A.4 Financial services regulations and requirements Flashcards
(14 cards)
Which of the following regulatory bodies oversees the securities industry in the United States?
A) Federal Deposit Insurance Corporation (FDIC)
B) Securities and Exchange Commission (SEC)
C) Commodity Futures Trading Commission (CFTC)
D) National Credit Union Administration (NCUA)
Securities and Exchange Commission (SEC)
Explanation: The SEC is responsible for regulating the securities industry in the United States.
A.4 Financial services regulations and requirements
The Gramm-Leach-Bliley Act requires financial institutions to:
A) provide consumers with privacy notices
B) disclose fees for services
C) report suspicious activities to law enforcement
D) maintain adequate capital levels
Provide consumers with privacy notices
Explanation: The Gramm-Leach-Bliley Act requires financial institutions to provide consumers with privacy notices describing how they collect, use, and share personal information.
A.4 Financial services regulations and requirements
Which of the following is not a requirement of the Bank Secrecy Act?
A) Reporting cash transactions over $10,000
B) Monitoring customer accounts for suspicious activity
C) Conducting background checks on employees
D) Providing consumer privacy notices
Providing consumer privacy notices
Explanation: The Bank Secrecy Act requires financial institutions to report cash transactions over $10,000, monitor customer accounts for suspicious activity, and conduct background checks on employees.
A.4 Financial services regulations and requirements
Under the USA PATRIOT Act, financial institutions are required to:
A) Report suspicious activity to law enforcement
B) Maintain adequate capital levels
C) Provide consumers with privacy notices
D) Disclose fees for services
Report suspicious activity to law enforcement
Explanation: The USA PATRIOT Act requires financial institutions to report suspicious activity to law enforcement to help prevent money laundering and terrorist financing.
A.4 Financial services regulations and requirements
Which of the following is not a requirement of the Fair Credit Reporting Act?
A) Providing consumers with free credit reports
B) Disclosing information about credit decisions to consumers
C) Reporting accurate information to credit bureaus
D) Providing consumers with privacy notices
Providing consumers with privacy notices
Explanation: The Fair Credit Reporting Act requires financial institutions to provide consumers with free credit reports, disclose information about credit decisions to consumers, and report accurate information to credit bureaus.
A.4 Financial services regulations and requirements
Which of the following is not a requirement of the Securities Act of 1933?
A) Registration of securities offerings
B) Disclosure of material information to investors
C) Prohibition of insider trading
D) Regulation of investment advisers
Regulation of investment advisers
Explanation: The Securities Act of 1933 requires the registration of securities offerings, disclosure of material information to investors, and prohibition of insider trading.
A.4 Financial services regulations and requirements
Which of the following is not a requirement of the Investment Advisers Act of 1940?
A) Registration of investment advisers
B) Disclosure of conflicts of interest
C) Prohibition of insider trading
D) Filing of annual reports
Prohibition of insider trading
Explanation: The Investment Advisers Act of 1940 requires the registration of investment advisers, disclosure of conflicts of interest, and filing of annual reports.
A.4 Financial services regulations and requirements
The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in response to:
A) The 2008 financial crisis
B) The savings and loan crisis of the 1980s
C) The dot-com bubble of the late 1990s
D) The Enron scandal
The 2008 financial crisis
Explanation: The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in response to the 2008 financial crisis.
A.4 Financial services regulations and requirements
Which of the following is not a requirement of the Bank Holding Company Act?
A) Regulation of bank holding company acquisitions
B) Limitations on nonbanking activities of bank holding companies
C) Regulation of commercial bank lending practices
D) Regulation of capital adequacy of bank holding companies
Regulation of commercial bank lending practices
Explanation: The Bank Holding Company Act regulates the activities of bank holding companies, including their acquisitions and nonbanking activities, as well as the capital adequacy of such companies. However, the Act does not regulate commercial bank lending practices.
A.4 Financial services regulations and requirements
An investment adviser receives a $10,000 bonus for recommending a particular investment to a client. Which of the following regulations has been violated?
A) Bank Secrecy Act
B) Investment Advisers Act of 1940
C) Securities Act of 1933
D) Fair Credit Reporting Act
Investment Advisers Act of 1940
Explanation: The investment adviser has violated the Investment Advisers Act of 1940 by failing to disclose the conflict of interest created by the bonus
A.4 Financial services regulations and requirements
A bank has provided a loan to a customer for a real estate project. The customer is behind on the loan payments and the bank is considering foreclosing on the property. Which of the following regulations requires the bank to provide the customer with notice and an opportunity to cure the default before foreclosing?
A) Bank Secrecy Act
B) Fair Credit Reporting Act
C) Fair Debt Collection Practices Act
D) Truth in Lending Act
Fair Debt Collection Practices Act
Explanation: The Fair Debt Collection Practices Act requires the bank to provide the customer with notice and an opportunity to cure the default before foreclosing.
A.4 Financial services regulations and requirements
A brokerage firm has received a large deposit from a customer in cash. Which of the following regulations requires the brokerage firm to file a report with the Financial Crimes Enforcement Network (FinCEN)?
A) Gramm-Leach-Bliley Act
B) Securities Act of 1933
C) Bank Secrecy Act
D) Investment Advisers Act of 1940
Bank Secrecy Act
Explanation: The Bank Secrecy Act requires financial institutions, including brokerage firms, to report cash transactions over $10,000 to FinCEN.
A.4 Financial services regulations and requirements
A credit card issuer has increased the interest rate on a customer’s account without providing notice or a reason for the increase. Which of the following regulations has been violated?
A) Fair Credit Reporting Act
B) Truth in Lending Act
C) Fair Debt Collection Practices Act
D) Investment Advisers Act of 1940
Truth in Lending Act
Explanation: The Truth in Lending Act requires credit card issuers to provide notice and a reason for any interest rate increases.
A.4 Financial services regulations and requirements
A customer has filed a complaint with a financial institution regarding an error on their account. The financial institution has investigated the complaint and determined that no error occurred. Which of the following regulations requires the financial institution to provide the customer with a written explanation of the investigation results?
A) Gramm-Leach-Bliley Act
B) Truth in Savings Act
C) Fair Credit Reporting Act
D) Electronic Funds Transfer Act
Electronic Funds Transfer Act
Explanation: The Electronic Funds Transfer Act requires financial institutions to provide customers with a written explanation of the investigation results when a complaint is filed regarding an error on an electronic funds transfer.
A.4 Financial services regulations and requirements
