CHAPTER 17: OTHER SEC AND SRO
RULES AND REGULATIONS EXAM
WITH CORRECT QUESTIONS AND
ANSWERS 2025
The securities industry in the United States is among the most heavily regulated in the world.
Firms and representatives must comply with SEC rules, the rules of the SROs, and house rules
developed by the firm internally. The intent of these rules is to protect the public, and your
career depends on your ability to follow the rules and regulations of the industry. The SEC was
created by the Securities Exchange Act of 1934 and is the primary regulatory body over the
securities industry. SROs, acting under authority approved by the SEC, regulate the conduct of
business. These include FINRA, MSRB, CBOE, and other U.S. exchanges. The type and location of
a security transaction determines which SRO has jurisdiction. A substantial portion of the exam
will be devoted to these and other industry rules. - CORRECT-ANSWERS
SEC - CORRECT-ANSWERSThe Securities and Exchange Commission is the securities industry's
primary regulatory body. Broker/dealers that transact securities business with customers or
with other broker/dealers must apply and be approved for registration with the SEC
,A broker/dealer must comply with SEC rules and regulations when conducting business. A
broker/dealer that does not comply is subject to: - CORRECT-ANSWERS- Censure
- Limits on activities, functions, or operations
- Suspension of its registration (or one of its associated person's license to do business)
- Revocation of registration
- Fines
Associated Persons ... - CORRECT-ANSWERSAn associated person may also be disciplined for
violating SEC rules and regulations
Fingerprinting - CORRECT-ANSWERSRegistered broker/dealers must have fingerprint records
made for most of their employees, and all directors, officers, and partners must submit those
fingerprint cards to the U.S. attorney
List of exempt employees (fingerprinting) - CORRECT-ANSWERS- Those who are not involved in
securities sales
- Do not handle or have access to cash or securities or to the books and records of original entry
relating to money and securities
- Do not supervise other employees engaged in these activities
, Self Regulatory Organizations (SROs) - CORRECT-ANSWERSSROs function under the SEC's
oversight. Each SRO is accountable to the Commission for enforcing federal securities laws, as
well as supervising securities practices within an assigned jurisdiction
List of largest SROs - CORRECT-ANSWERS- Financial Industry Regulatory Authority (FINRA)
- Municipal Securities Rulemaking Board (MSRB)
- Chicago Board Options Exchange (CBOE)
FINRA - CORRECT-ANSWERSThe Financial Industry Regulatory Authority (FINRA) resulted from
the merger of the New York Stock Exchange's regulatory committee and the National
Association of Securities Dealers. FINRA, as a regulatory body, is tasked with governing all
business dealings conducted between dealers, brokers and all public investors. The
consolidation of these two regulators aims into FINRA aims to do away with overlapping
regulation and inefficient costs. At its origin, FINRA was known as SIRA, the Securities Industry
Regulatory Authority, but there were numerous complaints because the name carried a strong
similarity to the Arabic term "Sirah," a term used for biographical texts about the life of
Muhammad
FINRA's purposes and objectives: - CORRECT-ANSWERS- Promote the investment banking and
securities business, standardize principles and practices, promote high standards of commercial
honor, and encourage the observance of federal and state securities laws
RULES AND REGULATIONS EXAM
WITH CORRECT QUESTIONS AND
ANSWERS 2025
The securities industry in the United States is among the most heavily regulated in the world.
Firms and representatives must comply with SEC rules, the rules of the SROs, and house rules
developed by the firm internally. The intent of these rules is to protect the public, and your
career depends on your ability to follow the rules and regulations of the industry. The SEC was
created by the Securities Exchange Act of 1934 and is the primary regulatory body over the
securities industry. SROs, acting under authority approved by the SEC, regulate the conduct of
business. These include FINRA, MSRB, CBOE, and other U.S. exchanges. The type and location of
a security transaction determines which SRO has jurisdiction. A substantial portion of the exam
will be devoted to these and other industry rules. - CORRECT-ANSWERS
SEC - CORRECT-ANSWERSThe Securities and Exchange Commission is the securities industry's
primary regulatory body. Broker/dealers that transact securities business with customers or
with other broker/dealers must apply and be approved for registration with the SEC
,A broker/dealer must comply with SEC rules and regulations when conducting business. A
broker/dealer that does not comply is subject to: - CORRECT-ANSWERS- Censure
- Limits on activities, functions, or operations
- Suspension of its registration (or one of its associated person's license to do business)
- Revocation of registration
- Fines
Associated Persons ... - CORRECT-ANSWERSAn associated person may also be disciplined for
violating SEC rules and regulations
Fingerprinting - CORRECT-ANSWERSRegistered broker/dealers must have fingerprint records
made for most of their employees, and all directors, officers, and partners must submit those
fingerprint cards to the U.S. attorney
List of exempt employees (fingerprinting) - CORRECT-ANSWERS- Those who are not involved in
securities sales
- Do not handle or have access to cash or securities or to the books and records of original entry
relating to money and securities
- Do not supervise other employees engaged in these activities
, Self Regulatory Organizations (SROs) - CORRECT-ANSWERSSROs function under the SEC's
oversight. Each SRO is accountable to the Commission for enforcing federal securities laws, as
well as supervising securities practices within an assigned jurisdiction
List of largest SROs - CORRECT-ANSWERS- Financial Industry Regulatory Authority (FINRA)
- Municipal Securities Rulemaking Board (MSRB)
- Chicago Board Options Exchange (CBOE)
FINRA - CORRECT-ANSWERSThe Financial Industry Regulatory Authority (FINRA) resulted from
the merger of the New York Stock Exchange's regulatory committee and the National
Association of Securities Dealers. FINRA, as a regulatory body, is tasked with governing all
business dealings conducted between dealers, brokers and all public investors. The
consolidation of these two regulators aims into FINRA aims to do away with overlapping
regulation and inefficient costs. At its origin, FINRA was known as SIRA, the Securities Industry
Regulatory Authority, but there were numerous complaints because the name carried a strong
similarity to the Arabic term "Sirah," a term used for biographical texts about the life of
Muhammad
FINRA's purposes and objectives: - CORRECT-ANSWERS- Promote the investment banking and
securities business, standardize principles and practices, promote high standards of commercial
honor, and encourage the observance of federal and state securities laws
