Understanding Trading, Customer Accounts and Prohibited ActivitiesDifficulty 2/5
Regulation S-P, as listed in the SIE outline, governs which of the following?
- AThe extension of credit by a broker-dealer to a margin customer
- BThe registration of securities offered to the public by an issuer
- CThe reporting of suspicious transactions to FinCEN by a member firm
- DNonpublic personal information, privacy notices and safeguard requirements
Show answer and rationale
Correct: D. Regulation S-P is the privacy rule: confidentiality of customer information, privacy notifications and safeguards. It sits in the books, records and privacy part of section 3.
- A — Credit extension to margin customers is governed by Regulation T, a Federal Reserve rule.
- B — Registration of public offerings is governed by the Securities Act of 1933.
- C — Suspicious transaction reporting arises under the anti-money laundering rules, not Regulation S-P.