Basic Definitions

Question 1

What does SEC stand for?

Answer 1

Securities & Exchange Commission

Question 2

What does SEC (Securities & Exchange Comisson) do?

Answer 2

Enforces federal securities laws as the top watchdog of the securities industry

Question 3

What does SRO stand for?

Answer 3

Self-regulatory organizatons

Question 4

SROs (Self-regulatory organizations)

Answer 4

Handle some of the day-to-day regulation and oversight of the securities business

Question 5

3 Main SROs (self-regulatory organizations(

Answer 5

Chicago Board Options Exchange (CBOE), Financial Industry Regulatory Authority (FINRA), Municipal Securities Rulemaking Board (MSRB)

Question 6

What does CBOE stand for?

Answer 6

Chicago Board Options Exchange

Question 7

CBOE (Chicago Board Options Exchange)

Answer 7

The world’s largest options exchange which is also tasked with regulating the options marketplace and options trading

Question 8

FINRA

Answer 8

Focuses on protecting investors through the registration and regulation of brokerage firms and their employees

Question 9

MSRB (Municipal Securities Rulemaking Board)

Answer 9

Regulates the municipal securities industry and all securities firms and professionals involved in the trading, underwriting, sales, and advising of municipal securities

Question 10

Treasury Dept

Answer 10

Federal gov department responsible for managing the finances (revenues and expenses) of the US government

Question 11

What does IRS stand for?

Answer 11

Internal Revenue Service

Question 12

What does FinCen (Financial Crimes Enforcement Network) do?

Answer 12

Works with banks and other financial institutions to prevent financial crimes, such as money laundering

Question 13

What does OFAC stand for?

Answer 13

Office of Foreign Assets Control

Question 14

OFAC (Office of Foreign Assets Control)

Answer 14

Maintains a list of persons, entities, and countries that the US is prohibited from doing business with

Question 15

FED (Federal Reserve)

Answer 15

Responsible for determining the amount of money in circulation to influence economic growth, inflation, unemployment, and currency exchange rates

Question 16

What are the Fed’s 3 main tools to achieve its goals?

Answer 16

Open market transactions, the discount rate, and reserve requirements

Question 17

What does SIPC stand for?

Answer 17

Securities Investor Protection Corporation

Question 18

SIPC (Securities Investor Protection Corporation)

Answer 18

A not-for-profit corporation that protects consumer brokerage accounts in the event that a broker-dealer goes bankrupt

Question 19

What does FDIC stand for?

Answer 19

Federal Deposit Insurance Corporation

Question 20

FDIC (Federal Deposit Insurance Corporation)

Answer 20

A US government corporation that insures customer bank deposits

Question 21

What type of accounts does SIPC (Securities Investor Protection Corporation) protect?

Answer 21

Brokerage accounts - stocks, bonds, mutual funds

Question 22

What type of accounts does the FDIC protect?

Answer 22

Bank accounts - checking and savings accounts

Question 23

NAASA (State regulators)

Answer 23

In addition to Federal regulation, each state has securities laws in place designed to protect the investing public

Question 24

What does NAASA stand for?

Answer 24

North American Securities Administrators Association

Question 25

What are state regulations often referred to as?

Answer 25

Blue sky laws

Question 26

Investors

Answer 26

The individuals, corporations, governments, and other entities that invest, purchase, and sell securities

Question 27

Retail Investors

Answer 27

Individuals who buy and sell securities for their own personal accounts

Question 28

What group of investors is typically granted the most protections from federal and state regulators?

Answer 28

Retail

Question 29

Institutional Investors

Answer 29

Large instituitions, such as mutual funds, banks, and insurance companies that trade securities for their investment portfolios

Question 30

Accredited Investors (and what can they can invest in)

Answer 30

Includes high-net worth individuals and institutions - permitted freely to invest in private placements (the securities of private companies that have not been registered with the SEC)

Question 31

What are broker dealers usually referred to as?

Answer 31

Brokerage firms

Question 32

What do brokerage firms do?

Answer 32

Trade securities for their own accounts or on behalf of their customers

Question 33

Who is the heart and soul of the securities business?

Answer 33

Broker dealers

Question 34

Issuer

Answer 34

Includes both corporations and governments that sell securities to raise capital

Question 35

Underwriter

Answer 35

A firm that helps an issuer market and sell securities to investors

Question 36

What is the stipulation that makes underwriting a bit risky?

Answer 36

Whatever the underwriter cannot resell, it owns and is financially liable for

Question 37

What is the role of an underwriter?

Answer 37

Buy the securities from the issuer and look to resell them to the public

Question 38

Investment Advisor

Answer 38

Any person or firm that provides securities-related advice to customers on a regular basis for a fee

Question 39

Municipal advisor

Answer 39

Any person or firm that provides advice to a municipal entity with respect to municipal-securities issuances or investments

Question 40

Market Maker

Answer 40

Firm that stands ready to buy and sell a specified number of shares of stock at public quoted price during normal market hours

Question 41

What do market makers help do?

Answer 41

Create liquidity in the market, allowing shares to be easily bought or sold

Question 42

Trader

Answer 42

Employee of broker-dealers and other financial institutions to conduct the actual trading of securities

Question 43

Custodian

Answer 43

Person responsible for managing another individual's account and making investment decisions for that person

Question 44

Trustee

Answer 44

An entity that is legally empowered to act in the best interest of bondholders by ensuring the issuer meets all its promises

Question 45

Transfer Agent

Answer 45

Maintains records regarding the transfer or exchange of securities between investors to ensure that ownership is properly assigned in each transaction