Stock Trading Regulatory Frameworks & Compliance 3

Question 1

Which provision of Dodd-Frank established the SEC's whistleblower program, offering awards of 10-30% of sanctions exceeding $1 million?

Accepted Answer

Section 922

Answer

Section 922 of Dodd-Frank created the SEC's whistleblower program, incentivizing individuals to report securities law violations.

Question 2

Under SEC Regulation S-P, broker-dealers must provide customers with a privacy notice describing their information sharing practices. When must the initial notice be delivered?

Accepted Answer

At the time of establishing the customer relationship

Answer

Regulation S-P requires initial privacy notices to be delivered at the time of establishing a customer relationship, not after.

Question 3

FINRA's suitability rule (Rule 2111) was largely replaced in 2020 by which SEC standard that imposes a higher 'best interest' obligation on broker-dealers?

Accepted Answer

Regulation BI (Best Interest)

Answer

Regulation Best Interest (Reg BI), effective June 2020, raised the standard for broker-dealers recommending securities to retail customers above the prior suitability standard.

Question 4

What is the primary purpose of SEC Rule 144 in the context of stock trading?

Accepted Answer

Governing the public resale of restricted and control securities

Answer

Rule 144 provides a safe harbor for affiliates and holders of restricted securities to sell shares publicly under specified conditions including holding periods and volume limits.

Question 5

A company's CEO sells 50,000 shares of company stock without filing a Form 4 with the SEC. Which reporting requirement did the CEO violate?

Accepted Answer

Section 16(a) insider reporting

Answer

Section 16(a) of the Securities Exchange Act requires corporate insiders to report changes in their holdings on Form 4 within two business days.

Stock Trading Practice Test

Stock Trading Practice Test

Stock Trading Regulatory Frameworks & Compliance 3