Chapter 1 Review

If having discretion over $100 million or more in 13(f) securities, which of the following would be exempt from filing a Form 13F? A) A natural person who exercises investment discretion over the account of any other natural person or entity B) A natural person who exercises investment discretion over her own account C) An investment adviser that manages mutual fund assets D) A trustee

B

An issuer properly files Form D in accordance with Rule 503 of Regulation D of the Securities Act of 1933. As such, the securities that are the subject of any transaction are: A) available only to institutional purchasers. B) required to register with the SEC. C) required to register with the state(s) in which they are sold. D) federal covered securities.

D Securities sold under Regulation D of the Securities Act of 1933 are private placements and, under the NSMIA, are considered federal covered securities.

What jurisdiction does the SEC have over a person who violates the rules of the Municipal Securities Rulemaking Board?

Has the authority to investigate violations unless the person is a financial institution Financial institutions are under the authority of banking regulatory bodies

The 3 things that are not on the trade ticket

Name Address Current Price

Who has the power to close a stock exchange and for how long

The SEC If they notify the President For 90 days

What is not required in execution of a trade

The discretionary orders going before the non discretionary orders

Which of the following has the power to close a stock exchange for up to 90 days? A) The President of the United States. B) The SEC. C) The Administrator in the state where that stock exchange is located. D) The President of that stock exchange.

B

According to the Investment Company Act of 1940, all of the following statements are true EXCEPT: A) investment companies can own no more than 3% of the shares of another investment company. B) 12b-1 distribution charges must be approved semiannually by a majority vote of the outstanding shares and by the board of directors. C) persons convicted within the past 10 years of a securities industry crime are not allowed to serve as directors without SEC permission. D) mutual fund shareholders must be sent semiannual statements that identify compensation paid to directors, officers, and other affiliated persons.

B 12b-1 fees are subject to annual approval by a vote of the board of directors of the company, and of the directors who are not interested persons (outside directors) of the company

Difference between an IA contract with a mutual fund being initially brought and renewed

Initial Contract- Majority vote of outstanding shares AND Majority of board of directors AND non-interested members of board of directors Renewal- Majority vote of the outstanding shares OR the majority of the board of directors AND the non interested members

Who must an individual who is holding more than 5% of voting stock in a corporation, notify

SEC Issuers board of directors exchange where it is sold NOT the admin which the customer redisides

What 2 things can managers of an open ended mutual fund company NOT do

Securities on Margin Short Stock

How often do investment companies have to send shareholder reports

Semi Annually

Who must approve of a 12-b1 mutual fund fee and what must happen

1. Board of Directors AND majority of outstanding shares 2. Distribution plan must be written

How long can the SEC bar trading on a particular non exempt security for

10 days