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With reference to the Uniform Securities Act, when does an agent's registration become effective?
30 days after filing the application Under the Uniform Securities Act, registrations become effective at noon on the 30th day after filing the application.
Under the Uniform Securities Act, an investment adviser who has no place of business in a state is exempt from registration if:
All of the adviser's clients are institutional investors
Under the Uniform Securities Act, which of the following statements is TRUE concerning the state registration of an agent?
An agent's registration to sell securities in a given state expires at the end of the calendar year. The licenses of all agents, broker-dealers, investment advisers, and investment adviser representatives expire on December 31 each year and must be renewed in order to be effective. Renewal is accomplished by the payment of a filing fee. An agent may sell unregistered securities, as long as they qualify for an exemption.
Which of the following could be considered an investment adviser representative under the Uniform Securities Act?
An individual employed by Chelsea Asset Management who solicits clients for the firm IA representatives are individual (natural) persons who are associated with an IA and make recommendations, manage accounts, give advice, solicit business, or negotiate the sale of IA services. Additionally, anyone who supervises persons engaged in these activities is also considered an IA representative.
Under the Uniform Securities Act, which of the following statements is TRUE concerning the registration of an investment adviser?
An investment adviser who does not maintain an office in a state who has seven clients who are residents of that state is not exempt from registration. An investment adviser is exempt from registration if the adviser has no office in a state and has clients who are all institutional investors (savings and loan associations), or does not have more than five retail clients who are residents of that state. Not all accredited investors are institutional investors.
A security issued by a U.S. municipality is considered a(n):
Exempt security Even though a U.S. municipality is an exempt issuer, this question asks you to identify the status of the security. Securities issued by a U.S. municipality are exempt securities.
Under the Uniform Securities Act, which of the following issuers are NOT exempt from registration with the state Administrator?
For-profit corporations Stock issued by a for-profit corporation is not exempt and is subject to registration.
XYZ broker-dealer is located in State A, where it maintains its corporate headquarters. Under the Uniform Securities Act, XYZ would not meet the definition of a broker-dealer in State B if it:
Has no office in State B and only sells securities to an investment company located in State B
If an agent resigns from their broker-dealer and is subsequently hired by another broker-dealer, who is required to notify the Administrator? 1. The broker-dealer that the agent resigned from 2. The broker-dealer that now employees the agent 3. The agent 4. Any one of the above mentioned persons
I, II, and III According to the Uniform Securities Act, when an agent shifts from one broker-dealer to another, the agent, the old employer and the new employer must notify the Administrator.
Which of the following statements is TRUE of an investment adviser that maintains custody of client funds or securities?
It must initiate Form ADV-E. All registered investment advisers who have custody of client securities or funds must have an independent public accountant to conduct surprise audits of these assets at least once every calendar year. The adviser also must initiate Form ADV-E and give it to the accountant, who then submits it to the regulators with a copy of the audit report attached. Form ADV-W must be filed by advisers that want to withdraw their registration or register with a different regulator.
According to the National Securities Markets Improvement Act (NSMIA), state Administrators are allowed to set:
Minimum financial requirements not to exceed those set by the SEC
A firm is located in State Y and has been hired by a pension plan to evaluate its investment manager. The investment manager's office is in State Z. The firm will be advising the pension plan whether it should retain the investment manager or hire a new one. Under the Uniform Securities Act, is the firm required to register as an investment adviser in State Z?
No, because the firm has no place of business in State Z and is servicing an institutional investor. Under the Uniform Securities Act, an adviser that has no place of business in a state and whose clients are only institutional investors (e.g., pension plans) is exempt from the registration requirements.
Under the USA, which of the following persons is considered an investment adviser?
None of the above
Which of the following situations would NOT require an adviser to provide customers with an annual audited balance sheet?
None of the above
Which of the following transactions are exempt from the antifraud provisions of the Uniform Securities Act (USA)?
None of the above Certain transactions may be exempt from the registration requirements of the USA; however, no transaction is ever exempt from the antifraud provisions of the Act.
Under the Uniform Securities Act, an employee of a municipal issuer selling securities to the public is considered:
Not an agent A person representing a municipal issuer is not considered an agent and would not be subject to registration. If the securities were not exempt, the employee would be subject to registration.
A broker-dealer registered in Georgia sells a security listed on Nasdaq. The transaction takes place in the secondary market between two clients who are Georgia residents. According to the USA, which of the following statements is TRUE?
The security is not required to be registered in Georgia This is an example of an exempt transaction since it is considered a nonissuer transaction executed by a registered broker-dealer where the security is listed on a national securities exchange.
For how long must broker-dealers and investment advisers maintain their books and records according to the Uniform Securities Act?
Three years for broker-dealers and five for investment advisers Investment advisory firms are required to keep books and records for a minimum of five years and broker-dealers for three years, according to the Uniform Securities Act.
William is an agent with a broker-dealer and is registered presently in three states. One of William's clients informs him that he is moving to a state where neither William nor his firm is registered. Which of the following statements is TRUE regarding William's registration in the new state?
William is not eligible to register in the new state until his broker-dealer is registered in that state . An agent may transact business in a state in which he is not currently registered under certain circumstances. The employing broker-dealer must be registered in the state, and the individual must be registered in at least one other state. Since his broker-dealer is not registered, William is not eligible for registration.
Which of the following choices is a broker-dealer in State B?
A broker-dealer registered in State A, where its only office is located, which has three individual clients in State B Agents, issuers, and banks are not broker-dealers. Also, a person with no place of business in a state, who deals only with institutional investors, is not a broker-dealer. If a firm deals with individuals, it would be considered a broker-dealer, even if it did not have an office in the state.
Under the Uniform Securities Act, which of the following is exempt from registration as a broker-dealer in State B?
A broker-dealer whose only office is in State A, but deals only with institutional clients in State B A broker-dealer must generally register where it has an office or place of business. A broker-dealer is exempt from registration in any state in which it does not have an office AND its only clients in the state are institutional clients or existing clients who are in the state temporarily.
All of the following transactions are considered exempt under the Uniform Securities Act, EXCEPT:
Any transaction directed to a maximum of 15 retail (noninstitutional) investors the maximum number of retail (noninstitutional) investors is 10, not 15. Any nonissuer transaction of a security registered under the Investment Company Act, or any transaction between an issuer and an underwriter would be considered exempt transactions. Additionally, unsolicited transactions effected through a broker-dealer are exempt.
According to the Uniform Securities Act, when does the registration of a financial professional become effective?
At noon on the 30th day after filing Assuming an applicant has submitted all required documentation, its registration becomes effective at noon on the 30th day after filing with the state. The Administrator does have the power to grant an earlier effective date, and may defer the effective date until the 30th day after the filing of any amendment to the initial application.
A brokerage firm executes an existing customer's order by locating a contra-party and charges the client a commission for executing the trade. In what capacity was the firm acting?
Broker The firm is acting in the capacity of a broker on the transaction since it was representing its client by locating someone willing to take the other side of the trade. Firms acting as brokers in trades earn a commission.
Which TWO of the following statements are TRUE regarding a broker-dealer acting as a dealer/market maker? 1. The broker-dealer buys for or sells from its own inventory. 2. The broker-dealer earns commissions for executing transactions. 3. The broker-dealer is acting as a principal. 4. The broker-dealer is acting in an agency capacity.
I and III A market maker is a broker-dealer that stands ready to buy or sell a specific stock for its own inventory (its own account). The price it is willing to pay for the stock is its bid price, while its ask or offer price represents the price at which it is willing to sell stock (to other dealers). As principals in transactions, market makers do not charge commissions. Commissions are charged when firms act as brokers (agents).
Under the Uniform Securities Act, which of the following securities is/are exempt? 1. Bonds issued by a Canadian province 2. Illinois General Obligation bond 3. Insurance company common stock 4. Securities issued by a not-for-profit educational association
I, II, III, and IV
All of the following statements are not true regarding the Uniform Securities Act, EXCEPT:
It is the model law governing state registration requirements The Uniform Securities Act is a model law governing state registration statutes for securities and financial professionals. The USA gives guidance to individual states when they draft their own securities statutes, but the USA itself is not the actual law of any one state.
Which of the following statements is TRUE regarding the Consent to Service of Process?
It is used for receiving and processing noncriminal complaints. The Consent to Service of Process appoints the state Administrator to serve as the applicant's attorney for the purpose of receiving and processing noncriminal complaints. It is required of all registrants when they file for registration in a state.
Under the Uniform Securities Act, when do the registrations of broker-dealers, agents, and investment advisers expire?
On December 31 each year Under the Uniform Securities Act, registrations expire at the end of each calendar year.
Which of the following terms is NOT specifically defined under the Uniform Securities Act?
Registered representative An agent is defined as a person who is employed by a broker-dealer or issuer to sell securities. There is no mention of the term registered representative under the USA. This term is used in federal law. An investment adviser representative is a person employed by an investment adviser who provides investment advice.
Sharon is responsible for answering phones and filing paperwork for Graceland Securities. Her title is Director of Human Resources. Under the Uniform Securities Act:
Sharon is not considered an agent since she is not involved in sales or trading Only personnel engaged in securities transactions are agents. Officers may be considered agents, but it depends on their particular job function.
Under the Uniform Securities Act, which of the following items is a security?
Stock issued by a foreign company, but listed on the NYSE Stock of a foreign company which is trading in the U.S. is called an American Depositary Receipt (ADR) and is considered a security.
Which of the following statements is TRUE according to the Uniform Securities Act?
The Administrator may require a surety bond for advisers who have custody of client funds or securities.
An investment adviser with no place of business within a state will not be required to register with the Administrator under which of the following conditions?
The adviser will provide advice to four individual clients. An adviser with no place of business who only advises four individual clients would meet the de minimis exemption.
The limited registration provision available to Canadian broker-dealers conducting business in a state permits which of the following actions?
The broker-dealer transacts business with existing clients who are temporarily in a state. The provisions allowing Canadian broker-dealers to transact business in a state are limited. A broker-dealer may effect transactions with a person from Canada who is temporarily in the state if there was an existing broker-dealer-client relationship before the person entered the United States.
Which of the following choices would not meet the definition of an exempt transaction?
Transactions between an issuer and retail investors Any transactions by trustees involved in a bankruptcy—sheriffs, marshals, guardians, and other fiduciaries—are considered exempt transactions. Unsolicited nonissuer transactions, whether with institutional or retail investors, and transactions limited to a maximum of 10 noninstitutional investors, are also considered exempt transactions. However, unlike transactions between an issuer and an underwriter, transactions between issuers and retail investors are not exempt from registration.
Under the USA, which of the following choices would NOT be considered a person?
An adult found to be mentally incompetent Natural persons (individuals) and legal persons (partnerships and corporations) are included in this definition. Minor children, incompetent adults, and deceased persons are not considered persons under the USA.
Which of the following statements is/are TRUE of exempt securities under the Uniform Securities Act? 1. If state rules regarding an exemption are more restrictive than federal rules, then state rules would govern. 2. Any security exempt under federal regulations is also exempt under the Uniform Securities Act. 3. An exempt security is one that is not subject to the antifraud provisions of the Uniform Securities Act. 4. Federal regulations always supersede state rules.
I only When the rules overlap, the most restrictive rule applies. A security can be exempt under federal law but not state law, and vice versa. No security is exempt from the antifraud provisions of the USA.
Which of the following statements are TRUE concerning certain federal covered securities? 1. The Administrator may require the issuer to pay a filing fee 2. The Administrator may bring enforcement action if fraud is involved 3. The Administrator may require the issuer to file a consent to service of process 4. The Administrator will grant the registration after a final review of the filing
I, II, and III only The National Securities Markets Improvement Act (NSMIA) places limits on states' power to regulate federal covered securities. Federal covered securities are exempt from registration at the state level therefore the state Administrator will not grant registration of a federal covered security, choice(IV).
Robert works part-time for JJ Financial Planning, where he develops financial plans for clients. He asks clients a series of questions about their current finances and investment objectives, and uses their answers to create customized financial plans. These plans often include recommendations that they purchase insurance or variable annuities, opening IRAs or other types of retirement accounts. Robert charges a fee for the plans, but he does not earn commissions for selling clients variable annuities and insurance to implement their plans. Is Robert an investment adviser representative?
Yes, he is an investment adviser representative. Robert is performing these activities as an employee of JJ Financial Planning. Assuming that his firm is registered as an investment adviser, Robert would be defined as an investment adviser representative, while JJ Financial Planning would be the investment adviser.
According to the USA, which of the following choices is not considered a security?
An endowment policy Under the USA, endowment policies are not securities.
Which of the following terms is not pertinent when determining whether a firm meets the investment adviser definition?
Commission To meet the definition of an investment adviser, a firm must be providing advice, as a regular part of its business, and receive specific compensation. Commission is a normal charge for a broker in transactions, not for an investment adviser.
A firm acting in the capacity of a dealer/market maker will:
Add markups or markdowns to all client trades A dealer/market maker either buys into inventory or sells out of inventory and charges a markup or a markdown. The broker-dealer will mark up from the offer price (asked) when selling and will mark down from the bid when buying.
According to the Uniform Securities Act, which of the following investment advisers would be exempt from registration?
An adviser with only five retail clients There is no investment adviser exemption based on net worth in the Uniform Securities Act. (In federal securities law, there is a securities registration exemption for private placements to accredited investors.) If an adviser does not have a place of business in a particular state and limits clientele to institutional investors or no more than five retail investors, the adviser is exempt from registration in the state.
An officer of GTO Company is selling his company's convertible debentures to the public. In this capacity, the officer is:
An agent of the issuer Unless the transaction or the security is exempt, a person who represents an issuer in the sale of securities is considered an agent of the issuer. There is no indication in this question that the transaction or the security is exempt.
Which of the following choices would be considered a person under the USA? 1. A customer 2. A broker-dealer 3. An estate 4. An issuer
I, II, III, and IV Under the USA, a person is defined as a legal entity, which would include individuals (natural persons) and business entities such as corporations, broker-dealers, partnerships, and investment advisers.
Which of the following securities are NOT exempt from the antifraud provisions of the Uniform Securities Act? 1. Municipal bonds 2. Securities issued by a corporation and listed on the Toronto Stock Exchange 3. Debt issued by a manufacturing company
I, II, and III Although U.S. government and listed securities are not required to be registered under the Uniform Securities Act, they are not exempt from the antifraud provisions of the Act. All securities are subject to the antifraud provisions.
Which of the following securities is NOT nonexempt, under the Uniform Securities Act?
The City of Pasadena, California bond, sold by an agent at Walck and Walker Broker-Dealer
Which of the following statements is TRUE regarding surety bonds?
The Administrator may allow a deposit of cash or securities. The surety bond is posted by a registrant to cover the cost of possible legal actions arising from violating the USA. Some broker-dealers and investment advisers may be granted a waiver for the surety bond. A deposit of cash or securities may be accepted in lieu of the bond, but the amount and type of securities will be determined by the Administrator. A surety bond can either be obtained directly from a bonding company or through a bond agency.
According to the Uniform Securities Act, which of the following statements is/are TRUE concerning private placements? 1. The offer may not be made to more than 10 persons in that state during any 12-month period. 2. The offer may not be made to more than 35 persons in that state during any 12-month period. 3. The offer may be made to any number of institutional investors during any 12-month period. 4. Commissions may not be paid if the buyers are noninstitutional customers.
I, III, and IV only Under the Uniform Securities Act, any transaction involving no more than 10 persons (there is no limit on institutional accounts) is considered an exempt transaction, known as a private placement, if the following conditions are met. The seller believes that all the noninstitutional buyers are purchasing for investment purposes only. No commission or other remuneration is paid for soliciting noninstitutional buyers.
