CCM Enforcement Actions & Penalties 3

Question 1

Under the Sarbanes-Oxley Act (SOX), an officer who certifies financial statements knowing they are materially misleading faces a maximum criminal fine of:

Accepted Answer

$5 million and/or 20 years imprisonment

Answer

SOX Section 906 provides that willful false certifications carry a maximum penalty of $5 million in fines and/or 20 years imprisonment.

Question 2

The 'disgorgement' remedy in SEC enforcement actions is intended to:

Accepted Answer

Strip the violator of ill-gotten gains to prevent unjust enrichment

Answer

Disgorgement requires a violator to return profits obtained through illegal conduct, preventing unjust enrichment rather than providing additional punishment.

Question 3

A 'prompt corrective action' (PCA) framework under federal banking law primarily applies to:

Accepted Answer

Undercapitalized depository institutions

Answer

PCA is a statutory framework requiring regulators to take increasingly severe supervisory actions as a bank's capital ratios decline.

Question 4

Which principle guides a compliance officer in determining whether to self-report a potential violation to regulators before an examination discovers it?

Accepted Answer

Self-reporting may mitigate penalties and demonstrates good faith, but does not eliminate liability

Answer

Voluntary self-disclosure typically results in reduced penalties and reflects positively on a firm's compliance culture, but liability is not eliminated.

Question 5

An 'industry bar' imposed by FINRA prohibits a securities professional from:

Accepted Answer

Associating with any FINRA member firm in any capacity

Answer

A FINRA industry bar is the most severe sanction, permanently or for a defined term prohibiting the individual from associating with any FINRA member firm.

(CCM) Certified Compliance Manager Practice Test

(CCM) Certified Compliance Manager Practice Test

CCM Enforcement Actions & Penalties 3