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SIE - Government Regulators and SROs - Coggle Diagram
SIE - Government Regulators and SROs
Government Regulators
SEC
Securities Exchange Act of 1934
Regulation Best Interest (Reg BI)
Creates it and is the primary enforcer under the Securities Exchange Act of 1934
form CRS
Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA)
Regulation SP
implements the Gramm-Leach-Bliley Act (GLBA) of 1999, which deals with consumer privacy in financial services. :check:
Customer privacy notice
:check:
Antifraud Provisions :check:
Safe Harbor
:check:
Securities Act of 1933
Regulation D
Rule 504
Rule 506(b) :check:
❌No General Solicitation or Advertising allowed / YES Can raise unlimited capital
Can sell to: Unlimited accredited investors, and Up to 35 non-accredited investors, if they are sophisticated
No disclosure required if only accredited investors are involved
If non-accredited investors are involved: must provide extensive disclosure documents (similar to what’s required in registered offerings)
Rule 506(c) :check:
General Solicitation and Advertising is allowed / YES Can raise unlimited capital
Can Only accredited investors—no exceptions
Issuer must take “reasonable steps” to verify that all investors are accredited (ex: reviewing tax retunrs)
Rule 144A
allows them to legally resell the securities without having to register with the SEC / Eligible investors: QIB
Goal: create liquid private market for institutional investors
exemptions from SEC registration for certain private placements of securities.
Regulation A
Regulation A+ (modernized version under JOBS Act of 2012)
exemption from full SEC registration for small offerings.
Regulates new issues (IPOs), Requires registration with EDGAR, Main goal is to protect retail investors
Regulation 147
(the intrastate offering exemption) old, stricter (must be incorporated in-state)
Rule 147A
:
updated, more flexible (incorporation not required, online offers allowed)
Securities Investor Protection Act (SIPA)
SEC supervises SIPC’s operations and approves its bylaws and rules
SIPC (Securities Investor Protection Corporation
)
nonprofit membership corporation created by federal law in 1970 under SIPA
Protect investors' brokerage accounts if a BD fails
SEC’s customer protection rules
Investment Company Act 1940
Trust Indenture Act of 1939
Requires a trustee and trust indenture for corporate bonds over $50mil over 1 year term
Investment Advisers Act of 1940
form ADV Part 2A/2B
US Federal Government
(Oversees bank holding companies and certain state-chartered banks)
FDIC (Federal Deposit Insurance Corporation)
:check:
SIPC (Brokerage Accounts)
:check:
State
Uniform Securities Act (USA)
NSMIA (1996)
SROs
FINRA
Created by SEC but enforced by FINRA
Regulation Best Interest (Reg BI)
Rules created and enforced by FINRA
Code of Arbitration Procedure
Set of rules that resolves disputes between Customer and BDs, BDs and registered reps, BDs and other firms
Uniform Practice Code (UPC)
standardize and govern trading and settlement practices in the over-the-counter (OTC) market and between broker-dealers
Code of Procedure (COP)
rulebook that outlines how FINRA investigates and takes disciplinary action against member firms and RR
Conduct Rules
Rules that govern interactions between firms and customers (fair dealing, suitable recommendations, compensation
)
Rule 3200 Series
: Responsibilities Relating to Associated Persons
Rule 3280
: notify before RR does outside trade (selling away)
Outside Business Activity (OBA) — Rule 3270
Rule 2210: Institutional Communication
Corporate ownership rule :check:
Interpositioning :check:
Registration and Qualification Rules by FINRA
Form U4
Form U5
Options supervision
Options Agrrement
MSRB
(Municipal Securities Rulemaking Board)
Rules
MSRB Rule G-37: political contribution
Contribution of $250 or less per election / contribution of over $250 are prohibited with 2 years of the firm seeking municipal business
Makes rules for secondary market of municipal securities; cannot regulate issuers; rules enforced by FINRA
exchanges (NYSE, Nasdaq, CBOE, etc.)
Investor protection
Nonprofit Private Corporation (overseen by the SEC)
SIPC (Securities Investor Protection Corporation)
U.S. central banking system
Federal Reserve Board (FRB)
Set Regulation T (margin requirements)
Conduct monetary policy (control money supply, interest rates).
Regulate and supervise banks
Executive department if the US gov
Department of Treasury
: Manages government finances, issues debt, prints currency
FinCEN (Financial Crimes Enforcement Network)
Bank Secrecy Act (BSA)
CTR (Currency Transaction Report)
$10,000 in one business day (
Suspicious Activity Report (SAR)
USA PATRIOT Act (2001)
AML programs
Firm-Level Supervision (Registered Principal)
Ensure compliance with FINRA and SEC rules
Pre-approve most communications and advertisements before they are sent to FINRA or the public.