Chapter 3 - Regulation of Broker-Dealers Flashcards Preview

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Flashcards in Chapter 3 - Regulation of Broker-Dealers Deck (19):

Broker-dealers and their agents get paid when ______ is completed

A transaction


A broker acts as a go-between for two parties interested in making a __________ for their accounts



A dealer sells clients securities from their _________

own account


Exceptions to registering as a broker or dealer

- an agent (employee of a broker-dealer)
- an issuer
- a bank, savings institution or trust company
- the issuer of securities involved in the transaction
- other broker-dealers (people only dealing with other broker-dealers)
- institutional investors


Broker-dealer registration quick facts

- if you have an office in that state you must register
- don't have to register if you don't have an office in that state and only have institutional clients
- do have to register if you don't have an office in the state but do have even one non-institutional client


An institutional investor must fit into one of the following categories:

- bank, savings institution, or trust company
- insurance company
- investment company
- broker-dealer
- pension or profit-sharing trust
- another financial institution or institutional buyer


Subsidiaries of bank holding companies that effect securities transactions with the public must _________ as broker-dealers



Commercial banks are ________ from having to register as broker-dealers



Canadian broker-dealers do not have to register if they don't have an office in the state and:

- client is from Canada, had previous relationship with the firm and is just visiting the state
- client is engaging in transactions for a self-directed tax advantaged retirement plan held in Canada
- client is an institutional investor


Agents can use a limited registration if from a Canadian broker-dealer, would have to:

- file application
- file consent to service of process
- provide evidence of good standing
- proof of membership in a Canadian SRO
- make records available
- inform admin of any criminal history
- disclose Canadian origin to clients
- pay a filing fee


Broker-dealers are almost ______ required to file federally

Always. Only exception is when all transactions will be made within one state (which is rarely the case)


To register, a broker-dealer uses Form _____

Form BD.


Registration of a broker-dealer becomes effective at _____ on the ______ after application is filed.

Noon on the 30th


Admin has _____ days to initiate a hearing

90 days


Broker-dealer must also register with the appropriate _______ and ________

SRO and Securities Investor Protection Corporation (SIPC)


Broker-dealers are subject to net capital requirements. T/F

True and state cannot make them meet requirements that are above the SEC requirements


Post-registration requirements for broker-dealers are:

- financial reports, must update inaccurate reports
- record keeping (client records and marketing lit for 3 years, first two in a an easily accessible place / some records for 6 years)
- audits can happen at any time
- bond or insurance required for broker-dealers with custody or authority


NSMIA says that a state cannot require net capital requirements, bonding, custody or reporting/record keeping above that of the ______ requirements



Termination of a broker-dealer for the following reasons:

- denial in the public interest
- revocation for public harm
- suspension for less serious infractions
- withdrawal (use Form BDW, effective after 30 days but under jurisdiction for the next year)
- restriction/limitation to operate only in certain capacities