Podcast
Questions and Answers
What is the obligation of a Registered Representative (RR) to act honestly, in good faith, and in a professional manner known as?
What is the obligation of a Registered Representative (RR) to act honestly, in good faith, and in a professional manner known as?
Duty of care
What are a set of values or morals that guide individual behaviour called?
What are a set of values or morals that guide individual behaviour called?
Ethics
What is a higher standard of care imposed by common law than the duty of care called?
What is a higher standard of care imposed by common law than the duty of care called?
Fiduciary duty
What is the national self-regulatory organization that oversees the securities industry in Canada called?
What is the national self-regulatory organization that oversees the securities industry in Canada called?
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What IIROC rule summarizes the organization's expectations regarding its Registered Representatives?
What IIROC rule summarizes the organization's expectations regarding its Registered Representatives?
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What is the obligation of a Registered Representative (RR) to understand their client's financial situation, investment knowledge, objectives, time horizon, and risk tolerance known as?
What is the obligation of a Registered Representative (RR) to understand their client's financial situation, investment knowledge, objectives, time horizon, and risk tolerance known as?
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What is the obligation of a Registered Representative (RR) to understand the products they recommend to clients called?
What is the obligation of a Registered Representative (RR) to understand the products they recommend to clients called?
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What type of individual is permitted to provide advice on the full range of equity and fixed income securities?
What type of individual is permitted to provide advice on the full range of equity and fixed income securities?
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What refers to a client's current financial situation, investment knowledge, investment objectives, time horizon, and risk tolerance?
What refers to a client's current financial situation, investment knowledge, investment objectives, time horizon, and risk tolerance?
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Which of the following are types of values?
Which of the following are types of values?
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What is the type of ethical dilemma that involves two or more right answers, creating a conflict between core values?
What is the type of ethical dilemma that involves two or more right answers, creating a conflict between core values?
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What ethical decision-making process test assesses whether a person's reputation would suffer if their behaviour became public knowledge?
What ethical decision-making process test assesses whether a person's reputation would suffer if their behaviour became public knowledge?
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What ethical decision-making process test checks if an action is legal or complies with industry rules and regulations?
What ethical decision-making process test checks if an action is legal or complies with industry rules and regulations?
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What type of value refers to the everyday actions we take to achieve our goals?
What type of value refers to the everyday actions we take to achieve our goals?
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What ethical decision-making process test considers how comfortable a person would feel when explaining their decision to those whose opinions they value?
What ethical decision-making process test considers how comfortable a person would feel when explaining their decision to those whose opinions they value?
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What refers to the rules and habits of a society's conduct, established based on perceived standards of right and wrong?
What refers to the rules and habits of a society's conduct, established based on perceived standards of right and wrong?
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What refers to the mutual reinforcement and support of end values and means values?
What refers to the mutual reinforcement and support of end values and means values?
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What are individual or cultural measures of the worth we place in certain ideas and behaviour called?
What are individual or cultural measures of the worth we place in certain ideas and behaviour called?
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What concept is seen as contained within and growing out of society's overall ethical sensibility?
What concept is seen as contained within and growing out of society's overall ethical sensibility?
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What refers to a climate of ethical behaviour that allows trust to flourish within a firm, filtering down to all employees and clients?
What refers to a climate of ethical behaviour that allows trust to flourish within a firm, filtering down to all employees and clients?
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What is the idea that there is no such thing as a universal moral principle governing behaviour, stating that everything is relative and negotiable?
What is the idea that there is no such thing as a universal moral principle governing behaviour, stating that everything is relative and negotiable?
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Which of the following are types of ethical dilemmas?
Which of the following are types of ethical dilemmas?
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What is the ethical decision-making process that involves identifying a moral issue, gathering facts, and applying resolution principles?
What is the ethical decision-making process that involves identifying a moral issue, gathering facts, and applying resolution principles?
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Which of the following are ethical dilemma solutions?
Which of the following are ethical dilemma solutions?
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What term is used by the Canadian Regulatory Framework to describe the securities regulatory authority of each province?
What term is used by the Canadian Regulatory Framework to describe the securities regulatory authority of each province?
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What fund was established in 1969 to cover the accounts of clients of dealer members in case of insolvency?
What fund was established in 1969 to cover the accounts of clients of dealer members in case of insolvency?
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What is the umbrella organization that aims to improve, coordinate, and harmonize the regulation of the Canadian capital markets called?
What is the umbrella organization that aims to improve, coordinate, and harmonize the regulation of the Canadian capital markets called?
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What is the broker that buys and sells securities to the investor called?
What is the broker that buys and sells securities to the investor called?
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What are domestic or foreign-based exchanges that list securities eligible for registered accounts (RRSPs, TFSAs)?
What are domestic or foreign-based exchanges that list securities eligible for registered accounts (RRSPs, TFSAs)?
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What is the underlying principle of securities regulation in Canada, requiring full disclosure of material facts about securities offered for sale?
What is the underlying principle of securities regulation in Canada, requiring full disclosure of material facts about securities offered for sale?
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What organization enforces security dealers' compliance with the Proceeds of Crime (Money Laundering) and Terrorism Financing Act (PCMLTFA)?
What organization enforces security dealers' compliance with the Proceeds of Crime (Money Laundering) and Terrorism Financing Act (PCMLTFA)?
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What teams were launched in 2003 to strengthen the law enforcement community's ability to detect, investigate, and deter capital markets fraud?
What teams were launched in 2003 to strengthen the law enforcement community's ability to detect, investigate, and deter capital markets fraud?
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What team, launched in 2013 by the OSC, targets fraud and other serious misconduct in the securities market?
What team, launched in 2013 by the OSC, targets fraud and other serious misconduct in the securities market?
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What is a process used by criminals to convert proceeds of crime into seemingly legitimate funds?
What is a process used by criminals to convert proceeds of crime into seemingly legitimate funds?
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What is the SRO responsible for regulating the distribution of mutual funds by its members in Canada?
What is the SRO responsible for regulating the distribution of mutual funds by its members in Canada?
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What are instruments adopted by all CSA jurisdictions to govern the securities markets in Canada?
What are instruments adopted by all CSA jurisdictions to govern the securities markets in Canada?
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What CSA tool aims to reduce unnecessary duplication in the review of filings made in multiple jurisdictions?
What CSA tool aims to reduce unnecessary duplication in the review of filings made in multiple jurisdictions?
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What refers to the sale of a new issue of stocks or bonds, raising capital for the issuing company?
What refers to the sale of a new issue of stocks or bonds, raising capital for the issuing company?
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What refers to the person who must maintain the requirements necessary to justify their registration?
What refers to the person who must maintain the requirements necessary to justify their registration?
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What refers to the public sale of previously issued securities held by large investors, where the proceeds go to the investors rather than the issuing entity?
What refers to the public sale of previously issued securities held by large investors, where the proceeds go to the investors rather than the issuing entity?
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What describes the buying and selling of securities by investors through a stock exchange after the initial primary distribution?
What describes the buying and selling of securities by investors through a stock exchange after the initial primary distribution?
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What are industry organizations that regulate their own members, enforcing compliance with securities legislation?
What are industry organizations that regulate their own members, enforcing compliance with securities legislation?
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What is a common set of trading rules applied in all markets in Canada to promote fair and orderly markets?
What is a common set of trading rules applied in all markets in Canada to promote fair and orderly markets?
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What is the governing body of more than 200 members, including securities regulators and SROs from around the world?
What is the governing body of more than 200 members, including securities regulators and SROs from around the world?
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What organization assesses and addresses vulnerabilities affecting the financial system and promotes international financial stability?
What organization assesses and addresses vulnerabilities affecting the financial system and promotes international financial stability?
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What is the US counterpart to IIROC, working with IIROC to enhance the effectiveness of both organizations?
What is the US counterpart to IIROC, working with IIROC to enhance the effectiveness of both organizations?
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What federal Crown Corporation provides deposit insurance against loss for depositors in case of a member institution's failure?
What federal Crown Corporation provides deposit insurance against loss for depositors in case of a member institution's failure?
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What legislation is enforced by the CRTC that establishes rules similar to the NDNCL for sending commercial electronic messages (CEMs)?
What legislation is enforced by the CRTC that establishes rules similar to the NDNCL for sending commercial electronic messages (CEMs)?
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What arises when the interests of a client and a registrant are inconsistent or divergent?
What arises when the interests of a client and a registrant are inconsistent or divergent?
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What is a growing concern in the area of financial and operational compliance, representing challenges similar to money laundering issues?
What is a growing concern in the area of financial and operational compliance, representing challenges similar to money laundering issues?
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What are the two roles that can be played by investment representatives?
What are the two roles that can be played by investment representatives?
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What was established by the CRTC regarding allowable times of day to call clients/nonclients for telemarketing?
What was established by the CRTC regarding allowable times of day to call clients/nonclients for telemarketing?
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What is a test conducted for suitability reviews, evaluating an applicant's integrity, financial solvency, and competence?
What is a test conducted for suitability reviews, evaluating an applicant's integrity, financial solvency, and competence?
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What is a plain language document containing key information about each class or series of a mutual fund, required to be made available on the fund's website and delivered to investors before they purchase?
What is a plain language document containing key information about each class or series of a mutual fund, required to be made available on the fund's website and delivered to investors before they purchase?
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What is one of the two most common IIROC registration categories for individuals employed at a dealer member, alongside Registered Representatives?
What is one of the two most common IIROC registration categories for individuals employed at a dealer member, alongside Registered Representatives?
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What sets of rules govern the collection, use, or disclosure of personal information in the course of commercial activities in Canada, applying to private sector businesses and government entities?
What sets of rules govern the collection, use, or disclosure of personal information in the course of commercial activities in Canada, applying to private sector businesses and government entities?
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What are individuals who deal with or provide discretionary portfolio management for managed accounts called?
What are individuals who deal with or provide discretionary portfolio management for managed accounts called?
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What are orders given to registered representatives (RRs) or sales assistants to buy and sell securities that are not initiated by the client?
What are orders given to registered representatives (RRs) or sales assistants to buy and sell securities that are not initiated by the client?
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What is a fundamental need in most knowledge-based industries, and is a vital requirement for ongoing licensing in the Canadian securities industry?
What is a fundamental need in most knowledge-based industries, and is a vital requirement for ongoing licensing in the Canadian securities industry?
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What IIROC notice addressed the use of social media by dealer members, including Facebook, Twitter, LinkedIn, and YouTube?
What IIROC notice addressed the use of social media by dealer members, including Facebook, Twitter, LinkedIn, and YouTube?
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What refers to the owner of the account who is financially responsible for the account?
What refers to the owner of the account who is financially responsible for the account?
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What type of client account requires the client to deposit payment in full for each purchased transaction?
What type of client account requires the client to deposit payment in full for each purchased transaction?
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During what process and throughout the client relationship must you be in the best position to observe and evaluate client behaviour from a money laundering perspective?
During what process and throughout the client relationship must you be in the best position to observe and evaluate client behaviour from a money laundering perspective?
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What type of account involves the purchase of securities and payment on a settlement date, usually involving a financial institution as an agent?
What type of account involves the purchase of securities and payment on a settlement date, usually involving a financial institution as an agent?
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What type of account grants the dealer member authority to select securities and execute orders on behalf of the client without their constant permission?
What type of account grants the dealer member authority to select securities and execute orders on behalf of the client without their constant permission?
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What refers to someone who works at a company and has access to non-public information about the company or other publicly traded companies?
What refers to someone who works at a company and has access to non-public information about the company or other publicly traded companies?
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What type of account involves investment decisions made on a continuing basis by the dealer member, who has discretionary authority on an ongoing basis?
What type of account involves investment decisions made on a continuing basis by the dealer member, who has discretionary authority on an ongoing basis?
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What type of client account allows for partial payment for purchases, with the dealer member lending the client the unpaid portion at a certain interest rate?
What type of client account allows for partial payment for purchases, with the dealer member lending the client the unpaid portion at a certain interest rate?
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What refers to a client who is in a prominent position of public trust or is an immediate family member or close associate of someone in a prominent position?
What refers to a client who is in a prominent position of public trust or is an immediate family member or close associate of someone in a prominent position?
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What is a legal document giving one person the power to act for another person, often used when clients are opening new accounts?
What is a legal document giving one person the power to act for another person, often used when clients are opening new accounts?
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What legislation sets out reporting responsibilities against money laundering and terrorist financing, with potential penalties of imprisonment and fines?
What legislation sets out reporting responsibilities against money laundering and terrorist financing, with potential penalties of imprisonment and fines?
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What refers to warning signals of possible improper activities, often discovered during client discovery and client relationship processes?
What refers to warning signals of possible improper activities, often discovered during client discovery and client relationship processes?
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What is a critically important document that must be completed by the RR and the client before opening a new account, containing client information, account information, and registrant information?
What is a critically important document that must be completed by the RR and the client before opening a new account, containing client information, account information, and registrant information?
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What type of account operates similarly to Delivery Against Payment (DAP) accounts, but involves the client selling securities rather than the agent or financial institution?
What type of account operates similarly to Delivery Against Payment (DAP) accounts, but involves the client selling securities rather than the agent or financial institution?
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What refers to accounts registered in an individual's name with the CRA, including categories such as RRSPs, RRIFs, RESPs, and TFSAs?
What refers to accounts registered in an individual's name with the CRA, including categories such as RRSPs, RRIFs, RESPs, and TFSAs?
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What type of account is opened for all employees or family members of a dealer member, who are considered non-clients?
What type of account is opened for all employees or family members of a dealer member, who are considered non-clients?
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What is a document that outlines the account relationship and services to be provided to the client, including information about products offered, processes, fees, and complaint procedures?
What is a document that outlines the account relationship and services to be provided to the client, including information about products offered, processes, fees, and complaint procedures?
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What is a document that shows each client's current holdings and provides a quick reference when speaking to the client?
What is a document that shows each client's current holdings and provides a quick reference when speaking to the client?
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What is an alphabetical list of all securities held by the firm's clients, showing each client's name under the securities they hold, enabling the firm to contact clients about important developments related to specific securities?
What is an alphabetical list of all securities held by the firm's clients, showing each client's name under the securities they hold, enabling the firm to contact clients about important developments related to specific securities?
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What refers to financial institutions, governments, regulated pension funds, trust companies, certain investment funds, and wealthy individuals who purchase securities?
What refers to financial institutions, governments, regulated pension funds, trust companies, certain investment funds, and wealthy individuals who purchase securities?
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What is a distribution of new securities where the dealer acts as an agent to sell the securities with no guarantee of sales or price?
What is a distribution of new securities where the dealer acts as an agent to sell the securities with no guarantee of sales or price?
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What is a distribution of new securities where the dealer purchases the whole or partial block of new securities and distributes it to institutional or individual investors?
What is a distribution of new securities where the dealer purchases the whole or partial block of new securities and distributes it to institutional or individual investors?
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What is a way for companies to raise capital through a crowd of investors?
What is a way for companies to raise capital through a crowd of investors?
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What is usually issued as an initial threshold prior to a takeover bid?
What is usually issued as an initial threshold prior to a takeover bid?
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What is a type of security that tracks an index, often purchased for their low fees or as a way to invest passively?
What is a type of security that tracks an index, often purchased for their low fees or as a way to invest passively?
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What refers to the portion of the capital markets where participation is restricted to certain individuals and entities who meet specific requirements?
What refers to the portion of the capital markets where participation is restricted to certain individuals and entities who meet specific requirements?
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What is the final version of the prospectus, containing a complete disclosure of all facts pertaining to the offering?
What is the final version of the prospectus, containing a complete disclosure of all facts pertaining to the offering?
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What refers to the first issuing of securities from a company into the market?
What refers to the first issuing of securities from a company into the market?
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What is a customer that is defined by IIROC as having certain characteristics like acceptable counterparties/institutions, regulated entities, registrants under securities law, and non-individuals with significant assets under management?
What is a customer that is defined by IIROC as having certain characteristics like acceptable counterparties/institutions, regulated entities, registrants under securities law, and non-individuals with significant assets under management?
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What is a situation where an issuer buys back its own shares?
What is a situation where an issuer buys back its own shares?
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What is a fixed income security that guarantees a minimum return equal to the investor's initial investment, regardless of the performance of the underlying assets?
What is a fixed income security that guarantees a minimum return equal to the investor's initial investment, regardless of the performance of the underlying assets?
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What refers to a way in which dealer members must communicate with their clients about the general availability of securities through various channels?
What refers to a way in which dealer members must communicate with their clients about the general availability of securities through various channels?
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What is a document that outlines the investment contract between the purchaser and the company, providing investors with essential information about the securities being offered?
What is a document that outlines the investment contract between the purchaser and the company, providing investors with essential information about the securities being offered?
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What is also known as the preliminary prospectus, marked with red ink on its front cover to indicate that it is subject to completion or amendment?
What is also known as the preliminary prospectus, marked with red ink on its front cover to indicate that it is subject to completion or amendment?
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What is a company that is issuing additional securities into the marketplace, typically still requiring a prospectus?
What is a company that is issuing additional securities into the marketplace, typically still requiring a prospectus?
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What is the right of a consumer to cancel certain types of loans or agreements, often provided within a specific timeframe?
What is the right of a consumer to cancel certain types of loans or agreements, often provided within a specific timeframe?
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What is the right of investors to withdraw from a purchase within 48 hours of making the purchase?
What is the right of investors to withdraw from a purchase within 48 hours of making the purchase?
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What occurs when an issuer purchases the securities of another issuer?
What occurs when an issuer purchases the securities of another issuer?
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What refers to providing advice to an issuer regarding securities to issue, pricing, and selling new securities?
What refers to providing advice to an issuer regarding securities to issue, pricing, and selling new securities?
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What is the process that dealer members and RRs must undertake in every part of their business to ensure that their clients are receiving appropriate service?
What is the process that dealer members and RRs must undertake in every part of their business to ensure that their clients are receiving appropriate service?
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Study Notes
Duty of Care
- Obligation #3 for registered representatives (RRs)
- Involves acting honestly, in good faith, and professionally.
- Requires appropriate skills and knowledge for client advice.
- Not a standard of perfection, but a higher standard than fiduciary duty.
- Key aspects are suitability and fiduciary duty.
Ethics
- Principles guiding individual behavior.
- Reflects societal standards of right and wrong.
- Continuous process of examining choices and decisions within moral principles.
- Rules cannot cover every situation, so ethics provide supplementary guidance.
Fiduciary Duty
- Higher standard than duty of care, imposed by common law.
- Exists when one party trusts another's authority/expertise.
- Less common than duty of care.
- Disputes often resolved through civil litigation.
Investment Industry Regulatory Organization of Canada (IIROC)
- National self-regulatory organization for the Canadian securities industry.
- Regulates RRs and investment dealers.
- Enforces strict compliance rules and high ethical standards.
- Oversees equity and debt marketplaces.
IIROC Rule 1402 Standards of Conduct
- Summarizes IIROC's expectations of registered representatives.
- Requires responsible behaviour, avoiding actions that harm investor confidence.
- Includes compliance with laws, regulations, and internal policies.
Know Your Client (KYC)
- Obligation #1 for RRs, understanding client circumstances.
- Requires understanding client suitability before making recommendations.
- Dealer members must maintain client records and notes.
- Companion obligation to KYP.
Know Your Product (KYP)
- Obligation #2 for RRs, understanding recommended products.
- Essential knowledge before recommending investment products.
- Includes an understanding of product construction, performance, and complexity.
- Companion obligation to KYC.
Registered Representative (RR)
- Individuals providing advice on various securities.
- Must meet certifications and pass required tests.
- Adhere to high ethical and conduct standards (duty of care, KYC, KYP).
- Avoid conflicts of interest and maintain client confidentiality.
- Must constantly improve professional knowledge.
Suitability
- Assessment of client financial situation, knowledge, objectives, time horizon, and risk tolerance.
- Requirement related to duty of care and implemented by IIROC.
End Values
- Long-term personal goals.
- Examples include accomplishment, service, security, peace, and recognition.
Ethical Dilemma
- Situations requiring choosing between 2+ options, using ethical principles.
- Categorized as right vs. wrong or right vs. right dilemmas.
- Right vs. right dilemmas are harder to analyze (conflicting core values).
Front Page Test
- Step 4 of ethical decision-making (right vs. wrong issues).
- Examines potential reputational damage of public disclosure.
Legal Test
- Step 4 of ethical decision-making (right vs. wrong issues).
- Evaluates whether the action is illegal or violates industry rules.
Means Values
- Daily actions guiding us toward end values.
- Examples include ambition, openness, and competence.
Mom Test
- Step 4 of ethical decision-making (right vs. wrong issues).
- Considers comfort level with revealing the decision to someone important.
Morals
- Societal rules of conduct and principles of right vs. wrong.
- Not created by authorities, but underpin their decisions.
- Based on reasoned principles.
Unified Value System
- End values and means values reinforce each other.
- Problems arise when means values don't align with end values.
- Values clarification critical for a balanced system.
Values
- Measures of worth attached to ideas and behaviors.
- Beliefs not facts, but they influence life goals and decisions.
- May reflect importance of people, money, work, leisure, or family.
- Can shift over time, without drastic alterations.
Laws
- Reflect societal values and encourage peaceful co-existence.
- Not equivalent to ethics, but rooted in ethical principles.
Tone at the Top
- Desired ethical culture of trust within an organization.
- Ethical behaviours from leadership, filtering downward.
- Guiding beliefs must be communicated throughout the firm.
Ethical Relativism
- Belief that universal moral principles do not exist.
- All values are relative, situational, and personal.
- Not a desirable ethical framework (personal needs may outweigh community ones).
Types of Ethical Dilemmas
- Truth vs. loyalty, individual vs. group, short-term vs. long-term, justice vs. mercy.
Ethical Decision-Making Process
-
- Recognize moral issues
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- Determine whose issue it is
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- Gather the facts
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- Test for right-versus-wrong issues
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- Test for right-versus-right paradigms
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- Apply the resolution principles
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- Make the decision
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- Reflect on the process
Ethical Dilemma Solutions
- End-based (greatest good), rule-based (rules for future), social contract (harmonious relationships), personalistic (best for self).
Administrator
- Province-specific securities regulatory authority.
- Harmonize regulation of Canadian capital markets with CSA.
- Register individuals and firms involved in securities.
Canadian Investor Protection Fund (CIPF)
- Covers client accounts in case of dealer insolvency
- Excludes losses due to poor investment performance.
Canadian Securities Administrators (CSA)
- Coordinates and harmonizes Canadian capital markets regulation.
- Protects investors, fosters fair markets, and maintains market integrity.
- Key tools are passport system, Super MOU, and electronic databases.
Dealer Member
- Broker that buys and sells securities to investors.
Designated Stock Exchange
- Domestic or foreign exchanges for eligible securities in registered accounts.
- Meets standards, operates within regulatory framework (IOSCO), and provides investor liquidity.
Disclosure
- Fundamental principle of securities regulation in Canada.
- Requires truthful disclosure of material facts in prospectuses or contracts to prospective buyers.
- Ensures investors have complete info.
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
- Enforces the Proceeds of Crime and Terrorist Financing Act.
- Addresses money laundering/terrorist financing compliance.
- Similar, but not identical, to U.S. SEC.
Integrated Market Enforcement Teams (IMETs)
- Joint initiative of RCMP and federal government (2003).
- Strengthened detection, investigation, and deterrence of capital markets fraud.
- Collaboration across multiple levels of authorities.
Joint Serious Offences Team (JSOT)
- OSC-initiated (2013) partnership.
- Combats serious securities law violations using securities act and criminal code.
- Enhances fraud investigations and prosecutions.
Money Laundering
- Process of converting crime proceeds to legitimate funds.
- Obscures origin to avoid suspicion using complex transactions.
- Stages are placement, layering, and integration.
Mutual Fund Dealers Association (MFDA)
- SRO regulating the sale of mutual funds.
- Does not regulate the funds themselves
National Instrument (NI)
- Adopted by all Canadian securities jurisdictions.
- Establishes harmonized securities markets regulations.
Passport System
- CSA tool reducing unnecessary regulatory filings.
Primary Distribution
- Sale of newly issued securities (e.g., IPO).
- Direct source of capital for issuing companies.
Registrant
- Individuals maintaining requirements for ongoing registration.
- Includes individuals seeking registration or licensing.
Secondary Distribution
- Public sale of previously issued securities to investors.
- Proceeds go to the current investors, not issuers.
Secondary Trading
- Buying and selling previously issued securities.
- Occurs on stock exchanges (freely trading).
Self-Regulatory Organization (SRO)
- Industry body regulating its own members' conduct.
Universal Market Integrity Rules (UMIRs)
- Uniform trading rules across Canadian markets.
- Assesses trade desk compliance.
International Organization of Securities Commissions (IOSCO)
- Global body for securities regulation, with many Canadian members.
Financial Stability Board (FSB)
- Successor to financial stability forum (FSF).
- Addresses financial system vulnerabilities, promotes information exchange.
Financial Industry Regulatory Authority (FINRA)
- U.S. counterpart to IIROC, works collaboratively.
Canada Deposit Insurance Corporation (CDIC)
- Insures deposits up to $100,000 per depositor.
Canada's Anti-Spam Legislation (CASL)
- Enforced by CRTC, similar to NDNCL.
- Requires consent for commercial electronic messages.
Conflict of Interest
- Situation where client and registrant's interests differ.
Cybersecurity
- Protecting financial systems and operations from cyberattacks.
Discount Broker
- One of two representative roles.
National Do Not Call List (NDNCL)
- List of disallowed telemarketing times.
Fit and Proper Test
- Assessment of integrity, financial solvency and competence.
- Conducted for IIROC approvals and securities registration
Fund Facts
- Required documents/info about mutual funds for investors.
Investment Representative
- IIROC registration category, must adhere to IIROC rules.
- Must be registered within the geographic location of their clients.
- Must disclose all outside activities that they participate in. These representatives can only take orders from clients from where they are licensed.
Personal Information Protection and Electronic Documents Act (PIPEDA)
- Governs personal information collection, use, and disclosure in commercial activities.
Portfolio Manager
- Individuals providing discretionary portfolio management services.
Unsolicited Order
- Order placed directly with RR or sales assistant.
Continuing Education (CE)
- Maintains proficiency in securities industry.
- Must satisfy 20+ hrs for RRs per 2 years, including compliance.
IIROC Note 11-0349
- IIROC notice about social media use by dealer members.
- Emphasizes compliance with securities legislation on social media.
Beneficial Owner
- Account owner with financial responsibility.
Cash Account
- Client deposits full payment for each transaction.
Client Discovery
- Identifying potential money laundering/terrorist financing red flags.
Delivery Against Payment (DAP)
- Security purchase with payment on settlement date.
Discretionary Account
- Account where dealer member can make investment decisions.
Insider (Insider Trading)
- Person with non-public material information about a company.
- Illegal use of non-public information for personal gain.
Managed Account
- Account requiring ongoing investment decisions by the dealer member.
Margin Account
- Account with partial payment for securities purchases.
- Dealer member lends remaining amount at interest.
Politically Exposed Person (PEP)
- Client in a position of public trust.
Power of Attorney
- Legal document granting one party authority to act for another.
Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
- Reporting requirements for money laundering and terrorist financing.
- Potential penalties for non-compliance (prison/fines).
Red Flag
- Potential indicator for money laundering or terrorist financing.
- Examples include reluctant disclosure, altered documents.
New Account Application Form (NAAF)
- Key document for new account opening (client, account, registrant information).
Receipt Against Payment (RAP)
- Account similar to DAP, except client sells securities.
Registered Accounts
- Accounts registered for tax purposes (e.g., RRSPs, TFSAs).
Pro Account
- Account for dealer members' employees or family.
Relationship Disclosure Document
- Outlines account details, products, processes, fees, complaints, etc.
Portfolio Record
- Shows client holdings for quick reference.
Security Cross-Reference
- Alphabetical list of clients and securities they hold.
Accredited Investors
- Institutions, governments, funds, trusts, and high-net-worth individuals.
Best Efforts Deal
- Dealer acts as agent for securities sales with no guarantees.
Bought Deal
- Dealer member purchases securities and sells them to investors
Crowdfunding
- Method for companies to raise capital.
Early Warning
- Initial threshold for a takeover bid.
Exchange-Traded Funds (ETFs)
- Similar to mutual funds, track an index.
Exempt Market
- Capital markets with restrictions for certain individuals/entities.
Final Prospectus
- Final version of a prospectus, including all disclosures.
Initial Public Offering (IPO)
- First issuance of securities by a company.
Institutional Customer
- Customers defined by IIROC (e.g., institutions exceeding $10M in securities).
Issuer Bid
- Issuer buys back its own shares.
Principal-Protected Notes (PPNs)
- Fixed income securities guaranteeing minimum return.
Private Placements
- Sales to select investors (e.g., institutional/accredited).
Prospectus
- Investment contract (for IPOs, Reporting Issuers) outlining facts and disclosures for potential purchasers.
Red Herring Prospectus
- Preliminary prospectus, not final, subject to changes.
Reporting Issuer
- Companies issuing securities requiring prospectuses.
Right of Rescission
- Consumer's right to cancel certain agreements.
Right of Withdrawal
- Investors' ability to cancel purchases within a timeframe.
Takeover Bid
- Issuer purchases securities of another issuer.
Underwriting
- Advice and assistance to issuers in issuing and selling new securities.
Due Diligence
- Dealer member/RRs ensure clients get appropriate services, maintain client confidentiality, and adhere to securities laws and regulations.
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Description
Explore the concepts of Duty of Care, Ethics, and Fiduciary Duty within the investment sector. This quiz delves into the obligations of registered representatives and the ethical principles that guide their decisions. Understand the importance of these duties and their regulatory framework in Canada.
