Stock Jobs Stock Market Regulations and Compliance

Question 1

Which US government agency primarily regulates the securities industry?

Accepted Answer

Securities and Exchange Commission (SEC)

Answer

The SEC is the primary federal agency responsible for enforcing securities laws, regulating securities markets, and protecting investors in the United States.

Question 2

What is 'insider trading' and why is it illegal?

Accepted Answer

Trading securities based on material non-public information, which gives an unfair advantage

Answer

Insider trading involves buying or selling securities using material, non-public information, which undermines market fairness and investor confidence.

Question 3

What is FINRA and what role does it play?

Accepted Answer

A self-regulatory organization that oversees broker-dealers and their registered representatives

Answer

FINRA is a self-regulatory organization authorized by Congress to protect investors by ensuring broker-dealers operate fairly and honestly.

Question 4

What does the Sarbanes-Oxley Act of 2002 require?

Accepted Answer

Public companies to certify the accuracy of financial statements and improve internal controls

Answer

Sarbanes-Oxley requires CEOs and CFOs to personally certify financial statements and mandates stronger internal controls to prevent corporate accounting fraud.

Question 5

What is a 'prospectus' in securities regulation?

Accepted Answer

A formal legal document providing details about an investment offering to prospective investors

Answer

A prospectus is a legally required document that provides material information about an investment offering, including financial statements, risks, and use of proceeds.

Stock Jobs Practice Test

Stock Jobs Practice Test

Stock Jobs Stock Market Regulations and Compliance