Question

All of the following statements regarding securities laws and regulation are correct EXCEPT:

A. The Securities Act of 1933 created the Securities and Exchange Commission (SEC).
B. The Investment Advisers Act of 1940 requires investment advisers to register with the SEC (or their state) and to provide clients with a disclosure brochure.
C. The Securities Exchange Act of 1934 prohibits certain types of conduct in the securities markets.
D. FINRA is a self-regulatory organization that writes and enforces rules governing the activities of broker-dealers in the U.S.

Answer 1

The incorrect statement is the first one (A), as it inaccurately states that the SEC was created by the Securities Act of 1933, instead of the correct formation under the Securities Exchange Act of 1934.

Step-by-step explanation:

All of the statements listed pertain to U.S. securities laws and regulation, but one of them is incorrect. Let's review each statement:

• The Securities Act of 1933 created the framework for regulating the issuance of securities and mandated disclosure of certain information to investors. However, the Securities and Exchange Commission (SEC) was actually established by the Securities Exchange Act of 1934.
• The Investment Advisers Act of 1940 indeed requires investment advisers to register with the SEC or their state, depending on their size, and to provide a disclosure brochure to their clients.
• The Securities Exchange Act of 1934 addresses various conduct in the securities markets and includes rules against fraudulent activities and insider trading.
• FINRA, the Financial Industry Regulatory Authority, is a self-regulatory organization that oversees the activities of broker-dealers in the U.S., writing and enforcing rules related to the securities industry.