CFE – Law — Question 29

Which of the following is the MOST ACCURATE statement about self-regulatory organizations (SROs) in the securities industry?

Answer options

• A. In some jurisdictions, SROs establish the standards and rules under which members of the securities industry operate.
• B. An SRO generally has sole regulatory authority over the securities industry in the jurisdiction in which it operates.
• C. In most jurisdictions, SROs are prohibited from participating in the resolution of disputes related to securities transactions.
• D. An SRO is a governmental entity that exercises regulatory authority over the securities industry in its jurisdiction.

Correct answer: A

Explanation

Option A is correct because SROs do establish the standards and rules for securities industry members in certain jurisdictions. Option B is incorrect as SROs often work alongside governmental bodies and do not have sole authority. Option C is wrong because SROs can participate in dispute resolutions in many jurisdictions. Option D is inaccurate since SROs are not government entities; they are independent organizations.