regulatory entities Flashcards
(22 cards)
Securities act of 1933
requires issuers to disclose all material company information to protect investors from fraud
securities exchange act of 1934
regulates the securities in the secondary market. Issuers are required to disclose pertinent information to the sale of their securities and file periodic reports.
investment advisers act of 1940
limits advertising investment advisers are allowed to engage in
it prohibits advertising that is fraudulent, deceptive, or manipulative
designates accredited investors and qualified clients
accredditied investor
an individual or couple with a net worth over 1 million or who earned over 200/300 k in the previous year
qualified client
a sophisticated investor who meets specific thresholds designated by the SEC.
1. assets under management totaling 1.1m with the investment adviser immediately after entering into an advisory contract
2. a net worth of at least 2.2m which the investment advisor reasonably believes is in excess of that amount immediately prior to entering into the advisory contract
who can investment advisors charge fees to?
only accredited investors and qualified clients
investment company act of 1940
regulates the organization of companies primarily dealing with securities and whose own securities are sold to the public.
investment companies must disclose their financial condition and investment policies to investors
SEC requires 85% of investment company assets to be in liquid securities that have readily available market prices
what are the Self regulatory Organizations (SROs)
FINRA, stock exchanges including the NYSE or the chicago board options exchange (CBOE), Municipal securities regulatory board (MSRB)
NYSEng
the largest stock exchange in the world created in 1972
Chicago Board options Exchange
the largest options exchange in the world created in 1973 where investors can trade in put and call options on etfs, publicly traded stocks, and exchange traded notes
FINRA
supervised by the SEC and is a not for profit organization that oversees US broker-dealers
municipal securities regulatory board (MSRB)
writes and enforces rules and procedures for investment firms and banks who sell municipal bonds, notes, adn securities
municipal bonds
exempt from federal taxes and interest paid on the bonds is tax free
US treasury
established in 1789 to oversee the IRS, the US mint, and bureau of engraving and printing
FinCEN
the financial crimes enforcement network (FinCEN) was created in 2014 to enforce the currency and foreign transaction reporting act of 1970 that requires US financial institutions to assist government agencies with detecting and proventing money laundering
Currency transaction Report (CTR)
required by FinCEN for any bank transaction of $10,000 or more or multiple transactions in a single day
the federal reserve
created by congress in1913 to regulate banks, maintain stability of the financial system, and provide financial services to depository institutions
when the fed wants to stimulate economic activity
they increase the money supply to increase inflation and lower interest rates
if the fed wants to slow the economy
they can shrink the money supply to lower inflation and increase interest rates
state regulators
provides education to the public and tries to protect investors like FINRA
one example is North American Securities Administrators Association (NASAA)
Securities investors protection corporation (SIPC)
created in 1970 to restore trust in the securities industry
elligible investors are isured by SIPC for up to $250,00 in cash in their brokerage accounts in case of brokerage failure
