Anti-Fraud Provisions
Chapters in this video
- 0:00 Standards of commercial honor: the ultimate catch-all
- 1:50 FINRA fraud prohibition versus commercial honor
- 3:10 SEC antifraud rule: the three-prong federal catch-all
- 4:26 Broker-dealer antifraud hook and completion of the transaction
- 5:12 Criminal penalties: the 5-20-25 memory aid
- 6:23 Ignorance of the rule is no defense to fines
- 7:24 Rapid-fire exam recap
What this video covers
- Why the FINRA standards of commercial honor can charge unethical conduct with no specific factual element, no customer harm, and even off-the-job behavior
- How the FINRA prohibition on manipulative, deceptive, or other fraudulent devices operates as the SRO-level analog to the Securities and Exchange Commission (SEC) antifraud rule
- The three prongs of the general antifraud provision: scheme to defraud, misstatement or omission, and fraudulent course of business
- Why materiality is the gatekeeper for the misstatement-or-omission prong, and how trivial omissions fail the test
- The broker-dealer antifraud hook and its specific definition of completion of the transaction
- The criminal-penalty memory aid: $5 million individual fine, 20 years individual prison, $25 million entity fine for willful violations
- Why lack of knowledge of the rule is a defense only to imprisonment, not to fines
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 24 course also includes adaptive practice questions and spaced-repetition flashcards, free through the end of 2026.