Securities Industry Essentials (SIE)
Exam 2023 New Update
Customer Protection Rule - ANS-Rule ensures customer's funds held by a broker dealer
are
... [Show More] deployed in safe areas; deposited in a RESERVE BANK ACCOUNT. 109
Currency Transaction Report (CTR) - ANS-Must file when a transaction from ONE
person in ONE day is over $10,000. Laundering prevention. 111
FinCEN (Financial Crimes Enforcement Network) - ANS-A treasury department agency
that focuses on money laundering and national security. Functions under "Bank Secrecy
Act" (BSA). 110
Money Laundering Stages - ANS-1. Placement
2. Layering
3. Integration
Money Laundering Abatement Act - ANS-Verify identity of customer seeking to open
account withing 5 business days; confirm not on any terrorist list. 111
Suspicious Activity Report (SAR) - ANS-A report that must be filed within 30 days
whenever a firm suspects that transactions of $5000 or more may be related to illegal
activities. 111
The PATRIOT Act (Providing Appropriate Tools Required to Interpret & Obstruct
Terrorism - ANS-Requires firms to obtain new customer's basic info- SSN, DOB, and
street address. 112
FTC Red Flag Rule - ANS-Requires businesses to implement a written Identity Theft
Prevention Program to identify theft in day-to-day operations; see warning signs/red
flags. 112
(3) Exceptions to 2-Year Time Out Period (Political Contributions) - ANS-1. $350 or less
if able to vote
2. $150 or less if can't vote
3. New covered associate made contribution more than 6 months prior to becoming.
115
2 Year Prohibition (Political Contributions) - ANS-Covered members/associates &
advisers undergo a 2 year prohibition from date of contribution. Includes third-party
solicitors & "bundling" ( solicit others to contribute). 114
Covered Member - ANS-Any member that solicits a government entity for investment
advisory services. 113
Covered Associate - ANS-1. Any general partner, managing member or executive
officer of a covered member.
i.e. a supervisor
2. Any associated person of a covereed member who engages in distribution/solicitation
activities with government entity.
3. Any PAC controlled by a covered member/associate. 113
Customer Identification Program (CIP) - ANS-The processes used by a financial
institution to verify and validate the stated identity of a customer within 5 business days
of opening account. For UGMA (minors)- the custodian's (adult) information must be
verified. Information is kept for 5 years after closing account. 115
Securities Act of 1933 - ANS-NEW Issues only (primary market)
Prospectus required (no opinions)
Provides monetary damages from fraud.
SEC NOT responsible, but :No Approval" clause required on front cover or page of
prospectus.
Exempt from Act '33: Insurance, Annuity (not variable), government & municipal
securities, Reg A offerings (short form), Commercial Paper (270 days max), Banker's
Acceptances (180 days max), Banks, Reg D (Private). 103
Regulation A Offerings - ANS-Short form registration.
No more than $50,000,000 in 12 consecutive months.
Offering statement filed with SEC (not full registration).
Prospectus NOT required.
Shares NOT restricted.
NO holding period.
'33 Act exempt. 102
Trusted Contact Person - ANS-FINRA Rule 4512
Registered rep can:
1. disclose information about account to address possible exploitation
2. confirm client's current contact information
3. Discuss client's health status
4. Identify legal guardian, executor, trustee, or holder of a Power Of Attorney on the
account. 130
New Account Report Form - ANS-Signed by branch manager/principal
Member firm holds responsibility for final approval of a new account (signature as
evidence)
PATRIOT Act requires: full name, DOB, street address, SSN (or passport/alien ID)
Customer account info must:
1. be sent to customer in 30 days of opening
2. updated withing 30 days of receiving change
3. given to each customer every 36 months
4. maintained for 6 years after account closure 131
Joint Account Types (3) - ANS-1. JTWROS Joint Tenants With Rights of Survivorship
2. Tenants in Common
3. Transfer on Death
JTWROS - ANS-Joint Tenants with Rights of Survivorship (death cert or affidavit of
domicile required) surviving member becomes sole owner. Orders can be placed by
either party. Both names on checks. 132
Tenants in Common - ANS-If one tenant dies, his interest will pass to his ESTATE, not
the other owner. Either party may place orders. 132
Transfer on Death (TOD) - ANS-individual account with a named beneficiary-assets
transferred directly to the named beneficiary upon death of account holder. Ex: brother
is the beneficiary but cannot place trades with I'm alive. Transfers stocks/bonds/mutual
funds (basic securities only)
NOT eligible: limited partnership interests, precious metals, variable/fixed annuities, and
commodities. 132
Corporate Accounts - ANS-Authorizes specific person(s) to enter trades on behalf of the
corporation.
Must provide Certified Copy of Corporate Resolution and Articles of Incorporation, and
may require Bylaws or Charter.
Affidavit NOT required. 132
Limited Partnership Accounts - ANS-Requires signature of all GENERAL partners (not
each limited partner) 133
Pattern Day Trader - ANS-Anyone who trades in the same security 4 or more times over
a 5-day period.
Must have a minimum equity of $25000.
Most concerned with "timing risk".
Least susceptible to inflationary risk.
Buying power limit is 4 times the maintenance margin excess in the account. 133
Trust Account - ANS-Property is managed by one person for the benefit of another.
Margin account establishment must be authorized in trust agreement.
Types: revocable (changeable)
irrevocable (not changeable)
living (revocable or irrevocable, set up while the grantor is "living")
testamentary trusts (created from a will) 133
Discretionary Authority - ANS-1. Limited Trading Authorization/ Limited POA- can make
trades, but can't withdraw funds. *When POA is granted, RR must know essential facts
about them.
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