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.
