Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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How soon must a member report missing securities suspected of criminal activity to the SIC and the FBI?

1 business day
2 business days
3 business days
5 business days

The correct answer is: 1 business day

The requirement to report missing securities suspected of criminal activity is governed by regulations set forth to ensure prompt action in the event of theft or fraudulent activity. A member must report these incidents to the Securities and Exchange Commission (SEC) and, in cases where a crime is suspected, also to law enforcement agencies such as the FBI within one business day. This rapid reporting is crucial because it helps authorities to investigate and potentially recover the missing securities before they can be further misappropriated or sold. Timeliness is essential in criminal matters to prevent further loss and to enhance the efficacy of law enforcement efforts, which is why the protocol mandates this swift action. In addition, adhering to this reporting timeframe demonstrates compliance with regulatory expectations and reinforces the integrity of the financial system. By promptly informing the appropriate entities, firms can help safeguard investor assets and maintain public trust in the securities industry.