Exam 30: Web 5:conflicts of Interest in the Financial Services Industry

Describe what is meant by economies of scope and explain how financial institutions' realizing economies of scope has led to an increase in conflicts of interest.

Which policy measure increased the SEC budget to supervise securities markets?

Which of the following policy measures authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating?

Which of the following policy measures created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings?

Which of the following is an example of a bank realizing economies of scope?

Which of the following is not a part of the Sarbanes-Oxley Act of 2002?

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included which of the following provisions to deal with conflicts of interest in the credit-rating Industry? 1. Created an Office of Credit Ratings at the SEC with its own staff and the authority to fine credit-rating agencies and to deregister an agency if it produces bad ratings. 2. 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. 3. Prohibited compliance officers from being involved in producing or selling credit ratings. 4. 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. 5. Authorized investors to bring lawsuits against credit-rating agencies for a reckless failure to get the facts when providing a credit rating.

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

Explain how the market can reduce the incentive for credit-rating firms to take advantage of conflicts of interest.

Under the Sarbanes-Oxley Act of 2002,the provision that established the PCAOB to supervise accounting firms is an example of