S-12 Regulatory Framework and Oversight

Question 1

Which US federal agency has primary regulatory authority over securities markets and broker-dealers?

Accepted Answer

The SEC (Securities and Exchange Commission)

Answer

FINRA

Answer

The Federal Reserve

Answer

CFTC

Question 2

What is the purpose of the Securities Exchange Act of 1934?

Accepted Answer

To regulate securities trading in secondary markets and broker-dealers

Answer

To regulate mutual fund companies

Answer

To establish federal income tax rules for investments

Answer

To create the Federal Deposit Insurance Corporation

Question 3

FINRA is best described as:

Accepted Answer

A self-regulatory organization (SRO) that oversees broker-dealers

Answer

A federal government agency

Answer

An insurance fund for securities accounts

Answer

A division of the Federal Reserve

Question 4

Under Regulation Best Interest (Reg BI), broker-dealers must act in whose best interest when making a recommendation?

Accepted Answer

The retail customer

Answer

The broker-dealer firm

Answer

The issuer of the security

Answer

The clearing firm

Question 5

Which legislation created the framework for regulating investment advisers in the United States?

Accepted Answer

The Investment Advisers Act of 1940

Answer

The Sarbanes-Oxley Act of 2002

Answer

The Securities Act of 1933

Answer

The Dodd-Frank Act of 2010

Question 6

What is the primary purpose of the Securities Investor Protection Corporation (SIPC)?

Accepted Answer

To protect customers if a brokerage firm fails financially

Answer

To guarantee investment returns

Answer

To regulate securities pricing

Answer

To insure against market losses