Investment Jobs Investment Compliance Test

Question 1

Under the SEC's Regulation Best Interest (Reg BI), broker-dealers must act in whose best interest when making recommendations?

Accepted Answer

The retail customer's best interest at the time the recommendation is made

Answer

The broker-dealer's shareholders

Answer

The clearing firm's interest

Answer

The issuer of the recommended security

Question 2

What is the primary purpose of the Bank Secrecy Act (BSA) in the investment industry?

Accepted Answer

To require financial institutions to assist government agencies in detecting and preventing money laundering

Answer

To regulate cross-border securities transactions

Answer

To protect bank customer deposit information from disclosure

Answer

To regulate bank investment in securities

Question 3

What is 'insider trading' under US securities law?

Accepted Answer

Trading securities based on material, non-public information in breach of a duty

Answer

Trading by employees of the company whose stock is traded

Answer

Trading before market open using pre-market data

Answer

Institutional block trades executed off-exchange

Question 4

What is a 'Chinese Wall' (information barrier) in financial services compliance?

Accepted Answer

Policies and procedures designed to prevent the flow of material non-public information between departments

Answer

Firewall software protecting trading systems from cyberattacks

Answer

Physical separation of trading floors

Answer

Regulations limiting foreign investment in US securities

Question 5

Which rule requires investment advisers to adopt a code of ethics that sets standards of conduct and requires reporting of personal securities transactions?

Accepted Answer

SEC Rule 206(4)-7

Answer

SEC Rule 10b-5

Answer

SEC Rule 17a-4

Answer

FINRA Rule 3110

Question 6

What does AML (Anti-Money Laundering) compliance require investment firms to implement?

Accepted Answer

Customer identification programs, transaction monitoring, and suspicious activity reporting

Answer

Daily reporting of all transactions to the SEC

Answer

Quarterly audits by independent firms

Answer

Annual stress tests of liquidity reserves