Notes 4 Flashcards
SEC 147 requirements for issuers
need 80% of assets, or 80% of revenue derived from that state
requirements to buy SEC 147 securities
Need either 100% of the partnership located in the state, have a principal office in the state. can’t have an organization that exists specifically to buy the security
are 529 plans paid with after tax or pre-tax?
after tax
What happens when fed does a repo?
buy securities, then sells them at later date
of people to be sent requirement for retail communication
at least 25
How to open a corporate account?
Individual needs to supply a corporate resolution authorizing one or more persons to open and operate account
What is the hypothecation agreement
allows BD to pledge customer’s securities to a bank as collateral for the customer’s margin loan. Requires the customer sign this agreement when the margin account is opened
Money market funds cannot contain __
stocks
What is Backing away
when BD fails to honor a quote it put into the market
Omnibus account
when a firm clearing trades for another firm is not given specific information regarding the introducing firm’s clients. The Introducing firms are required to establish and maintain records for omnibus accounts.
Trade surplus does what to currency?
Appreciates it, since exports > imports, people will want that currency to trade
Max criminal penalty for insider trading? How about max civil penalty?
Max criminal - $5MM fine or 20 years in prison
Civil - 3x amount gained or loss avoided
What is taxable for Muni bonds?
only capital gains, interest is tax free
Which economic theory believes govt. intervention is required for controlling economic growth?
Keynesian economic theory
What happens when corp sells its stock for above par value?
added to paid in capital / capital surplus
Who takes action for criminal activity against securities laws?
DOJ. SEC investigates it first though, DOJ only is involved if its a criminal matter
When sending a confirmation to a customer, a FINRA member must disclose
whether broker acted as principal or agent, amount of commission, time when trade was executed. doesn’t have to disclose whether the BD is an banker for the issuer of the security
Can a RR buy it’s employing BDs stock for a discretionary account?
Yes, but needs clients written approval
what is a discretionary account?
Client allows RR to trade on their behalf
Can a RR share in a client’s account?
Yes, but , must only take profits in proportion to his contribution. However, doesn’t need to contribute an equal amount into the account
What is a closing purchase? closing sale?
closing purchase is closing out an options position when you’re short (the seller). You cover the position by buying another option
Closing sale - you close out an options position when you sell it, if you’re in possession of it
Can father-in-law buy an IPO that a RR’s firm is an underwriter of?
Yes as long as its from another BD
What time frame felony’s need to be disclosed on a U4?
Any felony that has been committed, regardless of when it was
Options characteristics
Cannot get an extension of a margin call, cannot choose which securities be sold to meet margin call, and firm is not required to contact the customer when it sells securities in the acc
