Enforcement Actions & Penalties Flashcards
7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Enforcement Actions & Penalties flashcards as text
Under the Sarbanes-Oxley Act (SOX), an officer who certifies financial statements knowing they are materially misleading faces a maximum criminal fine of:
Answer: $5 million and/or 20 years imprisonment
SOX Section 906 provides that willful false certifications carry a maximum penalty of $5 million in fines and/or 20 years imprisonment.
The 'disgorgement' remedy in SEC enforcement actions is intended to:
Answer: Strip the violator of ill-gotten gains to prevent unjust enrichment
Disgorgement requires a violator to return profits obtained through illegal conduct, preventing unjust enrichment rather than providing additional punishment.
A 'prompt corrective action' (PCA) framework under federal banking law primarily applies to:
Answer: Undercapitalized depository institutions
PCA is a statutory framework requiring regulators to take increasingly severe supervisory actions as a bank's capital ratios decline.
Which principle guides a compliance officer in determining whether to self-report a potential violation to regulators before an examination discovers it?
Answer: Self-reporting may mitigate penalties and demonstrates good faith, but does not eliminate liability
Voluntary self-disclosure typically results in reduced penalties and reflects positively on a firm's compliance culture, but liability is not eliminated.
An 'industry bar' imposed by FINRA prohibits a securities professional from:
Answer: Associating with any FINRA member firm in any capacity
A FINRA industry bar is the most severe sanction, permanently or for a defined term prohibiting the individual from associating with any FINRA member firm.
Under the Foreign Corrupt Practices Act (FCPA), 'books and records' violations may be prosecuted separately from bribery charges because they:
Answer: Are strict liability offenses that do not require proof of corrupt intent
FCPA accounting provisions are strict liability offenses for issuers, meaning no corrupt intent is required — inaccurate books alone suffice for liability.
Which of the following scenarios most clearly describes 'vicarious liability' in a compliance enforcement context?
Answer: A company is held liable for a compliance violation committed by its employee acting within the scope of employment
Vicarious liability holds an employer responsible for an employee's wrongful acts committed within the scope of employment under respondeat superior doctrine.