series 63 ch 4,5,6 questions

The definition of offer to sell includes

- Any activity done in an effort to dispose of a security for value such as the offer to sell or solicitation of an offer to buy a security; the offfer is the attempt to make the sale

Which of the following statements regarding the Uniform Securities Act are true?

- State Admins may deny by rule or order an exemption to an exempt transaction under the USA if security involved is not covered by federal exemption - State admins may NOT deny by rule or order an exemption to a federal covered security

Which of the following statements are true?

-Agent registration is not effective when the agent is not associated

Which of the following transactions are prohibited?

1. Borrowing money or securities from HNW individual (agents may not borrow money or securities from a customer unless that customer is a bank or BD in business of lending money or securities) 4. Backdating confirmations for benefit of client tax reporting

As defined in the Uniform Securities Act, which of the following is not a security?

1. Commodities 2. Currency 3. Collectible 4. Personal residence (condo) 5. Nonvariable life insurance or endowment policies 6. Interest in retirement plans

Under the Uniform Securities Act, which of the following statements are true about the authority of an Administrator?

A cease and desist order may be issues prior to or after a hearing; in issuing a cease and desist order, the Admin may [rpvide prior notice and a hearing OR may issue the order without prior notice or a hearing (summarily). Cease/desist orders are directed against persons while stop orders are directed against securities

An applicant for registration as an investment adviser discloses on its application to the Administrator that it plans to use palm readers to help determine which investments are most suitable for their clients. Under the Uniform Securities Act, the Administrator

A denial of registration must be based on the concept of law. - To justify a denial, revocation, or suspension of the license of a professional, Admin must find that the order is in the public interest and also find that the applicant or registrant, or in the case of BD/IA, any partner, officer, or director: - Has filed incomplete/false/misleading app, willfully violates USA, been convicted of securities relates misdemeanor or any felony in last 10 years, been enjoined by law from engaging in the securities business, is subject to any other Admin denial revocation or suspension, is engaged in dishonest or unethical securities practices, is insolvent, has been found guilty in case of BD/IA in failure to supervise, has not paid app fees, and is not qualified due to lack of (this isnt enough though if solely on basis of lack of experience if applicant or registrrnt is qualified b y training or knowledge) - Admin also mahy not revoke on basis of stuff that was known before

As a general matter, the regulators do not treat posts by customers or other third parties as the firm's communication with the public. Under certain circumstances, however, third-party posts may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has (1) involved itself in the preparation of the content or (2) explicitly or implicitly endorsed or approved the content. Where the firm has involved itself in the preparation of the content, it is known as

Entanglement is the term used to describe material posted to a securities professionals social media site by a third party where the securities professional ha staken part in prep of material; this is different from adoption, where firm has endorsed/approved of post but played no part in its prep

Under the National Securities Markets Improvement Act of 1996, certain securities are designated as federal covered. This means that the Administrator may require all of the following of a federal covered security

Federal covered securities may be required to pay a filing fee, provide consent to service of process, and if requested submit copies of any and all documents filed with the SEC

All of the following must be specified in the state registration statement of a security except

It is not necessary to list the total amount of the security to be offered in each state. However, for filing fee purposes, the amount to be sold in this state must be disclosed.

In order for a security to lawfully be sold or offered under the Uniform Securities Act, it must meet at least one of the following requirements except

It is unlawful to sell a security in a state unless the security is a federal cover security/ sold in an exempt transaction/ or registered under the act; there is no requirement for the security to be registered with the SEC, thats the primry purpose of securithy registration by qualification - registering a security on the state level that is not SEC registered (qualification is for intrastate usually)

In general, a broker-dealer will disclose any changes to its fee schedule

Most broker-dealers disclose fee changes at least 30 days in advance; there is no requirement whatsoever to notify the Admin of BD fee changes

Under the Investment Advisers Act of 1940, if an investment adviser's sales literature describes an investment system, such as one using charts, the description must include

References to charts, tables, formulas and other devices used to forecast securities prices without setting forth difficulties or limits in their use is prohibited

Under the Uniform Securities Act, it is not considered unlawful if an agent

Securities that do not require registration under the USA are exempt securities; although the securities are exempt from registration, thereby making the solicitation permitted, the agent who makes the solicitation must be registered

The Administrator of State X receives a phone call warning that, within the next couple of weeks, a scam is going to be perpetrated in his state by someone from State Y. The tipster even supplies the Administrator with names of people who will be involved and ends the conversation by telling the Administrator that he himself is a resident of State Z. Which of the following would most likely be done?

State X would immediately begin an investigation

Under the Uniform Securities Act, the Administrator may require the filing of advertising and sales literature in which of the following offerings?

State securities Admin may require the filing of advertising and sales literature of an IPO limited to state residents; other choices are securities of issuers of exempt securities or federal covered

An agent based in Alabama directs a solicitation to a customer who lives in Connecticut while the customer is temporarily in Indiana. The customer does not accept the offer until he arrives back in Connecticut. According to the Uniform Securities Act, the Administrators of which of the following states have jurisdiction?

The Admin from any state from which an offer is made, directed, or accepted has jurisdiction over the offer

Admin may deny or suspend a registration in all of the following situations

The Administrator may restrict a registration on the basis of lack of training and knowledge but not for a lack of experience alone. The standard example of that is not granting registration to an investment adviser solely based on the firm's experience as a broker-dealer. The Administrator may deny a registration if the applicant was convicted of a misdemeanor involving securities within the last 10 years. The Administrator may deny a registration if the applicant has been the subject of an adverse order entered by the Administrator of another state within the past 10 years. Registrations may be suspended if agents or investment adviser representatives are not properly supervised.

Where would a prospective customer find disclosure of a broker-dealer's account maintenance fees?

The BD's fee disclosure document - Fees are to be disclosed when customer open account; if firm changes must notify minimum 30d advance notice

Under the Uniform Securities Act, when one is referring to a security that is guaranteed, the guarantee applies to

The USA defines the term guaranteed as meaning guaranteed as to payment of principal, interest, or dividends.

NASAA has created a template for registered broker-dealers to disclose their fee schedules to existing and prospective customers. For those broker-dealers that are also registered as investment advisers, which of the following charges would not be disclosed?

There are 3 items that are not part of BD fee disclosure document 1. Commissions 2. Markups/markdowns 3. Advisory fees (for those BDs that are also IAs)

Under the Uniform Securities Act, in order for a security to be sold in this state, it must meet any of the following

USA makes it clear that it is UNLAWFUL to offer or sell any security in the state unless the security is REGISTER/ EXEMPT FROM REGISTRATION/ FEDERAL COVERED/ OR SOLD IN AN EXEMPT TRANSACTION

An agent has raised capital from his customers with which he and his brother-in-law will build a small shopping center (although the broker-dealer with whom he is registered is not aware of his actions). The customers who contributed the capital received certificates of ownership in the shopping center, as well as full disclosure of the risks, and will have participation in income from renting mall space to retail businesses. In this situation, the agent has acted

Unlawfully because agent gave his BD no opportunity to supervise; agent is effecting private securities transactions involving the BDs cistomers without proper supervision - this is selling away or transactions off the books of the BD may only be effected with prior written consent of employing bD

Trade confirmations sent by broker-dealers to their customers must always include

amount of commission charged; markup or markdown has to be disclosed under certain but not all situations; trade price is also always disclosed

Terrence Washington operates his own financial planning organization, TW and Associates. He is registered with the state as an investment adviser. From time to time, Washington sells mutual funds to his advisory clients. Complying with state and federal laws means that Washington is registered as an agent with a broker-dealer. His actions as an agent must be supervised by

appropriate supervisory personnel of BD holding his agent license

Which of the following accurately describes a cease and desist order as authorized by the Uniform Securities Act?

cease and desist order is a directive order from an Admin to IMMEDIATELY STOP A PARTICULAR ACTION; Admin may issue cease/desist order with or without hearing (unlike stop orders for securities); courts issue injunctions usually when the cease and desist order is ignored

A broker-dealer is registered in five states. One of those states requires that trade blotters must be kept for 10 years. The state where the principal office of the firm is located only requires those records be kept for 5 years. SEC Rule 17a-4 has a 6-year retention requirement for trade blotters. This broker-dealer would be in compliance by keeping its trade blotters

follow SEC rules always