Chapter 11 - Federal Securities Acts Flashcards Preview

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Flashcards in Chapter 11 - Federal Securities Acts Deck (14):

All the securities regulations are aimed at 4 things

- all securities are properly registered
- investors have all the information they need to make a decision
- investment professionals and BDs must be properly authorized before working
- outline key ethical standards and practices


The Securities Act of 1933

- registration of securities and disclosures
- all issuing rules covered in the 79 (cooling off period, prospectuses, etc)


Exemptions to registration under the Act of 1933

- same as 79 list
- gov't securities, munis, bank securities, nonprofit, Reg A, Reg D, and Rule 147 Intrastate offerings


Securities Exchange Act of 1934 (The People Act)

- regulates those who sell securities to the public
- contains trading laws (including insider trading)
- Gives Federal Reserve Board the power to regulate margin requirements
- Created the SEC
- It allows securities exchanges to regulate themselves
- It allows BDs to regulate themselves


The Maloney Act of 1938 was an amendment to the Act of 1934, stating that

the OTC would be regulated by a national securities association (FINRA)


Trust Indenture Act of 1939

Applies to bond issues of more than $5m maturing in over 270 days


Investment Company Act of 1940

- regulates investment companies and their securities
- Covers mutual funds, UITs, and face value certificates
- requires them to register with the SEC
- must prepare a prospectus stating company's investment objectives and financial condition
- submit annual and semi-annual reports to the SEC
- obey all rules applicable to their fund type


An investment company must be _______ and at least ____ of its board must not be interested persons in the investment company

a domestic corporation and at least 40% must not be interested person


Investment Advisers Act of 1940

- requires registration of people and companies giving investment advice to the public for a fee


To fall under Advisers Act of 1940, must answer yes to the following three questions

1) do they provide investment advice? First and foremost is it advice on purchases, sales or mgmt of securities?
2) are they actually in the business of providing advice?
3) are they compensated for giving advice?


Specifically exempt under the Advisers Act of 1940 are

- BDs whose advise is incidental and are paid no additional comp for their advice
- Banks
- Advisers dealing only in gov't securities
- Publishers of general investment newsletters and books


Advisers with ____ or more in AUM must register on a _____ level

$110m in AUM must register on a federal


Advisers with less than ______ in AUM must register on the _____ level

$100m or less must register on the state level


For advisers with between ____ and ____ in AUM, can choose whether to register on the ____ or ____ level

between $100 and $100m in AUM can choose between state and federal level