permitted under Rule 10b-5-1 D - permitted under Regulation FD
C - permitted under Rule 10b-5-1
Broker-dealers are required to report their computed Net Capital to customers: A - monthly B - quarterly C - semi-annually D - annually
C - semi-annually
Which of the following CANNOT be a stabilizing bid for a new issue that has a Public Offering Price of $30 per share? A - $29.00 B - $29.88 C - $30.00 D - $30.13
D - $30.13
If an event occurs which requires an issuer to make an 8K filing with the SEC, the filing must be made: A - promptly B - 1 business day after the event C - 2 business days after the event D - 4 business days after the event
D - 4 business days after the event
Municipal market participants are subject to which of the following? A - Indenture requirements of the Trust Indenture Act of 1939 B - Issuer reporting requirements under the Securities Exchange Act of 1934 C - Prospectus delivery rules under the Securities Act of 1933 D - Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934
D - Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934
The anti-fraud provisions of the Securities Exchange Act of 1934 do NOT apply to: A - Individuals trading exempt securities B - Individuals trading non-exempt securities C - Broker-dealer firms trading exempt securities D - Broker-dealer firms trading commodities
D - Broker-dealer firms trading commodities
Under the provisions of the Securities Exchange Act of 1934, which of the following are NOT required to be registered? A - The exchanges that trade securities B - Member firms C - Sales employees of member firms D - Clerical employees of member firms
D - Clerical employees of member firms
All of the following requires filing with the SEC EXCEPT: A - Purchase of a 5% position in one company's stock B - An officer selling 1% of that company's stock C - Corporation declaring bankruptcy D - Corporate marketing materials
D - Corporate marketing materials
All of the following are provided to shareholders in the annual reports of registered corporations EXCEPT: A - Income Statement B - Balance Sheet C - Statement of Changes in Stockholders' Equity D - Details regarding new product launches
D - Details regarding new product launches
An information barrier must be put in place between: A - Human Resources and Retail Sales B - Compliance and Institutional Sales C - Human Resources and Compliance D - Institutional Sales and Retail Sales
D - Institutional Sales and Retail Sales
Which statement is FALSE about listed securities? A - Under Regulation T, all listed securities are marginable B - Listed securities are subject to "Regulation SHO" C - Listed issuers must register any new issue offerings with the SEC D - Listed issuers must report their results to the FRB
D - Listed issuers must report their results to the FRB
The Securities Exchange Act of 1934 regulates all of the following markets EXCEPT: A - First market B - Second market C - Third market D - Primary market
D - Primary market
The Securities Exchange Act of 1934 regulates which of the following? A - Securities, Commodities, and Futures transactions B - Securities and Commodities transactions only C - Securities and Futures transactions only D - Securities transactions only
D - Securities transactions only
An officer of a company has been invited by a large mutual fund company to give a talk to the fund company's analysts about its business plans and prospects. At the talk, the officer inadvertently discloses material information that could affect the stock's price. Which statement is FALSE? A - The officer is considered to be a "tipper" B - The analysts are considered to be "tippees" C - The company must make an immediate public disclosure of the information to avoid insider trading liability D - The company must file a 10K with the SEC disclosing the information to avoid insider trading liability
D - The company must file a 10K with the SEC disclosing the information to avoid insider trading liability
Information barriers are required between which brokerage firm departments? A - Margin and Reorganization B - Research and Accounting C - Investment Banking and Payroll D - Trading and Investment Banking
D - Trading and Investment Banking
The Securities and Exchange Commission is empowered to administer all of the following Acts EXCEPT: A - Securities Act of 1933 B - Trust Indenture Act of 1939 C - Investment Company Act of 1940 D - Uniform Securities Act
D - Uniform Securities Act
All of the following actions require a filing with the SEC EXCEPT: A - the purchase of a 5% position in one company's stock B - an officer selling 1% of that company's stock C - a broker-dealer's net capital computation D - a company declaring a cash dividend to stockholders
D - a company declaring a cash dividend to stockholders
An officer of a publicly traded company is prohibited from all of the following actions EXCEPT: A - selling short the common stock of that company B - retaining a profit generated from the purchase and sale of the company's stock within a 6 month period C - trading that company's stock based upon material, non-public information D - exercising call options or pre-emptive rights on that issuer's stock
D - exercising call options or pre-emptive rights on that issuer's stock
All of the following statements are true regarding "insiders" EXCEPT: A - insiders are prohibited from selling short the stock of the related corporation B - insiders must report changes in their holdings to the SEC C - if a trade results from the receipt of inside information, the person that transmitted the inside information can be held liable D - insiders are prohibited from holding or exercising options on the related company's stock
D - insiders are prohibited from holding or exercising options on the related company's stock
The Securities Exchange Act of 1934 is MOST concerned with: A - registration of new issues B - registration of market participants C - prevention of fraud in the primary market D - prevention of fraud in the secondary market
D - prevention of fraud in the secondary market
All of the following must be sent to broker-dealer customers semi-annually EXCEPT a broker-dealer's: A - balance sheet B - subordinated loan amounts C - net capital computation D - securities inventory amounts
D - securities inventory amounts
