Series 63 Questions ETC
Fact:
- An agent must register in the state in which he advertises and solicits a security. - A secretary for a broker/dealer who, as a courtesy, takes orders for the broker/dealer's clients must be registered.
A broker/dealer with an office in this state must register as an investment adviser if it charges:
- a fee for selling investment research and additional fees in the form of commissions for the sale of securities. - fees for investment research sold exclusively to institutions located in this state. A b/d must register as an IA if it charges a fee for selling investment research or any other form of investment advice, even to institutions. If a person in the business of selling research for a free, that person or firm must register as an IA. If a b/d charges commissions for selling securities and offers investment advice incidental to the sale of securities, the b/d need not register as an investment adviser because it is not compensated for the research.
Under the Uniform Securities Act, an investment adviser is exempt from registration if he has no place of business in a state and his only clients are any of the following EXCEPT:
Accredited Investors Included in the definition of accredited investor are individuals with net worth in excess of $1 million, excluding the value of the principal residence. However, that does not make them an institutional investor. Provided his clients are institutional investors and the adviser has no place of business in a state, he is not required to register as an investment adviser.
Under the Uniform Securities Act, which of the following is a broker/dealer?
Corporation that sells interests in an oil and gas limited partnership to investors with the proceeds going to the issuer. A broker/dealer is any person that buys or sells for the accounts of others or for his own account. In this case, an entity structured as a corporation is selling a security in the form of limited partnership units and is therefore a broker/dealer. A broker/dealer is not an issuer or an agent.
An agent terminates his association with broker/dealer A and begins to work for broker/dealer B. Under the Uniform Securities Act, which of the following must take place?
In the event an agent transfers from one b/d to another b/d, all three (the former employer, the new employer, and the agent) must report the transfer to the Admin.
Under the Uniform Securities Act, state Administrators set minimum net worth requirements for investment advisers. What should an IA do if its net worth falls below the minimum rule of the state in which it is operating?
Notify the Admin by the close of the next business day and file a report with the Admin by the business day following the notice
-Broker/dealers, investment advisers, and agents must renew their licenses with the state Administrator:
Under the Uniform Securities Act, registrations must be renewed every December 31. Registrations are not permanent and can be denied, revoked, or canceled according to the terms of the act.
XYZ Securities is a broker/dealer based in Wisconsin with 30 customers living in Illinois. During the winter, if 10 customers vacation in Florida for up to 7 weeks at a time, XYZ Securities is a broker/dealer in:
Wisconsin and Illinois. - Registration is required even if there is no physical office Under the USA, XYZ Securities is a broker/dealer in Wisconsin because it maintains an office there. XYZ Securities is also a broker/dealer in Illinois, and with 30 Illinois customers, registration is required even if there is no physical office in Illinois. Because none of XYZ's clients has taken up residence in Florida, such clients are transients rather than residents. Thus, XYZ Securities is not a broker/dealer in Florida subject to the state's registration requirements.
A president of a bank sells shares of the bank to public investors. Under the Uniform Securities Act, he or she is:
not defined as an agent under the Uniform Securities Act. Any individual selling securities on behalf of an issuer of an exempt security (bank securities are exempt) is not an agent under the USA.
Which of the following are agents as defined in the USA?
- An individual who, acting on behalf of a broker/dealer, sells exempt securities or engages in an exempt transaction. - An individual who represents an issuer selling a nonexempt security in a nonexempt transaction. A b/d by definition is not an agent. ****An individual who, while acting on behalf of the issuer, sells exempt securities, such as those issued by the U.S. government, is not an agent. The exclusion from the definition of an agent only applies to those individuals who are selling on behalf of the issuer (never a b/d) and only when either the security, the transaction, or both are exempt.
If Somerville Discount Securities has its principal office in New Jersey and recently registered a branch office in Minnesota, which of the following statements is TRUE?
Agents must be registered in every state in which they do business. An agent is not automatically registered in a state just because his employer is registered in that state.
When filing the consent to service of process, which of the following is TRUE?
The consent to service of process is supplied with the initial registration and remains on file permanently.
Emmet opened an investment advisory service 3 years ago and raised $50 million in capital from family, friends, and contacts and then closed to new investors. If Emmet's stock picks expanded assets under management to $110 million, Emmet
must register with the SEC When the annual updating amendment filed by a state-registered investment advisory firm indicates that the $110 million threshold has been reached, the firm has 90 days to register with the SEC
The Uniform Securities Act requires that, under certain conditions, broker/dealers must maintain a surety bond. The amount that must be kept is no higher than the:
requirements of the SEC. Whether it is bonding, recordkeeping, or net capital requirements, the Administrator can never impose a requirement greater than that of the SEC
Under the Uniform Securities Act, requirements for registration as an investment adviser may include which of the following?
- An announcement of the application for registration in one or more newspapers in the state. - Minimum financial requirements for advisers who do not have custody of client securities or funds.
Under the Uniform Securities Act, which of the following persons do NOT have to register as an investment adviser?
- Broker/dealer who gives investment advice that is incidental to the course of its business and for which no special compensation is received. - Attorney who writes a legal opinion for a municipal bond indenture. Broker/dealers need not register as investment advisers unless they charge a separate fee for providing investment advice. Attorneys are not investment advisers provided their investment advice is incidental to their practice. Giving a legal opinion on a municipal security indenture is not investment advice. Persons, including agents of broker/dealers, who charge a specific fee for advice and hold themselves out to the public as providers of investment advice must register as investment advisers.
When an application for registration as a agent is filed, the Administrator has the right to inquire about:
- a drug-related felony conviction that occurred 7 years ago - a conviction for a securities related misdemeanor 6 years ago - an adjudication by the SEC 5 years ago An agent's application for registration must disclose any felony or securities related misdemeanor conviction within the past 10 years. Non-securities related misdemeanors are not reported. Any adjudication by the SEC or an SRO within the past 10 years would aslo be reported.
Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities law practice full time in New York state. He must register as an investment adviser in New York state if:
Smith's clients, none of whom are residents of New York, receive investment advice as an integral part of Smith's legal services. Smith must register as an IA in NY when or if he is offering investment advice as an integral part of his practice. Since his place of business is in NY, he must register in NY, even though his clients are not themselves residents of the state.
A broker/dealer with no place of business in the state would not be required to register with the Administrator unless one of its clients was:
an employee benefit plan with assets of less than $1 million. As defined in the Uniform Securities Act, B/D does not include a person who has no place of business in this state if he effects transactions in this state exclusively with or through the issuers of the securities involved in the transaction, other b/ds, or banks, savings institutions, trusts, insurance companies, investment companies as defined in the Investment Company Act of 1940, employee benefit plans with assets of at least $1 million, or other financial institutions or institutional buyers.
Under the Uniform Securities Act, an individual is subject to registration as an agent if he engages in transactions between an issuer of a non-exempt security and:
an individual investor with assets in excess of $1 million. - A person representing an issuer is an exempt transaction does not have to register as an agent. - Transactions with investors, not meeting the definition of institutional investor, even a wealthy investor, are not exempt and require registration as an agent. - Transactions between an issuer and an underwriter, an insurance company or a banking institution are exempt. - Transactions with investors, not meeting the definition of institutional investor, even a wealthy investor, are not exempt and require registration as an agent.
An investment adviser that maintains discretion over client accounts is registered in several states. It must maintain net worth equal to the requirements of:
the state in which their principal office is located. Unlike B/Ds who are registered with both the SEC and the states, this must be a state-covered only adviser. In that case, satisfying the financial and recordkeeping requirements of the state in which the principal office is locates is all that is necessary.
