Rule 3 of 6 in this unit1.1.2

1.1.2 Self-regulatory Organizations (SROs)

SIE outline 1.1.2

A Self-Regulatory Organization Regulates Its Own Members

An industry organization with authority to write and enforce rules for the firms and people inside it, under SEC oversight. NOT a government agency.

The method for this kind of question
  1. This material is Section 1: 12 of the 75

Now answer

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

An SRO finishes writing a new rule for its own members. What must happen before that rule can take effect?

How sure are you?

Correct: A. Every SRO's rulebook is filed with and can be reviewed by the SEC before it stands.
B. An internal member vote does not replace SEC review of the filed rule.
C. Publication alone, without SEC review, is not how an SRO's rulebook is checked.
D. An unwritten-into-force rule with no SEC review at all contradicts the oversight structure the outline names.

Unit: SIE outline 1.1.2

Question 2Harder

A registered representative at a broker-dealer breaks an MSRB primary-offering disclosure rule. Which body wrote the rule, and which body enforces it here?

How sure are you?

Correct: B. MSRB Rule G-32 is written by the MSRB; because the rep works at a FINRA member firm and the MSRB has no examiners, FINRA brings the action.
A. The MSRB never enforces its own rules; it has no examination staff.
C. Reverses the roles; FINRA does not write municipal disclosure rules, the MSRB does.
D. The SEC did not write this rule; the MSRB did, under its own rulemaking authority.

Unit: SIE outline 1.1.2

Next ruleFINRA Governs Broker-Dealers

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