Exam 15: Conflicts of Interest in the Financial Industry

Which policy measure makes it unlawful for a registered public accounting firm to provide any nonaudit service to a client contemporaneously with an impermissable audit?

Which of the following policy measures prohibited compliance officers from being involved in producing or selling credit ratings?

If firms have an incentive to hide information from mandatory disclosure because the information is proprietary, then which of the following remedies is the least intrusive way to overcome this incentive?

In investment banking, a conflict usually is present between the issuers of securities, who ________, and investors, who ________.

When the Glass-Steagall Act was repealed in 1999, potential conflicts of interest arose with

Explain the type of conflicts of interest that can arise from the development of universal banking.

If the incentive to take advantage of a conflict of interest is high

Which of the following policy measures forced credit-rating agencies to provide reports to the SEC when their employees go to work for a company that has been rated by them in the last twelve months.?

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating. This is an example of which remedy of conflicts of interest?

Under the Global Legal Settlement of 2002, the provision that requires investment banking firms to make their analysts' recommendations public is an example of

Which policy measure requires investment banks to make public their analysts' recommendations?

Conflicts of interest may arise within the credit rating agencies because

Not surprisingly, when financial institutions have consolidated more services under one roof, the amount of conflicts of interest has ________, which has led to ________ in unethical behavior.

The incentive for analysts in investment banks to distort research increases when

Evidence suggests that credit-rating agencies ________ exploited conflicts of interest because ________.

Evidence suggests that the market ________ take into account the credibility of analyst's recommendations of IPO's that were underwritten at the analyst's investment bank because the performance of these recommendations was about 50% ________ compared to recommendations made by other analysts at different investment banks.

Under the Sarbanes-Oxley Act of 2002, the provision that gives more funding to the SEC is an example of

Advice on taxes, accounting or management information systems, and business strategies are commonly referred to as ________ services.

Under the Global Legal Settlement of 2002, the provision that requires investment banking firms to sever the link between underwriting and research is an example of

Which of the following policy measures required the SEC to prevent issuers of asset-backed securities from choosing the credit-rating agencies that will give them the highest rating and supported earlier initiatives by the SEC?