Series 63: Ch 2 Q&A
The withdrawal of an agent's registration generally becomes effective: 15 days after filing 30 days after filing 45 days after filing Immediately
30 days after filing The withdrawal of an agent's registration generally becomes effective 30 days after filing. The Administrator may initiate proceedings against an agent up to one year from the effective date of the withdrawal.
Which of the following choices would be considered an offer or offer to sell under the Uniform Securities Act? - A group of creditors receives stock in a bankrupt company as part of a court-approved reorganization plan - A corporation's current shareholders receive the right to purchase additional shares at a predetermined price - A corporation's current shareholders receive stock instead of a cash dividend - A used car dealer offers a free savings bond with every car
A corporation's current shareholders receive the right to purchase additional shares at a predetermined price Choice (b) describes an offering of stock rights, which is defined as an offer or offer to sell under the USA. Choice (c) describes a stock dividend, which is not considered an offer or offer to sell under the USA. Choice (a) refers to a situation in which the issuer is bankrupt and the creditors receive stock as part of the reorganization plan. Any securities received as a result of a reorganization plan approved by the bankruptcy courts are not part of an offer or offer to sell.
Which of the following choices is considered a securities offering? - An investor receives more shares due to a stock split - An investor receives a stock dividend - An investor purchased bonds and receives a warrant as a bonus - An investor receives a tender offer
An investor purchased bonds and receives a warrant as a bonus According to the Uniform Securities Act, the security that the investor received as a bonus would be considered a stock offering. The Act specifically states that a stock dividend, or shares received due to a corporate action is never considered an offer or offer to sell a security. A tender offer is an offer to buy a security from existing shareholders.
Prior felony convictions must be disclosed on Form U4 if the conviction occurred: Within the last two years Within the last five years Within the last 10 years At any time
At any time This question is an example of a "hair splitter" that sometimes occurs on the real exam. The fine point of the question is whether you must disclose something versus whether or not that situation would affect your employment. Agents are required to disclose all felony charges or convictions on Form U4 regardless of when they occurred. There is no time frame. If an applicant had a felony conviction 20 years ago, it must be disclosed. On the other hand, an agent will be statutorily disqualified if the conviction was within the last 10 years. The agent may be registered if she requests and receives permission at a special hearing. The Administrator may reject the application of anyone convicted of a felony regardless of when it occurred if the Administrator shows it is in the public interest to do so. As a follow-up point, applicants must also disclose all securities-related misdemeanors, charges or convictions, regardless of when they occurred
Under what circumstances may the Administrator of State X issue a cease-and-desist order on behalf of the Administrator of State Y? A) Only when the agent involved is also registered in State X B) Only if the Administrator in State X receives a written request from the Administrator of State Y C) Anytime the Administrator of State X believes that the agent is about to violate the law in State X D) Never
C) Anytime the Administrator of State X believes that the agent is about to violate the law in State X The USA gives the Administrator the power to issue a cease-and-desist order anytime he believes that anyone has violated the securities laws of his state or believes that someone is about to do so. The Administrator of State X has no jurisdiction in State Y
Chris is an agent with D&D Securities. The Administrator has revoked Chris' registration for unsuitability and churning. Based on these facts, which of the following statements is TRUE? - D&D's registration is automatically revoked as well - D&D's registration is automatically revoked as well as the registrations of all of its other agents - D&D's registration may be suspended as well if the Administrator determines that D&D failed to properly supervise Chris - D&D has 30 days to request a hearing or voluntarily withdraw its registration
D&D's registration may be suspended as well if the Administrator determines that D&D failed to properly supervise Chris The revocation of an agent's license does not automatically result in the revocation of the broker-dealer's license unless the Administrator determines that the firm failed to properly supervise the agent.
An instrument that permits legal documents served to the Administrator to have the same force as if served to an agent is called: - Habeas corpus - A letter of rescission - A surety bond - A Consent to Service of Process
- A Consent to Service of Process A Consent to Service of Process is an irrevocable appointment of the Administrator as the applicant's attorney to receive and process any noncriminal legal complaints. This instrument must be provided when applying for registration as an agent, broker-dealer, investment adviser, or investment adviser representative.
Which of the following activities is an exempt transaction according to the Uniform Securities Act? - An agent sells securities listed on the Toronto Stock Exchange - A broker-dealer solicits 35 retail investors within the state regarding a private placement during a 12-month period -An agent sells unregistered, nonexempt securities to a client on a solicited basis - There is a sale of securities by a bona fide pledgee, the purpose of which is to circumvent the Act
- An agent sells securities listed on the Toronto Stock Exchange Choice (a) would qualify as an exempt transaction according to the NASAA Model Rule on Secondary Market Trading Exemptions for Qualifying Canadian Securities. Note that in order to qualify for this exemption, the transaction must be effected through the agent of a broker-dealer, the securities must be listed on the Toronto Stock Exchange (or the TSX Venture Exchange), and the issuer must have been a reporting company in Canada for at least the previous six months. Sales of private placements, choice (b), are not exempt transactions if they are offered to more than 10 retail investors during a 12-month period. Sales of unregistered, nonexempt securities are exempt if done on an unsolicited basis, choice (c). Transactions by a bona fide pledgee are normally exempt, but not if the purpose of the sale is to evade the requirements of the USA.
An advertisement is printed in State A and circulated in State B. A client in State B feels that she has been treated in an unethical manner by the agent who created the advertisement. Which state has the authority to investigate the agent? - State A only since the advertisement was printed in that state - State B only since the client is a resident of that state - Both States A and B - Since this involves an interstate transaction, only the SEC would have jurisdiction
- Both States A and B Administrator has jurisdiction over a securities professional whose offers originate within his state or who solicits residents of a state. In this scenario, the agent created an advertisement in State A. This is where the solicitation originated. The agent then sent the advertisement to State B. Since the offer occurs in both locations, both Administrators have the authority to investigate the solicitation. The SEC may have jurisdiction as well, but not solely
According to the Uniform Securities Act, if a prospective agent has an impaired financial condition, the Administrator may: - Issue an indictment - Deny registration - Require a Consent to Service of Process - Require an amendment to Form ADV
- Deny registration The Administrator may deny the agent's registration because the prospective agent is insolvent. Indictments are criminal charges for alleged violations of the law. The Consent to Service of Process is required for all registrants. Form ADV is filed by an investment adviser, not an agent
Which of the following choices is considered a stock offering under the Uniform Securities Act? - Creditors receive stock as part of a bankruptcy proceeding - Shareholders receive a stock dividend - Shareholders receive the right to purchase additional shares in a subsidiary at a prearranged price - An issuer pledges its securities as collateral for a loan
- Shareholders receive the right to purchase additional shares in a subsidiary at a prearranged price Choice (c) describes an offering of stock rights, which is defined as an offer, or offer to sell, under the USA (sometimes called a rights offering). Choice (a) refers to a situation in which the issuer is bankrupt and the creditors receive stock as part of the reorganization plan. Any securities received as a result of a reorganization plan approved by the bankruptcy courts are not an offer or an offer to sell (and neither is stock that is received as a result of a merger or acquisition, or other corporate reorganization). Stock dividends, choice (b), are not defined as sales or as offers to sell. Choice (d) describes a situation where securities are being pledged as collateral for a loan, which also is not a sale or an offer to sell.
An investment adviser representative was the subject of a customer complaint two years ago in the state of Idaho and resigned his position as a result. The Administrator conducted an investigation, the results of which were not made public. He is currently applying for a mortgage for a new home in Boise. The bank where he is applying requests his employment history and contacts the investment adviser for verification. The personnel manager at the firm is reluctant to give the bank any information about its former employee and directs the bank to contact the state Administrator. When the bank calls the Administrator, what information can it expect to receive? - The Administrator will provide the details of the complaint since it was securities-related - The Administrator will contact the investment adviser for authorization to release the information - The adviser must contact the Administrator for approval to release the information to the bank - The Administrator will not release any details of the complaint
- The Administrator will not release any details of the complaint According to the Uniform Securities Act, neither the Administrator nor any of his officers or employees may disclose nonpublic information obtained in the course of performing their duties, except among themselves or when it is necessary as part of a proceeding or investigation.
What information is not included on the registration application for a broker-dealer? - Whether the broker-dealer is a partnership or corporation - The types of businesses in which the broker-dealer intends to engage - The names and addresses of the agents the broker-dealer intends to register - The broker-dealer's current financial condition
- The names and addresses of the agents the broker-dealer intends to register The names and addresses of the agents the broker-dealer intends to register are not required. The qualifications and history of any partner, officer, director, or controlling person are required.
Which of the following choices warrants the denial of registration by the Administrator? - The registrant was arrested for insider trading - The registrant was charged in a stock manipulation scheme - The registrant was convicted of a drug-related felony - The registrant was convicted of a misdemeanor
- The registrant was convicted of a drug-related felony The Administrator may deny registration for any felony conviction, not just those involving securities. Registration can also be denied if there is a misdemeanor conviction involving securities. Being arrested or charged with a criminal act falls short of being convicted
Under the Uniform Securities Act, which of the following choices BEST describes the term inspectorial powers? - The state Administrator's power to delegate responsibility to a self-regulatory organization - The state Administrator's power to have special investigators review the records of registered investment advisers - The state Administrator's power to apply the stop-order test - The state Administrator's power to subpoena records within and outside the state
- The state Administrator's power to subpoena records within and outside the state Inspectorial powers refer to the right of the state Administrator to inspect or review any records, both within and outside the state, in order to carry out the provisions of the Uniform Securities Act
According to the Uniform Securities Act, when a broker-dealer distributes bonds with warrants attached as a bonus: - This constitutes an offer to sell the bonds only - This constitutes an offer to sell the bonds and the underlying stock - There is no offer to sell the warrants because they are not technically securities - This constitutes an offer to sell the bonds and the warrants
- This constitutes an offer to sell the bonds and the warrants Warrants are securities and an offer to sell exists whether they are offered with bonds or independently.
Under the Uniform Securities Act, an Administrator would automatically deny a registration to an agent if the agent had been convicted of a felony within the past: 10 years 20 years 25 years Unlimited period
10 years If an individual had been convicted of any felony in the previous 10 years, he would be statutorily disqualified from registration. The Administrator may deny an agent's registration for the conviction of a felony exceeding 10 years, provided he could show it was in the public interest.
Under the Uniform Securities Act, an Administrator will deny registration to an agent if the Administrator finds that the agent had been convicted of a securities-related misdemeanor within the past: 10 years 20 years 25 years Unlimited period
10 years The Administrator will deny an agent's registration if he finds the individual has been convicted of a misdemeanor involving securities within the past 10 years.
A broker-dealer's registration may be revoked or suspended if the Administrator determines that this action is in the public interest and the: - Broker-dealer violated federal commodities laws within the past 10 years - Broker-dealer's controlling partner has declared personal bankruptcy - Broker-dealer withdrew its registration in another state - Broker-dealer has engaged in ethical business practices
Broker-dealer violated federal commodities laws within the past 10 years The Administrator may cancel, revoke, or suspend a broker-dealer's registration if the Administrator determines that this action is in the public interest and the firm has violated the provisions of the Commodity Exchange Act. The insolvency (personal bankruptcy) of one of the broker-dealer's partners, officers, directors, or controlling persons may not be used as a basis for revoking or suspending a broker-dealer's registration. Withdrawal from registration as a broker-dealer is a voluntary procedure and does not imply wrongdoing by the registrant.
What action may the state securities Administrator take without giving the registrant an opportunity for a hearing? - Revoke a registration - Suspend a registration - Cancel a registration - Bar a registrant
Cancel a registration An Administrator may cancel a registration without a hearing if the registrant is deceased, judged mentally incompetent, or is missing and cannot be located after a reasonable search. If the Administrator revokes or suspends a registration, or bars a registrant, then that person must be given the opportunity for a hearing to contest the Administrator's action
All of the following situations are grounds for revocation of an agent's license, EXCEPT: - The agent has been convicted of mail fraud - Clients have complained that the agent has given poor investment advice - The agent has been convicted, although not fined or sentenced to jail, in connection with a plan to convert securities owned by a broker-dealer - The agent was fined for violating Regulation T of the Board of Governors of the Federal Reserve System
Clients have complained that the agent has given poor investment advice Crimes involving securities, as well as felony convictions, are grounds for revoking an agent's license. Customer complaints are not grounds for license revocation
Under the Uniform Securities Act, a state Administrator may NOT deny, suspend, or revoke any registration, or bar or censure a person if the applicant was: - Convicted of a felony within the past 10 years - Convicted of a misdemeanor eight years ago - Prohibited by a court from engaging in the securities business - Subject to a suspension order of a stock exchange
Convicted of a misdemeanor eight years ago An Administrator may deny, suspend, revoke, bar, or censure a person for a securities misdemeanor within the last 10 years, not just any misdemeanor. All of the other reasons given are valid
When a broker-dealer is acquired by another broker-dealer, when will the agents' registrations expire? - December 31 - One year from the date of the acquisition - On the date the acquisition becomes effective - It will not as long as the agent is associated with a broker-dealer
December 31 Under the Uniform Securities Act, all securities professionals registration expires on December 31
Jeff White and Mary Johnson have formed a corporation to start a new broker-dealer. They are the sole shareholders. Which of the following grounds could the Administrator use as a basis for denying their application? - Jeff's liabilities currently exceed his assets and he is having trouble paying his bills - Three years ago, Mary's agent registration was suspended for two weeks - Eight years ago, Jeff pled guilty to one felony count of tax evasion - Neither Jeff nor Mary has previous experience in operating a broker-dealer III only I and III only I, II, and III only I, II, and IV only
Eight years ago, Jeff pled guilty to one felony count of tax evasion When an application is made for a broker-dealer registration, the application may be denied based on the history and condition of the applicant (the broker-dealer) or its controlling persons (Jeff and Mary), officers, or directors. The fact that Jeff was convicted of a felony within the last 10 years could result in denial of their application. If the applicant is currently subject to a suspension, the application could be denied. However, Mary's suspension has ended. Insolvency could also be used as grounds for denial, but the Administrator must find that the broker-dealer is insolvent, not an individual controlling person. Lack of experience alone cannot be used as grounds for denial
f the Administrator has summarily suspended an agent's registration, within how many days of the agent's written request must a hearing be scheduled? Immediately Three days Ten days Fifteen days
Fifteen days The Administrator may suspend or postpone an agent's registration. Upon entering the order, the Administrator will notify the registrant as well as that person's employer (or potential employer) of the order. The Administrator will also send notification that the person has a right to a hearing within fifteen days of a written request.
An agent holding full discretionary authority over a customer's account may: I) Buy or sell securities in the account without consulting the customer II) Receive a fee for using his discretion in trading the account III) Withdraw money from the account IV) Borrow assets from the customer's account I and III I and IV II and III II and IV
I and III An agent holding full discretionary authority over a customer's account may buy or sell securities in the account without consulting the customer and may withdraw money from a client's account. An agent may not receive a fee for using his discretion in trading a customer's account. Borrowing client assets is never allowed
Under an underwriting agreement, the syndicate will be given warrants as part of its compensation package. The warrants can be exercised at any time in the next two years. Under the Uniform Securities Act, which TWO of the following statements are TRUE regarding the issuer of this stock? I) The issuer must register the stock or distribute it under an exemption before the warrants can be issued II) The issuer may distribute the warrants when the registration statement for the stock is filed III) The issuer is subject to state reporting requirements until the warrants expire IV) The issuer is subject to state reporting requirements only until the stock distribution is completed I and II I and III II and III II and IV
I and III The Uniform Securities Act states that there is always an offer of the stock called for by the conversion privilege of the warrants; therefore, the stock must be registered or sold under an exemption before the warrants are issued. As long as the conversion privilege is in effect, the offer is being made and the issuer is subject to state reporting requirements.
Which TWO of the following actions would fall under the jurisdiction of a state securities Administrator? i) The purchase of options through the Internet by a state resident ii) The sale of long-term certificates of deposit by a bank iii) The delivery of securities to a customer who is a resident of a particular state iv) The offer of securities by an out-of-state broker-dealer to a resident of the state I and II I and III I and IV III and IV
I and IV State securities Administrators have jurisdiction over securities transactions that are: Originated in their state Directed to and received in their state Accepted in their state Delivery of securities to a particular state does not fall under an Administrator's jurisdiction, nor do general commercial banking transactions
A broker-dealer is registered in State A. Which TWO of the following statements are TRUE regarding the examination of that broker-dealer's records by the Administrator of State A? I) The Administrator may examine the broker-dealer's records even if they are located in State B II) If the records are located in State B, the Administrator of State A must obtain the consent of the Administrator of State B to examine the records III) The Administrator may examine the broker-dealer's records under any circumstances IV) The Administrator may examine the broker-dealer's records with good reason I and III I and IV II and III II and IV
I and IV The Administrator may examine the broker-dealer's records even if they are located in another state. Cooperation from the Administrator of the other state is not required. Although the Administrator's inspections may be unannounced, such examinations must be reasonable.
A fraudulent transaction was initiated by an agent in State Y with a customer who lives in State X. The transaction took place in State Z, where the customer was visiting a relative. Under the Uniform Securities Act, which Administrators have authority over the transaction? I) The State X Administrator II) The State Y Administrator III) The State Z Administrator I and II only I and III only II and III only I, II, and III
I, II, and III All of the Administrators could have authority over the transaction since each state's jurisdiction was crossed
An agent's application includes which of the following choices? I) A filing fee II) Work history II) A Consent to Service of Process I and II only I and III only II and III only I, II, and III
I, II, and III An agent's application contains all of the items listed.
According to the Uniform Securities Act, which of the following persons has authority over a securities transaction? I) The Administrator in the customer's home state II) The Administrator in the broker-dealer's home state III) The Administrator in the state where the transaction occurred I and II only I and III only II and III only I, II, and III
I, II, and III Any or all of the Administrators listed could have authority over the transaction
Which TWO of the following reasons would allow the Administrator to deny an agent's registration? I) The applicant has been convicted of a misdemeanor within the past 10 years II) The applicant neglected to disclose a bankruptcy filing six years prior III) The applicant has a history of losing arbitration cases with public customers in the previous two years IV) The applicant failed to disclose he was formerly employed at another broker-dealer in the last four years I and III I and IV II and III II and IV
II and IV Failure to disclose bankruptcy filings or employment history of the past 10 years would constitute grounds for the Administrator to deny registration to an agent. These are material facts about an agent. Remember, all material facts must be disclosed under the USA. A misdemeanor conviction is not grounds for denial, provided it is not securities-related. Since this choice does not mention securities-related, you must assume it is not. Arbitration case loses may be cause for concern, but they are not grounds for denial.
Under the Uniform Securities Act, a person's registration may be revoked or denied for which of the following reasons? I) The person was convicted of a non-securities-related misdemeanor three years ago II) The person was convicted of a drug-related felony seven years ago III) There is mounting evidence that the individual is involved in a securities-related fraud IV) The person was convicted of a securities-related misdemeanor six years ago I and IV only II and IV only II and III only I, II, and IV only
II and IV only Under the Uniform Securities Act, the Administrator may deny, revoke, cancel, or withdraw the registration of any person if he has been convicted within the past 10 years of any felony or any misdemeanor involving a security. The Administrator may not take any action if a person has been accused or indicted, but has not been convicted.
An advisory client of your firm has contacted the Administrator of the state of Kentucky about a possible violation of the Uniform Securities Act. The firm has its home office in Illinois and is registered in both states. Which of the following actions would the Administrator of Kentucky be LEAST likely to take regarding the possible violation? - Begin an investigation in Kentucky - Open an investigation in Illinois - Contact the Illinois Administrator - None
None The Administrator has the authority to begin an investigation if a violation has occurred or is about to occur. The investigation may take place within or outside the state as deemed necessary
An applicant for registration as an investment adviser indicates that the firm will base its investment decisions on psychic readings and other nonfinancial criteria. According to the Uniform Securities Act: - The Administrator may deny/postpone registration only for those reasons specified in the law - The Administrator may act in the public interest and deny registration - The Administrator must review the track record of the applicant to ascertain the feasibility of such criteria for investing - The Administrator should encourage alternative methods of analysis and grant registration if there is a reasonable basis for this methodology
The Administrator may deny/postpone registration only for those reasons specified in the law The state Administrator must cite reasons found in state law to disqualify a person from registration (e.g., a felony conviction, violation of commodities laws, misleading statements, etc.). The Administrator may deny registration if it is in the public interest AND if any provision of the USA has been or will be violated. While basing investment decisions on psychic readings may be a debatable proposition, the law does not say anything about methods of analysis for advisers, except that it is a disclosure item. Looking at it another way, the Administrator does not want to be in the role of determining which methods of analysis are better than others
A woman in Alabama is reading a daily financial newspaper containing an advertisement that could be interpreted as an offer to sell securities. The newspaper is published in New Jersey, but its circulation is spread evenly throughout the United States. According to the Uniform Securities Act, which of the following statements is TRUE regarding the advertisement? - The ad is an offer of a security in Alabama only if the issuer is domiciled in Alabama - The ad is an offer of a security in Alabama regardless of the domicile of the issuer - The ad is an offer of a security in New Jersey only - The ad is not an offer of a security in any state
The ad is not an offer of a security in any state An advertisement such as this could only be an offer of a security in the state in which the newspaper is published (in this case, New Jersey). However, if more than two-thirds of the newspaper's circulation is outside of its state of publication, the offer is not considered to occur in any state. Since that is the condition that applies in this situation, an offer is not made in any state
A broker-dealer located in State A, in business for three years, goes out of business in July. Some of the principals at the firm start a new broker-dealer in August of that year. Which of the following statements is TRUE concerning the broker-dealer's registration fee? - A fee is not required until the next year - The appropriate registration fee must be paid - A prorated fee must be paid - A fee is not required since the broker-dealer and not the agent is seeking registration
The appropriate registration fee must be paid Every applicant whether an agent, broker-dealer, investment adviser, or investment adviser representative must pay a registration fee. This fee is paid when an applicant files the initial application as well as when the license expires each year on December 31. If a registration fee is paid in the middle of the year, the fee is usually not prorated.
Under the Uniform Securities Act, when would the sale of an unregistered, nonexempt security not be a violation? - The transaction was reviewed by the customer's attorney - The customer had signed an agreement not to prosecute - The customer provided a written statement that the order was unsolicited - Under no circumstances
The customer provided a written statement that the order was unsolicited It is normally a violation of the Uniform Securities Act to sell unregistered, nonexempt securities. However, there is an exemption for unsolicited transactions. Generally, most states require that the customer sign a written statement that the order was unsolicited, which serves as proof that it was unsolicited and, therefore, an exempt transaction.
An employee of XYZ Corporation is selling common stock to the public but is not being paid a commission. Under the Uniform Securities Act, which of the following statements is TRUE? - The employee would be considered an agent of a broker-dealer and would need to register - The employee would be considered an agent of a broker-dealer but would not need to register - The employee would be considered an agent of the issuer and would need to register - The employee would be considered an agent of the issuer but would not need to register
The employee would be considered an agent of the issuer and would need to register Under the Uniform Securities Act, an individual representing a nonexempt issuer in sales to the public is defined as an agent of the issuer (XYZ Corporation) and must register as such whether or not compensation has been paid. Conversely, if the transactions are with existing employees, directors, or partners of the issuer, and no compensation is paid for soliciting any person in the state, then the employee is not required to register.
A broker-dealer wishes to withdraw its registration with the Administrator. Under the Uniform Securities Act, which of the following statements is NOT TRUE? -The withdrawal may not take effect if the Administrator is instituting a revocation proceeding - The withdrawal must be in writing - The withdrawal is ordinarily effective 30 days after the broker-dealer gives its intention to withdraw - The withdrawal prevents the broker-dealer from starting over as a new broker-dealer
The withdrawal prevents the broker-dealer from starting over as a new broker-dealer A firm that withdraws its registration has the right to initiate the registration process again
A broker-dealer has filed an application to withdraw its registration. Which of the following statements is TRUE? - The withdrawal will become effective within 60 days after the application is received by the Administrator - The withdrawal will become effective when the Administrator determines whether there is an action for revocation of the firm's license pending at the time the application was filed - By filing an application to withdraw, the firm agrees to settle all charges currently pending without admitting or denying them - The Administrator has two years after the date the firm's registration is withdrawn to initiate a proceeding for revocation of its license
The withdrawal will become effective when the Administrator determines whether there is an action for revocation of the firm's license pending at the time the application was filed An application for withdrawal generally becomes effective 30 (not 60) days after it was filed. However, the withdrawal will not become effective until the Administrator declares whether there are proceedings pending or instituted against the firm at the time the application for withdrawal was filed. (This is also true if the Administrator institutes proceedings within 30 days after the application was filed.) The Administrator has one year (not two) after the registration is withdrawn to begin revocation or suspension proceedings against the firm. In practical terms, the reason for this is because if violations have occurred in a state and the broker-dealer (B/D) withdraws, the Administrator can still bring a cause of action against the B/D for up to one year after the withdrawal. The cause of action may carry over to other states. This prevents a B/D from avoiding the consequences of rule violations
All of the following statements are TRUE regarding the preparation and maintenance of records by investment advisers and broker-dealers, EXCEPT: - The Administrator may determine that the records prepared by investment advisers and broker-dealers may be different - All records must be preserved for a period determined by the Administrator - Correcting amendments must be filed promptly if information in a document previously filed becomes inaccurate - Only an Administrator within the same state may examine the records of an investment adviser or broker-dealer
This option is false: Only an Administrator within the same state may examine the records of an investment adviser or broker-dealer An Administrator may inspect the records of a broker-dealer or investment adviser located within or outside the state. All of the other statements regarding recordkeeping are correct.
Rules created based on interpretations of the Uniform Securities Act may be rescinded or amended by the Administrator: - With prior approval from the SEC - As mandated by Congress - With prior approval from the state legislative governing body - To carry out any of the provisions of the Act at any time the Administrator feels it necessary
To carry out any of the provisions of the Act at any time the Administrator feels it necessary The Administrator does not need prior approval to rescind or amend its rules, which interpret specific provisions of the Act. The Act itself may only be amended by each state's governing legislative body
If it is in the public interest, all of the following actions may be used by the Administrator as grounds for denial of an application for registration as an agent, EXCEPT in the case where the registrant: - Violated federal commodities laws within the past 10 years - Failed to disclose a six-month gap of employment on the U4 - Sold unregistered, non-exempt securities in another state without acknowledgement from investors - Withdrew from registration as an agent in another state
Withdrew from registration as an agent in another state Withdrawal from registration as a broker-dealer or an agent is a voluntary procedure and does not imply wrongdoing by the registrant. All the other choices are reasons for the Administrator to deny an application for registration
The Administrator of State X has begun an investigation of your investment adviser firm. You work at the home office in State Y and are registered as an investment adviser representative in State Y. You have received a subpoena to testify at a hearing in State X. Your supervisor states that you cannot be compelled to appear since you are not registered in State X. Which of the following statements is TRUE of this situation? - You must comply with the subpoena and testify - You are not compelled to appear, however, your state - - Administrator can compel you to appear in your home state - Your supervisor must appear in any state in which the firm is registered to represent the firm's employees Prior to appearing, your firm must now register you in State X due to the subpoena from the Administrator
You must comply with the subpoena and testify According the Uniform Securities Act, no person is excused from attending and testifying in response to a subpoena, regardless of his registration status. No individual can be prosecuted or subjected to any penalty for testifying
A broker-dealer's original application filed with the state includes i) Place of business ii) Form of business organization iii) Type of services rendered iv) Fingerprints i, iii i, ii, iii i, ii, iv i, ii, iii, iv
i, ii, iii i) Place of business ii) Form of business organization iii) Type of services rendered Fingerprints are not required for a broker-dealer's registration. The other items listed are disclosures found in the broker-dealer application.
