The provisions of the Securities Exchange Act of 1934 apply to all of the following activities EXCEPT:
a. trading of corporate bonds
b. trading of municipal bonds
c. issuance of municipal bonds
d. issuance of corporate financial statements
issuance of municipal bonds
Broker-dealers are required to report their computed net capital to customers:
a. monthly
b. quarterly
c. semi-annually
d. annually
semi-annually
A broker-dealer may hold fully paid customer securities:
a. when authorized in writing by the customer
b. if the securities are segregated and held in safekeeping
c. if the firm notifies the customer every 3 months as to the amount of securities and the f
if the securities are segregated and held in safekeeping
During a tender offer, which of the following activities are prohibited?
I. purchase the stock in a cash account and tender 2 business days after the trade date
II. purchase a call option in a cash account and tender 2 business days after the trade date
I
purchase a call option in a cash account and tender 2 business days after the trade date
tender shares held in an arbitrage account where the position is "short against the box
A customer inherits 3,000,000 shares of ABC stock, a company listed on the NYSE which has 10,000,000 shares outstanding. The customer is not a director or officer of the company. Which of the following statements is (are) true?
I. the customer is defined
All of them
Which of the following is (are) considered to be insiders?
I. ABC corporation's president
II. the spouse of ABC Corporation's president
III. the in-house counsel of ABC corporation
IV. an investor holding non-convertible senior ABC securities
ABC corporation's president
the spouse of ABC Corporation's president
the in-house counsel of ABC corporation
All of the following are covered under the Securities Exchange Act of 1934 except:
a. registration of broker-dealers
b. registration of new issues
c. stabilization of new issues
d. registration of exchanges
registration of new issues
Which of the following requires filing with the SEC?
I. purchase of a 5% position in one company's stock
II. an officer selling 1% of that company's stock
III. broker-dealer net capital computation
IV. corporate proxy material
All of them
The chairman of XYZ Corporation, while playing golf with a neighbor, casually mentions that this quarter's earnings are likely to be lower than expected. Based on this information, the neighbor sells short XYZ stock the next day. Which statement is TRUE?
both the neighbor and the chairman have violated insider trading rules
Fines assessed for convictions involving violations of insider trading are paid to the:
a. internal revenue service
b. department of treasury
c. securities and exchange commission
d. department of justice
department of treasury
The anti-fraud provisions of the Securities Exchange Act of 1934 apply to:
I. individuals trading exempt securities
II. individuals trading non-exempt securities
III. broker-dealer firms trading exempt securities
IV. broker-dealer firms trading non-exempt
All of them
Which if the following issuers must report to the SEC under the Securities Exchange Act of 1934?
I. corporations
II. investment companies
III. municipalities
IV. federal agencies
corporations
investment companies
All of the following meet the statutory definition of an 'insider' except:
a. an officer of a company
b. the holder of 10% of the equity securities of a company
c. the holder of 10% of the debt of a company
d. the director of a company
the holder of 10% of the debt of a company
The 'penny stock rule' applies to customer purchases of securities that are not exchange listed which are priced below:
a. $10 per share
b. $5 per share
c. $2 per share
d. $1 per share
$5 per share
SEC Rule 10b-18 allows an issuer to buys its shares in the open market:
a. at any price that is reasonably related to the current market
b. at the highest independent bid or the last reported sale price, whichever is higher
c. at the lowest independent of
at the highest independent bid or the last reported sale price, whichever is higher
Which statements are TRUE about the 'penny stock rule"?
I. before confirmation of a trade in a 'penny stock' can be made with a new customer, a suitability determination must be completed, signed, and returned
II. suitability statements are required for n
All of them
SEC Rule 10b-5-1:
a. is the 'catch-all' fraud rule that makes any deceptive or manipulative practice in connection with the sale of a security potentially fraudulent under the Securities Exchange Act of 1934
b. gives officers of publicly held companies a
gives officers of publicly held companies a safe harbor from being charged with an insider trading violation if they establish a pre-arranged trading plan for that issuer's securities
Issuers that wish to give "earnings guidance" to research analysts must conform with the provisions of SEC:
a. regulation SB
b. regulation FD
c. regulations SK
d. regulations SP
regulation FD
Which of the following usually acts as the stabilizing market maker?
a. issuer
b. managing underwriter
c. any member of the syndicate
d. any member of the selling group
managing underwriter
Under Regulation M, which statement is TRUE regarding stabilized bids entered by market makers?
a. stabilizing bids can only be maintained for 5 consecutive business days
b. stabilizing bids can only be maintained for 30 calendar days
c. stabilizing bids
there is no time limitation on the period that a stabilizing bid can be maintained
A short seller is prohibited from covering short sales with offered securities purchased from an underwriter participating in the offering if the short sale occurred how many days prior to the pricing of the offered securities?
a. 1
b. 2
c. 5
d. 10
5
SEC regulation FD covers:
a. notification to customers of a member firm's privacy policies and practices
b. selective disclosure of material non-public information by issuers
c. standardization of disclosure of financial and non-financial information by i
selective disclosure of material non-public information by issuers
Under regulation M, the maximum restricted period for trading a subject security by a syndicate member that is not a market maker:
a. 1 day
b. 5 days
c. 10 days
d. 20 days
5 days
Pre-arranged trades by insiders are:
a. prohibited
b. permitted under Rule 10b-5
c. permitted under Rule 10b-5-1
d. permitted under regulation FD
permitted under Rule 10b-5-1
Under regulation M, Tier 1 securities are those with a minimum:
I. daily trading volume of $100,000
II. daily trading volume of $1,000,000
III. market float of $25,000,000
IV. market float of $150,000,000
daily trading volume of $1,000,000
market float of $150,000,000
The Securities Exchange Act of 1934 is primarily concerned with:
A. registration of exempt issues
B. registration of non-exempt issues
C. prevention of manipulation and fraud in the primary market
D. prevention of manipulation and fraud in the secondary m
prevention of manipulation and fraud in the secondary market
The Securities Act of 1933 requires that new issues that are not exempt from the Act be registered with the SEC. Thus, the 1933 Act is concerned with the primary (new issue) market. The Securiti
The Securities Exchange Act of 1934 regulates all of the following markets EXCEPT:
A. Primary
B. Secondary
C. Third
D. Fourth
Primary
The Securities Exchange Act of 1934 regulates which of the following?
I. Futures transactions
II. Securities transactions
III. Futures brokers
IV. Securities brokers
Securities transactions
Securities brokers
The Securities Exchange Act of 1934 regulates trading of all of the following EXCEPT:
A. Commodities Futures
B. Options
C. Corporate Bonds
D. Corporate Stock
Commodities Futures
The Securities Exchange Act of 1934 does not regulate the trading of commodities, since these are not securities, and are not regulated under the Securities Acts. Rather, futures (commodities) are regulated by the CFTC - the Commoditie
All of the following statements about the Securities Exchange Act of 1934 are true EXCEPT the:
A. general provisions of the Act apply to non-exempt securities
B. general provisions of the Act apply to exempt securities
C. anti-fraud provisions of the Act
general provisions of the Act apply to exempt securities
The general provisions of the Securities Exchange Act of 1934 apply to non-exempt securities only. For example, holders of municipal bonds (an exempt security) cannot be considered to be "insiders
Municipal market participants are subject to which of the following rules?
A. Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934
B. Prospectus delivery rules under the Securities Act of 1933
C. Issuer reporting requirements under the Securiti
Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934
Municipal bonds are "exempt" securities and thus are not subject to the provisions of the Securities Acts with the exception of the "anti-fraud" provisions. Municipal bonds do not have to pro
The Securities and Exchange Commission was created by:
A. a Constitutional amendment
B. a Supreme Court decision
C. the Securities Act of 1933
D. the Securities Exchange Act of 1934
the Securities Exchange Act of 1934
The Securities and Exchange Commission was created by the Securities Exchange Act of 1934 (which was passed in the very beginning of 1934, while the 1933 Act was passed at the very end of 1933 - so these 2 Acts were rea
The Securities and Exchange Commission was:
I. created under the Securities Act of 1933
II. created under the Securities Exchange Act of 1934
III. given regulatory authority over securities exchanges
IV. given regulatory authority over futures exchanges
created under the Securities Exchange Act of 1934
given regulatory authority over securities exchanges
The Securities and Exchange Commission was created under the Securities Exchange Act of 1934. It has overall regulatory authority over the securities ma
The Securities and Exchange Commission is empowered to administrate which of the following Acts?
I. Uniform Securities Act
II. Securities Act of 1933
III. Trust Indenture Act of 1939
IV. Investment Company Act of 1940
Securities Act of 1933
Trust Indenture Act of 1939
Investment Company Act of 1940
The SEC administrates the Securities Act of 1933; the Securities Exchange Act of 1934; the Trust Indenture Act of 1939; and the Investment Company Act of 1940. The Uniform S
The Securities Exchange Act of 1934 established "self regulatory organizations" (SROs) and empowered these organizations to do all of the following EXCEPT:
A. set guidelines for fair dealing with the public
B. establish commission rates to be charged to t
establish commission rates to be charged to the public
The Securities Exchange Act of 1934 established "self regulatory organizations" (SROs) and empowered these organizations to:
I. set guidelines for fair dealing with the public
II. handle complaints against broker-dealers for securities law violations
III.
set guidelines for fair dealing with the public
handle complaints against broker-dealers for securities law violations
take administrative action against broker-dealers that violate industry regulations
Under the provisions of the Securities Exchange Act of 1934, which of the following must be registered?
I. The exchanges that trade securities
II. Member firms
III. Sales employees of member firms
IV. Clerical employees of member firms
The exchanges that trade securities
Member firms
Sales employees of member firms
Which of the following must be sent to customers of broker-dealers semi-annually?
I. Broker-dealer securities inventory amounts
II. Broker-dealer balance sheet
III. Broker-dealer subordinated loan amounts
IV. Broker-dealer net capital computation
Broker-dealer balance sheet
Broker-dealer subordinated loan amounts
Broker-dealer net capital computation
Which of the following statements are TRUE regarding a broker-dealer holding margin and fully paid securities?
I. Margin securities can be commingled with the securities of other customers and rehypothecated
II. Margin securities must be segregated and pl
Margin securities can be commingled with the securities of other customers and rehypothecated
Fully paid securities must be segregated and placed in safekeeping
When is a foreign broker-dealer permitted to solicit U.S. based clients?
I. If the foreign broker-dealer establishes an SEC-registered U.S. subsidiary
II. If the foreign broker-dealer only offers exempt securities
III. If the foreign broker-dealer only de
If the foreign broker-dealer establishes an SEC-registered U.S. subsidiary
If the foreign broker-dealer only deals with major institutional investors
The SEC requires financial reports from all of the following EXCEPT:
A. municipal issuers
B. corporate issuers
C. municipal broker-dealers
D. corporate broker-dealers
municipal issuers
Municipal issuers are exempt from the provisions of the Securities Acts, as are all other governmental issuers. The SEC has authority over corporate issuers, and requires financial reports from corporations. Broker-dealers, including mun
Which of the following issuers must report to the SEC under the Securities Exchange Act of 1934?
I. Corporations
II. Investment Companies
III. Municipalities
IV. Federal Agencies
Corporations
Investment Companies
Only corporations and investment companies (which are either corporations or trusts) file annual and semi-annual reports with the SEC. Municipal and federal issuers are exempt from the Securities Exchange Act of 1934.
All of the following are included in the 10K report filed by corporate issuers with the SEC EXCEPT:
A. income statement
B. balance sheet
C. retained earnings statement
D. net capital computation
net capital computation
Corporate annual reports contain the following audited financial statements - Income Statement; Balance Sheet; Statement of Changes to Retained Earnings (this shows earnings added for the year and dividends paid from retained earni
Which of the following statements are TRUE regarding corporate reports sent to shareholders?
I. The 10K report consists of the annual financial statements
II. The 10K report consists of the quarterly financial statements
III. The 10Q report consists of th
The 10K report consists of the annual financial statements
The 10Q report consists of the quarterly financial statements
Corporate annual reports are 10K reports which are audited reports. The 10Q is a quarterly report which is unaudited. Corporate annual
An issuer is required to make an 8K filing with the SEC for all of the following events EXCEPT:
A. declaration of a cash dividend
B. election of new members of the Board of Directors
C. declaration of bankruptcy
D. proposal of a merger with another corpor
declaration of a cash dividend
An 8K filing with the SEC is required by a corporation if a "major event" happens at the company. These include if there is a change in the composition of the Board of Directors; if the company declares bankruptcy; if there
If a publicly traded corporation declares bankruptcy:
I. a 10K report must be filed
II. an 8K report must be filed
III. the required report must be filed within 1 business day
IV. the required report must be filed within 4 business days
an 8K report must be filed
the required report must be filed within 4 business days
Corporations are required to file 8K reports within 4 business days of significant events such as a declaration of bankruptcy, merger, change in the Board of Directors, et
A registered representative receives an order from a corporate issuer to buy 500,000 shares of that issuer's stock in the market, 5 minutes prior to market close. The registered representative should:
A. reject the order
B. accept the order as given
C. in
inform the company that this is a possible market manipulation under the Securities Exchange Act of 1934
A 13D notice would be filed when a(n):
A. corporation has a change in its Board of Directors
B. investor accumulates a 5% or greater position in the common stock of an issuer
C. corporation reports its annual results to the Securities and Exchange Commiss
investor accumulates a 5% or greater position in the common stock of an issuer
Investors who accumulate a 5% or greater position in the common stock of one registered issuer are required to file a 13D notice with the SEC within 10 business days of date th
Which statements are TRUE about a tender offer for common shares?
I. The offer must remain open for at least 10 business days
II. The offer must remain open for at least 20 business days
III. Each "sweetening" of the offer must extend the offer for an add
The offer must remain open for at least 20 business days
Each "sweetening" of the offer must extend the offer for an additional 10 business days
Which statements are TRUE about an issuer making a tender offer for its non-convertible bonds?
I. The minimum life of the initial offer is 5 business days
II. The minimum life of the initial offer is 10 business days
III. Each "sweetening" of the offer mu
The minimum life of the initial offer is 5 business days
Each "sweetening" of the offer must extend the offer for another 5 business days
Under Federal law, stock can be tendered from all of the following accounts EXCEPT a:
A. cash account
B. long margin account
C. restricted margin account
D. short margin (borrowed) account
short margin (borrowed) account
Under the "short tender rule," a person cannot tender borrowed shares. To tender stock, the person must be in a "net long" position in that security. Long stock can be held in a cash or margin account. Restriction (an accou
Which of the following statements are TRUE regarding margin regulations?
I. In-house rules may be more stringent than FINRA rules
II. Exchange rules may be more stringent than Federal Reserve rules
III. In-house rules may be less stringent than FINRA rule
In-house rules may be more stringent than FINRA rules
Exchange rules may be more stringent than Federal Reserve rules
Margins on government and municipal securities are set by (the):
A. MSRB
B. FINRA
C. FRB
D. SEC
FINRA
Stabilization of new issues is:
I. a provision of the Securities Act of 1933
II. a provision of the Securities Exchange Act of 1934
III. permitted at, or above, the Public Offering Price
IV. permitted at, or below, the Public Offering Price
a provision of the Securities Exchange Act of 1934
permitted at, or below, the Public Offering Price
Since a stabilizing bid is placed in the trading (secondary) market, the rules for stabilizing bids come under the Securities Exchange Act of 1934. Stabil
Which statements are TRUE about stabilizing bids?
I. A stabilizing bid is placed by the syndicate manager
II. A stabilizing bid is placed by each syndicate member
III. Only 1 stabilizing bid is permitted at any time
IV. Any number of stabilizing bids can
A stabilizing bid is placed by the syndicate manager
Only 1 stabilizing bid is permitted at any time
Which of the following CANNOT be a stabilizing bid for a new issue that has a Public Offering Price of $30 per share?
A. $29.00
B. $29.88
C. $30.00
D. $30.13
$30.13
Stabilizing bids can only be entered at or below the public offering price, never above. If the bid were allowed to be placed above the public offering price, it would make the issue instantly "hot" and this is prohibited.
Rule 103 of Regulation M requires that a market maker in a stock that is also a syndicate member in an "add-on" offering of that issue, during the 20-day cooling off period:
A. can only place a stabilizing bid at, or below the Public Offering Price
B. can
can either resign as a market maker or can act as a passive market maker
Under Regulation M, the maximum restricted period for trading a subject security by a syndicate member that is NOT a market maker is:
A. 1 day
B. 5 days
C. 10 days
D. 20 days
5 days
Which of the following individuals would be considered an insider?
I. A person who uses public information to trade in that company's stock for a profit
II. A person who uses non-public information to trade in that company's stock for a profit
III. A Chai
A person who uses non-public information to trade in that company's stock for a profit
A Chairman of a corporation who uses non-public information to trade in that company's stock for a profit
A wife of a Chairman of a corporation who uses non-public info
Which of the following brokerage firm units would need to be separated under "Chinese Wall" requirements?
I. U.S. equities trading desk separated from Asian equities trading desk
II. U.S. equities trading desk separated from the firm's U.S. investment ban
U.S. equities trading desk separated from the firm's U.S. investment banking unit
U.S. equities trading desk separated from the firm's U.S. research unit
The "Chinese Wall" as used in the securities industry, is the complete separation of a broker-dealer'
The Vice-President of ACME Corporation, an NYSE listed firm, places an order to buy 10,000 shares of ACME common at the market. 3 months later, ACME stock's price has increased by 20% and the officer places an order to sell. Which statements are TRUE?
I.
The sale of the stock is subject to Rule 144
The officer must forfeit the profit on the sale
Which of the following statements are TRUE regarding corporate officers who wish to trade their own company's stock?
I. Officers are prohibited from selling their company's stock short except for "short against the box" trades
II. Officers are allowed wit
Officers are prohibited from selling their company's stock short except for "short against the box" trades
Officers must file change of holding reports with the SEC
An officer of a listed company calls his registered representative and tells him to buy a large block of that stock. Prior to placing the order to buy, the registered representative calls ten of his customers and tells them to buy that company's stock. Wh
This action is a violation of the insider trading rules
When the registered representative received the buy order from the officer, he is obligated to execute that order before acting on the information he has received. Once the order is executed, it is p
A corporate executive holds a meeting with a select group of high-producing registered representatives and gives information about the company's expected revenue and income for the upcoming quarter that is extremely positive. The representatives are permi
do nothing with the information and should report the situation to the firm's compliance department
Regulation FD (Fair Disclosure), passed in 2000, is basically an elaboration of the insider trading rules. It prohibits issuers from making selective discl
An officer of a company has been invited by a large mutual fund company to give a talk to the fund company's analysts about its business plans and prospects. At the talk, the officer inadvertently discloses material information that could affect the stock
A public announcement of the news must be made within 24 hours
The company must file an 8K with the SEC disclosing the information to avoid insider trading liability
A detailed suitability determination must be completed by the registered representative and signed by the customer before confirmation of sale of a(n):
A. NASDAQ security
B. NYSE listed security
C. Pink sheet security under $5
D. CBOE listed option
Pink sheet security under $5
The "penny stock rule" (Rules 15g-1 through 15g-6) requires that new customers who receive a recommendation and purchase non-exchange listed securities (meaning OTCBB or Pink Sheet issues) priced under $5 per share sign and re
If a customer is solicited to buy a "penny stock," which of the following statements are TRUE?
I. Detailed financial information about the client must be obtained
II. It should be determined if the customer is "established" with the firm
III. If the custo
All of them
Under the "penny stock rule," a customer is considered to be "established" and does not have to sign a suitability statement to buy a penny stock if that customer has bought how many penny stock issues previously from that broker-dealer?
A. 2
B. 3
C. 5
D.
3