Regulations: Other Federal and State Regulations
Which of the following callers is EXEMPT from the provisions of the Federal Telephone Consumer protection Act of 1991? a. telemarketing firm b. real estate company c. non-profit organization d. securities firm
non-profit organization
A customer has a margin account at a broker-dealer that goes bankrupt. The account holds $800,000 of securities and has a $400,000 debit balance. The customer will receive: A. $400,000 in cash B. $400,000 in securities C. $500,000 of securities after the debit balance is paid off and becomes a general creditor for the remaining $300,000 D. The customer will receive $500,000 of cash and $300,000 of securities
$400,000 in securities
Securities Investor Protection Corporation coverage limits per customer account are: I. $500,000 total in cash and securities II. $5,000,000 total in cash and securities III. inclusive of $250,000 cash maximum IV. inclusive of $500,000 cash maximum
$500,000 total in cash and securities inclusive of $250,000 cash maximum
Which of the following would be defined as an "Investment Adviser" that must register under the Investment Advisers Act of 1940? A. A magazine of general circulation on investing B. A subscription investment letter that gives advice tailored to specific customer situations C. A weekly economic forecasting report available by subscription D. A daily newspaper column on personal investing
A subscription investment letter that gives advice tailored to specific customer situations
New non-exempt debt issues in excess of $50,000,000 are subject to which of the following requirements? I. Registration of the issue with the SEC under the Securities Act of 1933 II. Sale of the securities with a prospectus under the Securities Act of 1933 III. Appointment of an independent trustee to protect the bondholders under the Trust Indenture Act of 1939 IV. Anti-fraud Rule 10b-5 under the Securities Exchange Act of 1934 for any subsequent resales of the securities
All of them
State registration (Blue Sky) requirements apply to: I. resident salespersons soliciting that state II. non-resident salespersons soliciting in that state III. resident issuers of securities offered in that state IV. non-resident issuers of securities offered in that state
All of them
Which information, at a minimum, must be disclosed when making unsolicited phone calls to potential customers? I. caller's name II. firm's name III. address or phone number form which the caller is dialing
All of them
Which of the following maintain a "Do not call" list? I. SEC II. Member firm III. FTC IV. FINRA
Member firm FTC
Which statements are TRUE about SIPC coverage for customer accounts at banks that solely handle exempt securities? I. The bank must be registered as a broker-dealer under the Securities Exchange Act of 1934 II. The bank does not need to be registered as a broker-dealer under the Securities Exchange Act of 1934 III. The bank must be a member of the Securities Investor Protection Corporation IV. The bank does not need to be a member of the Securities Investor Protection Corporation
The bank does not need to be registered as a broker-dealer under the Securities Exchange Act of 1934 The bank does not need to be a member of the Securities Investor Protection Corporation
Which statements are TRUE about banks that have customer accounts holding both exempt and non-exempt securities? I. The bank must be registered as a broker-dealer under the Securities Exchange Act of 1934 II. The bank does not need to be registered as a broker-dealer under the Securities Exchange Act of 1934 III. The bank must be member of the Securities Investor Protection Corporation IV. The bank does not need to be a member of the Securities Investor Protection Corporation
The bank must be registered as a broker-dealer under the Securities Exchange Act of 1934 The bank must be member of the Securities Investor Protection Corporation
A customer has a cash account holding $200,000 of securities and $340,000 of cash. If the broker-dealer were to fail, which statement is TRUE regarding the status of the account in an SIPC liquidation? A. SIPC will provide coverage for the $200,000 of securities only B. SIPC will provide coverage for the total of $540,000 of securities and cash C. SIPC will provide coverage for only $340,000 of cash D. The customer will become a general creditor in the amount of $90,000
The customer will become a general creditor in the amount of $90,000
A lawyer is a partner at a major investment advisory firm and is paid a fee by a customer for investment advice. Which statement is TRUE? A. The lawyer must be registered with the Securities and Exchange Commission (SEC) as an investment adviser B. The lawyer must be registered with FINRA as a representative C. The lawyer must be registered with both the SEC as an investment adviser and with FINRA as a representative D. The lawyer is not required to be registered with the SEC as an investment adviser nor with FINRA as a representative
The lawyer must be registered with the Securities and Exchange Commission (SEC) as an investment adviser
Which statements are TRUE about trustees performing their duties under the Trust Indenture Act of 1939? I. The trustee is appointed by the issuer II. The trustee is elected by the bondholders III. The trustee protects the interests of the issuer IV. The trustee protects the interests of the bondholders
The trustee is appointed by the issuer The trustee protects the interests of the bondholders
All of the following communications fall under the Federal Telephone Consumer Protection Act of 1991 EXCEPT: A. U.S. Mail B. Facsimile transmission C. Telephonic via pre-recorded message D. Telephonic via live human voice
U.S. Mail The Federal Telephone Consumer Protection Act of 1991 does not apply to offers made through the U.S. mail. It does apply to any unsolicited offers made through the phone - whether these are made by fax, pre-recorded messages, or personal contact.
A customer is very satisfied with the service provided by his registered rep and gives the rep the name and telephone number of a good friend who needs investment advice. When the representative enters the telephone number of the friend, it comes up as blocked since this person is on the firm's DNC list. Which statement is true? a. because the friend's name was given as a referral, this individual can be solicited by the rep b. because the friend's telephone number was given as a referral, this individual can be solicited by the rep c. because the referral was made by an existing customer of the firm, this individual can be solicited by the rep d. because this individual is on the firm's DNC list, no solicitation by the rep is permitted
because this individual is on the firm's DNC list, no solicitation by the rep is permitted
A customer has a cash account and a margin account at a brokerage firm. In a liquidation under SIPC: a. only the equity in the margin is covered b. only the cash account value is covered c. each account is covered separately up to $500,000 total coverage per account d. both accounts are treated as one account with coverage limited to $500,000
both accounts are treated as one account with coverage limited to $500,000
Securities Investor Protection Corporation protects against: a. broker-dealer failure b. credit risk c. fraudulent trading d. loss of principal
broker-dealer failure
The Trust Indenture Act of 1939 applies to: I. US Government bonds II. municipal bonds III. corporate bonds
corporate bonds
The "valuation date" for securities in a SIPC liquidation is the date the: A. court appoints a trustee in bankruptcy B. security was acquired by the claimant C. security is distributed to the claimant D. claim is received from the harmed customer
court appoints a trustee in bankruptcy
If an unsolicited facsimile is sent to a potential client, all of the following information must be included EXCEPT the: A. identity of sender B. time, place and address from which sent C. date and number of sheets D. phone number from which sent
date and number of sheets
For any claims that a customer may have against a failed broker-dealer that are in excess of Securities Investor Protection Corporation coverage limits, the customer becomes a: A. general creditor B. secured creditor C. super-secured creditor D. equity holder
general creditor
Which of the following actions taken by a fiduciary would NOT be consistent with the obligations imposed under the "Prudent Man Rule"? a. diversifying a fixed income portfolio with securities of varying maturities b. selecting AA rated corporate convertible bond investments to meet an investment objective of both capital income and capital gains c. investing in small capitalization unlisted new issue investments for long term growth d. writing covered calls against securities positions held in the account to increase income
investing in small capitalization unlisted new issue investments for long term growth
The Trust Indenture Act of 1939 was enacted to: A. regulate the activities of Real Estate Investment Trusts not included in the Investment Company Act of 1940 B. require the registration of Trust Company issues with the Securities and Exchange Commission C. protect holders of non-exempt bond issues from issuer misconduct D. require that trustees in bankruptcy, where new securities will be issued, are subject to the Securities Act of 1933
protect holders of non-exempt bond issues from issuer misconduct The primary purpose of the Trust Indenture Act of 1939 is to protect corporate bondholders from being taken advantage of by the issuing corporation. It provides for the appointment of a substantial independent trustee to protect the interests of the bondholders.
State registration (Blue Sky) requirements apply to: I. registration of government and municipal securities II. registration of corporate securities III. registration of state chartered bank issues
registration of corporate securities
The legislation that requires the CEO of a publicly traded company to make an annual certification of the information presented in the company's financial statements is the: a. securities act of 1933 b. securities exchange act of 1934 c. trust indenture act of 1939 d. sarbanes-oxley act of 2002
sarbanes-oxley act of 2002
A customer has an individual cash account, an individual margin account, a joint cash account with his wife, and a custodian account for each of his 2 children. If the firm liquidates, Securities Investor Protection Corporation covers: A. only the custodian accounts B. the custodian accounts separately, the joint account separately, and both individual accounts separately C. the custodian accounts separately, the joint account separately, and both individual accounts are combined and treated as one D. any one account of the customer's choosing; the other accounts become general creditors of the broker-dealer
the custodian accounts separately, the joint account separately, and both individual accounts are combined and treated as one
In an SIPC liquidation, the trustee has distributed all securities registered in the company name. After this distribution, a customer has a claim for $590,000 in securities and another $260,000 of cash (free credit balance). Which statement regarding SIPC coverage limits is true? a. the customer is covered for the total amount of $850,000 b. the customer is covered for $500,000 total, and becomes a general creditor for 350,000 c. the customer is only covered for $500,000 of the securities; cash is not covered d. the customer is only covered for $250,000 of the cash; securities are not covered
the customer is covered for $500,000 total, and becomes a general creditor for 350,000
A registered representative has mailed promotional material and response cards to potential clients in near-by affluent neighborhoods. The registered rep receives a signed response card from one of the prospects, and when calling the phone number provided, finds that it is on the National Do not call list. Which statement is True? a. the prospect cannot be called by the registered representative b. the prospect can be called by the registered representative c. this prospect can only be called by the registered rep between 8am and 9pm d. this prospect can only be called by the registered rep with written approval of the #24 general principal
the prospect can be called by the registered representative
A series 7 licensed individual wishes to sell wrap accounts. Which statements are TRUE? I. this individual must be state registered II. this individual must be federal registered III. this individual must pass either the series 65 or the series 66 exam IV. this individual is not required to take any additional licensing exams
this individual must be state registered this individual must pass either the series 65 or the series 66 exam
Which statements are TRUE regarding the Federal Telephone Consumer Protection Act of 1991? I. unsolicited calls cannot be made before 8:00 AM, nor after 9:00 PM, local time II. solicited calls cannot be made before 8:00 AM, nor after 9:00 PM, local time III. If the caller states that he or she does not wish to receive calls, then the person must be placed on a "Do not call" list IV. If the caller states that he or she does not wish to receive calls, then the person must be referred to a supervisor
unsolicited calls cannot be made before 8:00 AM, nor after 9:00 PM, local time If the caller states that he or she does not wish to receive calls, then the person must be placed on a "Do not call" list
