Question.2561 - Assessment Traits Requires Lopeswrite Assessment Description The purpose of this assignment is to describe the history and purpose of the SEC and various securities acts as well as a comparison of the role of credentialed professionals during the investment process. Write a paper (750-1,000 words) demonstrating an overview of the history and purpose of regulatory agencies and acts. The paper should contain the following: 1. Provide an overview of the history and purpose of the SEC, including a summary of the objectives 2. Describe the history and purpose of the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Advisors Act of 1940. 3. Provide an overview of the history and purpose of the Securities Investor Protection Corporation (SIPC). 4. Utilizing the topic Resources, compare the possible roles of the following credentialed professionals in the investment process: Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and Certified Investment Management Analyst (CIMA ). Include at least five different sources (e.g., government websites, reliable original material, academic articles, etc.). Wikipedia, Investopedia, and other nonreliable sources may not be used. Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion. You are required to submit this assignment to LopesWrite. A link to the LopesWrite technical support articles is located in Class Resources if you need assistance.
Answer Below:
1. History and purpose of the SEC The Securities Exchange Commission -SEC was Formed officially on 26 th October 1936 by the Securities Act and operations began on 11 th November 1936 under the Leadership of Ricardo Nepomuceno. To safeguard the public interest from investments in securities major functions are ? registration of securities ? analysis of every registered security ? evaluation of the financial condition ? operations of applicants for security issues, screening of applications for broker’s or dealer’s license ? supervision of stock and bond brokers as well as the stock exchanges In 1981, the Commission was expanded to include two (2) additional commissioners and two (2) departments, one for prosecution and enforcement and the other for supervision and monitoring. Then on 01 December 2000, the SEC was reorganized as mandated by R. A. 8799 also known as the Securities Regulation Code Primary Objectives of SEC are ? To protect investors, ? maintain fair, orderly, and efficient markets, and ? facilitate capital formation 2. History and purpose of the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Advisors Act of 1940 Securities Act of 1933, Securities Exchange Act of 1934 were established in response to Market Crash in October 1929. This was formed under the leadership of then President Franklin Roosevelt The Securities Act of 1933 is governed by the Securities and Exchange Commission, which was created a year later by the Securities Exchange Act of 1934. Several amendments to the act have been passed to update rules numerous times over the years, with the latest enacted in 2018. The main purpose of these Acts was to ? disclosure of Information by companies that issues securities and ? to ensure Investor had balanced and non- fraudulent information ? The Securities Act also established laws against misrepresentation and fraudulent activities in the securities markets Investment Advisors Act of 1940 was formed as after Market crash in 1929, Investors felt that proper supervision of their securities invested is necessary as advisors also Manipulated clients by placing high quality securities to advisors personal account and disputable stocks to client their main motto is to get new clients when funds of existing were exhausted and there were questionable business techniques used by these investors to avoid all these Investors Advisors Act of 1940 was formed. The Purpose of Investment Advisors Act of 1940 was to ? be bound by a fiduciary duty to their clients, meaning that advisers must put the interests of their clients above their own interests. ? obtain the best possible prices in the buying and selling of securities in investment portfolios ? disclose to their clients all material facts relating to an investment. ? establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information (MNPI) by the investment adviser; and ? register with the SEC, submit written materials relating to its investing practices to the SEC, and submit to periodic SEC examinations. 3.Securities Investor Protection Corporation (SIPC). he Securities Investor Protection Corporation (SIPC) had its origins in the difficult years of 1968- 70, when the paperwork crunch, brought on by unexpectedly high trading volume, was followed by a very severe decline in stock prices. Hundreds of broker-dealers were merged, acquired, or simply went out of business. Some were unable to meet their obligations to customers and went bankrupt. Public confidence in the U.S. securities markets was in jeopardy. ? Then, the Securities Investor Protection Corporation (SIPC) is a non-profit corporation created by an act of Congress in 1970 to protect the clients of brokerage firms that are forced into bankruptcy. It provides Limited coverage to investors on their brokerage accounts if their brokerage firm became insolvent ? SIPC members include all brokers and dealers registered under the Securities Exchange Act of 1934, all members of securities exchanges, and most NASD members. ? SIPC coverage insures people for up to a limit of $500,000 in cash and securities per account. SIPC protections also include up to $250,000 in cash coverage. The total amount of coverage is $500,000 ? SIPC insurance only comes into play when the SIPC must intervene. This happens when it receives a referral from regulatory agencies such as the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Agency (FINRA). If a broker-dealer fails and customers have lost securities and/or cash, the liquidation process will begin ? SIPC insurance is an important safeguard to have in place so investors can rest easy, knowing their money will be safe if their broker fails 4. Certified Public Accountant The CPA designation distinguishes licensed accounting professionals committed to protecting the public interest. These professionals offer financial statement audits and other attestation services to help inform investors about the financial health of organizations. They provide individuals and families with valuable knowledge and advice on taxes and financial planning. In business and industry, CPAs offer organizations around the world tax, financial reporting, and advisory services Chartered Financial Analyst CFA is a financial manager or analyst who has been certified by the CFA Institute with the professional designation Chartered Financial Analyst. Chartered Financial Analysts are responsible for identifying good investments for their company or clients to make, as well as identifying bad investments for their company or clients to avoid. Chartered Financial Analysts collect data, perform analyses, evaluate returns and risks on different investments, create financial models and forecasts, write reports, and sometimes make presentations to executives. They typically work at banks, investment banks, securities firms, brokerages, insurance companies or multinational corporations, and manage financial instruments and investments, such as securities, bonds, funds, stocks, companies. Certified Financial Planner ? Analyse clients’ financial statuses (e.g., income, expenses, and liabilities) ? Examine and suggest financial opportunities (e.g., insurance plans, investments) ? Develop sound plans and budgets for clients ? Customize financial plans according to clients’ changing needs ? Help clients implement their plans and carry out transactions ? Present and sell suitable financial products and services ? Maintain updated knowledge of regulations, practices, and financial products The Certified Investment Management Analyst (CIMA) is a certification for financial consultants and investment advisors. It is issued by an organization called the Investments and Wealth Institute. A CIMA-accredited advisor generally will focus on investment consulting. Unlike a financial advisor, a certified investment management analyst typically won’t consult on budget or other aspects of financial management. Instead, they build their practice around Investment, Risk Assessment and Portfolio Management A CIMA must show an expertise not only in finance but also in business strategy, operations, and management. This makes them well suited for assessing risk and making decisions on the scale of entire corporations or funds. As a result, they are better suited for advising commensurately wealthy clients.More Articles From Finance
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