CBOE Governs Its Own Options Market

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Which of the following is governed by the Securities Act of 1933 rather than the Securities Exchange Act of 1934?

A. An issuer's registration statement for a first-time securities sale B. A broker-dealer's ongoing reporting obligations after a stock lists C. The SEC's own creation and structure D. A listed stock's day-to-day trading

How sure are you?

Sure Fairly sure Guessing

Correct: A. The 1933 Act governs new issues, including the registration statement an issuer files before its first sale.

B. Ongoing reporting after a security is already trading is 1934 Act, trading-market, territory.

C. The 1934 Act creates the SEC, not the 1933 Act.

D. Day-to-day trading of an already-issued security is the 1934 Act's own domain.

Unit: SIE outline 1.1.1

Question 2Above the exam

An issuer's registration statement goes effective, the stock later declines, and a customer complains that the SEC guaranteed the deal. Two separate facts settle the complaint: what 'effective' means under Section 23, and which regulatory tier actually reviews a broker-dealer's day-to-day sales practice once the stock trades. Which choice states both correctly?

A. Effectiveness is not a finding of accuracy or a passing on the merits; day-to-day sales-practice review sits with the SRO tier (FINRA), not the SEC directly B. Effectiveness is a finding of accuracy; sales-practice review sits with the SEC directly C. Effectiveness is not a finding of accuracy; sales-practice review sits with the Federal Reserve D. Effectiveness is a finding of accuracy; sales-practice review sits with FINRA

How sure are you?

Sure Fairly sure Guessing

Correct: A. Section 23 states effectiveness is not a Commission finding of accuracy or a passing on the merits; and under the outline's own two-tier structure, the SRO tier (FINRA) reviews day-to-day broker-dealer sales practice, not the SEC directly.

B. Reverses the Section 23 rule and wrongly assigns day-to-day sales-practice review to the SEC directly.

C. Correctly states the Section 23 rule but assigns sales-practice review to the Federal Reserve, which has no role here.

D. Reverses the Section 23 rule, even though it correctly names FINRA as the SRO-tier reviewer.

Unit: SIE outline 1.1.1

CBOE Governs Its Own Options Market

Now answer