August 7th

When it comes to advertising by investment advisers and their representatives, which of the following would be most likely to be acceptable to the Administrator?

A "like" from a client on an investment adviser representative's Facebook page post that announced the birth of her most recent child.

Under the Uniform Securities Act, which of the following is excluded from the definition of investment adviser?

A bank An investment adviser representative A lawyer giving suggestions to a client on where to invest the proceeds of a divorce settlement that he helped her obtain An investment adviser with an office in the state whose only client is a closed-end investment company registered under the Investment Company Act of 1940

Which of the following persons are NOT excluded from the definition of, or exempt from registration as, a broker-dealer under the Uniform Securities Act?

A broker-dealer with no office in the state that has no more than 5 retail clients resident in the state within a 12 month period

Which of the following is (are) NOT exempt from registration as an investment adviser representative in the state in which they maintain a place of business?

A certified financial planner who prepares financial plans and whose only compensation is commissions An insurance agent who prepares comprehensive financial plans and receives commissions on any insurance products purchased by his clients

Under the Uniform Securities Act, which of the following is NOT an investment adviser representative?

A clerk employed by a state-registered investment advisory firm

Which of the following persons are investment advisers subject to state registration?

A financial planner or other person that provides investment advisory services to others for compensation

In some instances, rather than use an investment banker to distribute its securities to the public, an issuer will hire a sales force or use its own employees to make the sales. The individuals involved in the selling in this state would NOT be defined as agents under the Uniform Securities Act if selling on behalf of which of the following issuers?

A savings institution organized and supervised under the laws of any state

Which of the following would be required to register as an agent under the Uniform Securities Act?

A trader who is authorized to handle customer orders An individual who makes cold calls to pre-qualify prospects and lets a principal in the firm handle all customer trades

Under the Uniform Securities Act, which of the following is considered a place of business of a registered investment adviser representative?

An office from which the representative regularly provides advisory services to clients A location published in a professional directory, indicated on business cards, or telephone book listing that identifies it as a place where the representative will be available to meet or communicate with clients A hotel or auditorium at which the representative has advertised to the public that he will be available to conduct advisory business at that site

In which of the following situations did an agent commit fraud?

An agent knowingly sold a nonexempt, nonregistered security to a retail client for whom the security was deemed suitable.

The term "investment adviser representative" includes which of the following?

An employee who solicits new business for an adviser A supervisor who oversees employees who manage client portfolios for an adviser

A consent to service of process required by an Administrator is

an agreement whereby a registrant will be bound by any legal action or subpoena served on the Administrator as if it had been served on the registrant

One of the major differences between identity theft and physical theft is that in the case of identity theft,

it might not be discovered for some time

Bryan, an agent registered with a broker-dealer, buys 1,000 shares of XYZ Corp. in his own account. In recommending XYZ Corp. to his customers, Bryan informs them that he believes in the company so much that he put his own money in the stock. This practice is

not an unethical sales practice

When does a customer have to receive the options disclosure document?

Before or at the time the firm approves that customer's account or accepts the customer's order to trade options covered by the ODD

Which of the following actions should be taken by an agent when a client decides to open an options account?

Before the first options trade, review with the client the risks involved when trading options

Under the Uniform Securities Act, if an investment adviser takes custody of client assets, which of the following statements are TRUE?

Clients must receive quarterly statements. The adviser must be audited at least annually.

In October 1987, the SEC promulgated Release IA-1092, which had the effect of broadening the definition of investment adviser. As a result of the Release, which of the following would NOT be included in the definition?

Commercial banks offering a full range of advisory services for their high-net-worth clients

What document must accompany an initial registration application for those persons required to register under the Uniform Securities Act?

Consent to service of process

Under the Howey test, a Supreme Court Case that established the standards for defining an investment contract, which of the following is a characteristic of a security?

Entails an investment of money Carries expectation of profits Entails investor reliance on the efforts of others

Which of the following pieces of customer information must an agent attempt to obtain when opening a new account?

Financial condition Investment objective

In which of the following cases would the Uniform Securities Act require registration of an investment adviser who had no place of business in the state?

He had more than five non-institutional clients who were residents of the state.

Which of the following types of compensation is an investment adviser prohibited from accepting?

Quarterly fee based on account performance

One of the unethical practices under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents is market manipulation. Which of the following are examples of a broker-dealer engaging in that practice?

Matched orders Wash trades

State securities Administrators may NOT impose which of the following?

Minimum net worth levels on registered investment adviser representatives

According to the USA, a person must register as a broker-dealer in a state if he had which of the following?

No place of business in the state, but clients who relocated their official residence to that state more than 30 days ago A place of business in the state

​An individual with a place of business in State A manages client assets on behalf of a ​covered investment adviser​. ​This individual wishes to expand his client base by working one day per week out of the firm's office in State B. Which of the following actions must the person take to practice within that particular state?

Pay state registration fees if required by the Administrator

Which of the following statements regarding brokerage and advisory activities under the USA are TRUE?

Sanctions for both investment advisers and broker-dealers include administrative proceedings, judicial injunctions, and civil and criminal prosecutions. It is unlawful for any person, whether technically defined as an investment adviser or not, to deceive another person for compensation as to the value of securities.

It has long been custom for broker-dealers to provide research and other customer-related services to investment advisers who direct brokerage business to them. Details about what is and what is not allowable are found in

Section 28(e) of the Securities Exchange Act of 1934

Under the Uniform Securities Act, an investment adviser who has custody of client securities or funds must do all of the following EXCEPT

Send clients itemized statements no less frequently than every 6 months detailing the funds and securities in the adviser's custody at the end of the period

Sharon Smith is an agent for Highwater Securities, a broker-dealer registered in all 50 states. Sharon receives an unsolicited order from a bank located in State X, a state in which she has no place of business. Under the Uniform Securities Act,

Sharon must be registered in State X in order to accept the order

Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities law practice full time in New York state. He must register as an investment adviser in New York state if

Smith's clients, none of whom are residents of New York, receive investment advice as an integral part of Smith's legal services

XYZ Securities Co. is ​simultaneously ​registering as a broker-dealer with the SEC​ and several states.​ Which of the following statements regarding its registration under the Uniform Securities Act is CORRECT?

State registrations expire annually on December 31.

Which of the following activities are unethical or fraudulent for agents?

Stating that a specific stock always follows the performance of the Dow Jones Average Stating that the agent will always follow the client's account and recommend changes prior to a market shift Recommending speculative, low-priced stocks with no knowledge of client's financial condition Stating that the client will always make money investing prior to quarterly reports

Under which of the following circumstances may an Administrator revoke an adviser's registration?

The adviser has been convicted of a nonsecurities-related felony.

Under the Uniform Securities Act, which of the following are TRUE regarding the registration of a successor firm?

The successor firm need not be in existence when the application for registration is filed. The successor firm's registration will be effective for the unexpired portion of the year.

Which of the following statements regarding Form ADV Part 2 is TRUE?

Unless there are no material changes, it must be delivered to clients annually.

All of the following activities and communications would fall outside the definition of a recommendation EXCEPT

a broker-dealer sends an email to its more conservative clients stating this would be an excellent time to invest in public utility stocks, and includes a list of those paying the highest dividends

Under the Uniform Securities Act, all of the following are exempt from state registration as investment advisers EXCEPT

a financial planner who provides fee-based investment advisory services to clients and currently has a total of $18 million in assets under management

Under the Uniform Securities Act, the definition of a broker-dealer includes

a person in the business of effecting securities transactions in its own account or for the accounts of others

Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser EXCEPT

a person in the business of providing advice on municipal bonds for compensation

Under the Uniform Securities Act, the term person would include

a political subdivision an unincorporated association an inter vivos trust

All of the following are investment adviser representatives EXCEPT

a receptionist/switchboard operator employed by ABD Advisers, Inc. ABD Advisers, Inc.

When it comes to identity theft, one of the red flags is suspicious documents. Documents that can offer hints of identity theft would include all of the following EXCEPT

a valid passport with stamps showing visits to North Korea and Iran

An investment adviser representative lends $10,000 to her brother-in-law who is her client and works in the firm's IT department. He signs an agreement to pay her back in 5 years at below market interest. This arrangement is

acceptable because she made the loan to a fellow employee of the firm

All of the following would be prohibited practices under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT

accepting an order from a client's spouse shortly after receiving a written trading authorization

Disclosure to customers of a broker-dealer's control relationships is required in

agency transactions principal transactions exempt transactions

The NASAA Model Rule on Agency Cross Transactions requires that an investment adviser send a written disclosure document to affected clients that includes such items as the total number of agency cross transactions during the period for the client, as well as the total amount of all commissions or other remuneration the investment adviser has received in connection with agency cross transactions for the client during the period no less frequently than

annually

An individual functioning as an investment adviser representative for a federal covered adviser, with no place of business in this state, would be required to register in this state if

he conducts frequent public seminars in the state

It would be correct to state that SIPC

offers protection for the net account value, up to the SIPC limits, in the event of a broker-dealer's insolvency

An investment adviser hires two individuals to solicit new customers for the firm's wealth management service. Under the USA

registration as investment adviser representatives is required

Under the Uniform Securities Act, all of the following are included in the definition of the term exempt transaction EXCEPT a sale of

securities to an individual investor with a net worth of more than $5 million

When it comes to safeguarding confidential information pertaining to the account(s) of an individual customer or family, the rules deal primarily with what is called a covered account. A key factor in determining if an account meets the definition is

the ability of the customer to move funds out of the account on multiple occasions

An individual representing the issuer in the sale of that issuer's securities to the public would have to register in this state if

the issuer is a federal savings and loan association authorized to do business in this state

An agent's recommendation for the purchase of a municipal security to a customer who wants fixed income and is in a relatively low tax bracket would in most cases be

unsuitable and unethical grounds, in extreme cases, for suspension or revocation of the agent's license