Series 63 Questions Unit 2
Which of the following statements best describes the effect of the NSMIA on securities regulation? A) Preempts state registration of covered securities B) Established the need for dual registration of securities C) Provided for the registration of intrastate securities D) Increased the power of state securities Administrators over registration of securities
A) Preempts state registration of covered securities
The term "agent", as defined in the Uniform Securities Act, would not include which of the following individuals? A) One who represents an issuer of any exempt security B) One who represents a registered broker-dealer selling unregistered exempt securities C) One who represents an issuer in effecting exempt transactions D) One who represents a registered broker-dealer selling securities listed on the NYSE to individual clients
C) One who represents an issuer in effecting exempt transactions
Simus Fund, a new open-end investment company, is preparing its registration statement with the SEC. Under the provisions of the NSMIA, this company would qualify for sale in a state by A) securitization B) qualification C) notice filing D) coordination
C) notice filing When a new open-end investment company registers with the SEC, it carries the legal status of a federal covered security, and the NSMIA provides that individual states may not impose normal registration requirements. Instead, the procedure used to notify the Administrator that the securities will be offered for sale in the state (along with payment of a fee) is known as notice filing.
An employee of a commercial bank selling the bank's bonds to its banking clients is acting in the capacity of a(n) A) person excluded from the definition of an agent B) agent of a broker-dealer C) broker-dealer D) agent of the issuer
A) person excluded from the definition of an agent Commercial banks are included in that group of issuers of exempt securities whose individuals representing them in the sale of their securities are excluded from the definition of agent.
All of the following securities are exempt from state registration EXCEPT A) bonds issued by the Republic of Argentina B) unsolicited orders C) municipal bonds D) securities issued by a registered investment company
B) unsolicited orders Be careful. Unsolicited orders are exempt transactions, the others are exempt securities. Furthermore, the choice, unsolicited orders, is the only one that is not a security, exempt or not.
Any individual who represents an issuer in effecting transactions between the underwriter and the issuer A) does not meet the definition of "agent" as promulgated under the Uniform Securities Act B) must be registered as an underwriter C) must be registered as an agent D) must be registered as an investment adviser
A) does not meet the definition of "agent" as promulgated under the Uniform Securities Act Under the Uniform Securities Act, a person representing an issuer in securities transactions between an underwriter and an issuer is not deemed an agent and is exempt from the agent registration requirements of the act.
Under the USA, all of the following issues would be exempt from registration EXCEPT A) stock issued by an insurance company not offering policies in this state B) bonds issued by the city of New Orleans C) an investment contract issued in connection with an employee stock purchase plan D) stock issued by savings and loan association authorized to do business in this state
A) stock issued by an insurance company not offering policies in this state Had the insurance company been authorized to do business in this state, its securities offering would be exempt.
Included in the USA's definition of exempt transaction would be any transaction by any of the following EXCEPT one by A) a trustee in bankruptcy B) a trustee of an irrevocable trust C) a guardian D) a marshal
B) a trustee of an irrevocable trust Although the term trustee is found in the list of persons engaged in exempt transaction, the USA limits it to trustees in bankruptcy
An Administrator may deny or revoke a security's exemption A) if the Administrator determines that an exemption applicable to federal covered securities is inconsistent with state securities law B) for a federal covered security if its issuer is in violation of state law C) by providing the burden of proof that the exemption is not deserved D) without a hearing if the issuer is given an opportunity for a hearing after the revocation
D) without a hearing if the issuer is given an opportunity for a hearing after the revocation An Administrator may deny or revoke a security's exemption without a hearing if the issuer is given an opportunity for a hearing after the revocation. The issuer requesting an exemption must prove the exemption; this is not the responsibility of the Administrator. The Administrator may not revoke exemptions of federal covered securities.
Under the USA, it is unlawful to sell a A) nonexempt, nonregistered security issued by a foreign corporation from a country with which the U.S. government maintains diplomatic relations B) security of a commercial bank not registered in the state C) federal covered security not registered in the state D) security registered in the state under the USA but not registered in any other state
A) nonexempt, nonregistered security issued by a foreign corporation from a country with which the U.S. government maintains diplomatic relations Nonexempt, nonregistered securities cannot be lawfully sold in a state unless in an exempt transaction (and nothing in the question indicates that is the case). The fact that they are issued by a foreign corporation is irrelevant; nonexempt securities must be registered. A federal covered security need not be registered in a state. Securities issued by banks, not bank holding companies, are always exempt securities.
An investment adviser is registered in New Jersey and has offices in Georgia and Arkansas. One of their IARs lives in Georgia and in addition to his local clients, has one client who lives in Arkansas. The IAR would be required to register in A) Georgia and New Jersey B) Georgia C) Georgia and Arkansas D) Georgia, Arkansas and New Jersey
B) Georgia The IAR is living in Georgia and has local clients so must be registered there. With only one client in Arkansas, the de minimis exemption would apply to the IAR. There is no need to register in New Jersey because the IAR has no clients there.
Which of the following financial instruments are considered securities under the USA? 1. Collateral trust certificates 2. Investment contracts, including interests in oil and gas drilling partnerships 3. Options listed on the Chicago Board of Options 4. Exchange Foreign currency options contracts traded on the Philadelphia Stock Exchange A) I and II B) I, II, III, and IV C) II and III D) II, III, and IV
B) I, II, III, and IV Collateral trust certificates, investment contracts, options, and option contracts, regardless of the underlying asset, are identified as securities in the Uniform Securities Act and are subject to its provisions. Currencies are not securities, but options on currencies are.
All of the following are exempt transactions EXCEPT A) unsolicited, nonissuer transactions B) top-rated commercial paper with a maturity of no longer than 270 days issued in minimum denominations of $50,000 C) the sale of securities to a closed-end investment company D) isolated, nonissuer transactions
B) top-rated commercial paper with a maturity of no longer than 270 days issued in minimum denominations of $50,000 This question deals with transactions. While all of the items listed are exempt, commercial paper is an exempt security, not an exempt transaction. Remember, an exempt transaction is a verb—there is an "action" taking place, while an exempt security is a noun.
Transactions meeting certain conditions are exempt from the Uniform Securities Act's registration and advertising filing requirements. Which of the following transactions does NOT meet those conditions to qualify as an exempt transaction? A) A sale of securities by the executor of an estate B) A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid C) The sale of U.S. government securities to a wealthy client's IRA by a registered broker-dealer D) An offer of a security for which a registration statement has been filed but has not yet become effective
C) The sale of U.S. government securities to a wealthy client's IRA by a registered broker-dealer In the sale of U.S. government securities to a wealthy client, the security is exempt, but the transaction is not. Had the sale been to an institutional client, it would have been exempt. An offer is not a transaction.
Exemption from the registration requirements of the USA would be granted to all of the following EXCEPT a A) security issued by a credit union authorized to do business in the state B) bond issued by a Canadian province C) corporate debenture D) bond issued by the state of New Jersey
D) bond issued by the state of New Jersey Securities issued by any province or state, as well as a credit union authorized to do business in the state are exempt securities. Without further information about the debenture, we don't know whether or not it is federal covered and, therefore exempt. This is an excellent example of choosing the correct answer because the other 3 choices can't be the right one.
An issuer employs its officers and directors to sell newly issued shares of the company to the public. To comply with the USA, the officers and directors would have to be registered as agents of A) neither a broker-dealer nor the issuer because the transactions are exempt B) the issuer C) the broker-dealer D) the broker-dealer and the issuer
B) the issuer Unless something in the question indicates that the securities being issued are exempt, employees, including officers and directors, who sell shares of their companies to the public fall under the definition of agent under the USA.
Under the Uniform Securities Act, an officer who sells an issuer's nonexempt securities to the public is considered A) not to be an agent of the issuer B) an agent of the issuer not subject to registration C) an agent of the issuer subject to registration D) not to be an agent of the issuer but subject to civil penalties under the USA
C) an agent of the issuer subject to registration An officer of an issuer who sells the issuer's nonexempt securities to the public is acting as an agent and must register. Don't assume the sales are made in an exempt transaction unless something indicates that to be the case. However, an officer who sells an issuer's securities, exempt or not, to existing employees without compensation, is not an agent.
The term used to describe a customer initiated order that includes all of the details except time and price is A) solicited B) discretionary C) exempt D) unsolicited
D) unsolicited When the order to buy or sell is initiated by the customer, it is considered to be an unsolicited order. Discretionary orders leave the decision as to what security, how much and buy or sell up to the designated agent. This is an exempt transaction, not an exempt order.
Under the Uniform Securities Act, which of the following is a broker-dealer? A) Corporation that sells interests in an oil and gas limited partnership to investors with the proceeds going to the issuer B) Credit union that issues its own stock C) Issuer D) Agent
A) 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 (the credit union) or an agent.
Under the Uniform Securities Act, the term person would includeany natural person who has a valid U.S. passporta political subdivisionan unincorporated associationan inter vivos trust A) II, III, and IV B) I, II, III, and IV C) I and II D) III and IV
A) II, III, and IV The term person has an extremely broad definition. It is best to remember the three things that are not persons: minors, individuals who have been judged incompetent, and deceased individuals. Minors can have passports; any natural person would include them and they are not persons under the act.
According to the Uniform Securities Act, which of the following would be considered exempt transactions? 1. The sale of a unlisted corporate bond by an executor of an estate 2. The gift of 100 shares of a NYSE-listed stock from a father to his minor child 3. Preorganization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made 4. An unsolicited order from an individual client to purchase a nonexempt, unregistered security A) I and IV B) II and III C) III and IV D) I and II
A) I and IV Fiduciary transactions and unsolicited orders, regardless of the security being purchased or sold, are always exempt transactions under the USA. Preorganization certificates are limited to a maximum of 10 subscribers, whether individuals or institutions. A gift of securities is not a sale, so no transaction has taken place.
Under the Uniform Securities Act, a security that is exempt from the registration requirements is also exempt from 1. the requirements for filing of advertising and sales literature 2. antifraud provisions 3. civil liabilities provisions A) I only B) I and III C) II and III D) I, II, and III
A) I only An exempt security is exempt only from the registration requirements and the requirements for filing of advertising and sales literature. There are no exemptions from the antifraud provisions. Civil liability arises anytime a security is sold or advice is rendered in violation of the act, regardless of whether any security involved was registered or exempt.
All of the following are exempt transactions under the USA EXCEPT A) initial sale of shares to in-state residents of a local manufacturing company B) a sale of common stock by an administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator C) a securities transaction by an executor D) a rescission offer, sale, or purchase
A) initial sale of shares to in-state residents of a local manufacturing company An initial sale of shares to in-state residents is an intrastate initial public offering and must be registered with the state securities Administrator. A securities transaction by an executor, a sale of common stock by an administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator, or a rescission offer, sale, and purchase are exempt transactions.
A federal covered investment adviser is a person A) exempt from regulation under the Securities Exchange Act of 1934 B) registered, or excluded from the definition of investment adviser, under the Investment Advisers Act of 1940 C) registered under the Uniform Securities Act D) registered with North American Securities Administrators Association (NASAA)
B) registered, or excluded from the definition of investment adviser, under the Investment Advisers Act of 1940 A federal covered investment adviser refers to a natural person or entity registered under the Investment Advisers Act of 1940 or excluded from the definition under that act. A person registered under the Investment Advisers Act of 1940 is exempt from state registration or licensing requirements of state securities Administrators under the NSMIA and the Uniform Securities Act.
Under the Uniform Securities Act, which of the following is NOT an exempt transaction? A) A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid B) A sale of securities by the executor of an estate C) The sale of U.S. government securities to an individual with a net worth in excess of $2 million by a registered broker-dealer D) The sale of a non-Nasdaq over the counter stock to a closed-end investment company
C) The sale of U.S. government securities to an individual with a net worth in excess of $2 million by a registered broker-dealer In the case of a U.S. government security, the security is exempt, but the transaction is not. The USA does not care about the wealth of the individual; unless specifying the order was unsolicited, or the individual was acting in the capacity of an executor (or similar circumstance), sales to individuals are never exempt transactions. All of the other choices are exempt transactions since they are either to an institutional investor, existing owners for no consideration, or by a fiduciary.
Under the provisions of the USA, all of the following transactions are exempt EXCEPT A) liquidation of a security pledged as collateral for a loan B) transactions by executors C) a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made by the investors D) transactions in preorganization certificates if no commission is paid, no subscriber makes any payment, and the number of subscribers does not exceed 10
C) a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made by the investors A transaction pursuant to an offer by an issuer to 10 persons in the state would qualify as a private placement and would be exempt. However, unlike a preorganization certificate, the subscribers do pay for their purchases. All of the other transactions are exempt.
Under the Uniform Securities Act, which of the following best describes the obligations of an issuer of a stock listed on the NYSE? A) As the issuer of a federal covered security, it is exempt from all of the provisions of the Act. B) It must register the security with the state and must not make any misrepresentations in the sale of their security. C) There is no obligation because the issuer is excluded from the definition of broker-dealer. D) Although the security is exempt from registering with the state, the issuer must not make any misrepresentations in the sale of their security.
D) Although the security is exempt from registering with the state, the issuer must not make any misrepresentations in the sale of their security. Securities listed on the NYSE are considered federal covered under the NSMIA of 1996. That means that the issuer is exempt from registering the security with the state. In a very small number of states, the Administrator may require a notice filing (that is not considered registering with the state) along with payment of a fee, but, in a question like this, you have to answer based on the usual circumstance. However, any security, exempt or not, must not violate the anti-fraud provisions of the act.
Which of the following are required to provide a consent to service of process to the Administrator in a state in which registration is sought? 1. An agent employed out of state but who seeks registration in a state in which business is conducted 2. A federal covered investment company not required to be registered in a state in which business is conducted but required to supply notice filing materials by the state Administrator 3. A broker-dealer registered in 25 states that seeks registration in a 26th state 4. An investment adviser with less than $100 million of assets under management who is not covered by federal legislation A) I, II, III, and IV B) I, II, and IV C) I and III D) II and IV
A) I, II, III, and IV Every legal or natural person seeking registration or making a notice filing must supply a consent to service of process with their registration applications. For example, a federal covered investment company, while covered under federal law, need not register with the state administrator but must submit notice filings materials that include a consent to service of process.
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 A) accredited investors B) broker-dealers C) other investment advisers D) investment companies
A) 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.
According to North American Securities Administrators Association's (NASAA) Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following practices is NOT unethical? A) Within the first ten days of a client's initial transaction, an agent accepted oral discretion and purchased securities on behalf of the client. B) An agent of a broker-dealer exercised discretion in deciding the time that a sale took place during the trading day without expressed written discretionary authority. C) An agent sold shares at a price less than authorized by a client. D) To protect the client in a declining market, an agent sold all shares in the client's account when the client had only authorized the sale of 30% of the shares.
B) An agent of a broker-dealer exercised discretion in deciding the time that a sale took place during the trading day without expressed written discretionary authority. An agent of a broker-dealer may exercise discretion in deciding the time or the price at which a sale takes place during the trading day without express written discretionary authority. Such action is not unethical because time and price are not considered true discretion. An agent may not exercise discretion over the number of shares to be sold without prior written discretionary authority.
Which of the following are exempt from state registration? 1. A bond issued by the city of San Jose, Costa Rica 2. An isolated nonissuer transaction 3. A transaction by an administrator of an estate 4. A transaction with no commissions, directed by the offer or over the period of one year, to no more than 50 retail investors in the state who buy the security for investment purposes only A) I and IV B) II and III C) I and II D) III and IV
B) II and III Isolated nonissuer transactions and transactions by an administrator of an estate are included in the list of exempt transactions. With the exception of Canada, no foreign securities, other than those issued or guaranteed by the sovereign government, are exempt securities. Perhaps you read too quickly and thought it was San Jose, California (which would be exempt).There is a limited offering exemption, but it is limited to no more than 10 retail (non-institutional) investors in a 12 month period.
All of the following are included in the definition of federal covered security EXCEPT A) ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Maryland B) City of Portland, Maine, GO bond sold to a resident of Augusta, Georgia C) City of Portland, Maine, GO bond sold to a resident of Augusta, Maine D) ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Delaware
C) City of Portland, Maine, GO bond sold to a resident of Augusta, Maine Municipal bonds, exempt securities under the Securities Act of 1933, are also federal covered securities with one significant exception: if the issuer is a political entity in this state and it is sold to a resident of this state, it is not considered a federal covered security in this state.Any security listed on the NYSE, regardless of the corporation's or the customer's state of domicile, is a federal covered security.
Which of the following situations would require registration as an investment adviser? 1. A broker-dealer provides investment research services to a customer and charges a fee for the service 2. An agent of a broker-dealer recommends the purchase of ABC securities to a customer, who then purchases 100 shares, and the agent earns a commission 3. An agent of a broker-dealer prepares a complete financial plan for a customer with a one-time charge of $950. The plan recommends specific securities transactions, which the customer orders. 4. The agent earns commissions on the securities transactionsA broker-dealer charges its customers a fee for collecting dividends and account maintenance, in addition to commission charges for transactions executed A) I, II, III, and IV B) I, III, and IV C) I and III D) I and II
C) I and III Under the Uniform Securities Act, broker-dealers and their agents are not defined as investment advisers if their performance is solely incidental to the conduct of a brokerage business, and no special compensation is received for the advisory services.
Which of the following statements relating to notice filing are CORRECT? 1. It is available only to federal covered securities. 2. A notice filing is effective for 1 year beginning from the later of filing with the Administrator or the effective date determined by the SEC. 3. Renewal is accomplished by filing with the state a copy of records filed with the SEC along with a signed consent to service of process. 4. Failure to pay required fees could lead to the issuance of a stop order. A) II, III, and IV B) I, II, III, and IV C) I, II, and IV D) I and III
C) I, II, and IV Notice filing is only available to securities that meet the definition of federal covered security. Just as with other registrations under the act, a registration is effective for a 1-year period. In this case, it is the later of the filing with the state or the SEC effective date that sets the clock. The initial filing requires a consent to service of process that may be incorporated by reference into the renewals. Consent to service of process need not be renewed annually because it remains on file. Any time fees are not paid, the Administrator will take action.
Under the Uniform Securities Act, which of the following is TRUE regarding the registration of securities? A) Registration by coordination becomes effective on a date ordered by the Administrator. B) The effectiveness of a registration statement assures the completeness of the information contained in the statement. C) State registration by coordination is only available if a federal registration statement has been filed under the Securities Act of 1933 in connection with the same offering. D) The Administrator may require that a prospectus be delivered to every purchaser of a registered security no sooner than the time at which the security is delivered.
C) State registration by coordination is only available if a federal registration statement has been filed under the Securities Act of 1933 in connection with the same offering. The federal registration statement is what the state registration is being coordinated with. Registration by coordination becomes effective simultaneously with the federal registration. A prospectus may certainly be delivered prior to the delivery of the security. The act prohibits any statement or implication that registration involves approval or verification of facts by the Administrator.
An agent solicits orders for a primary offering of a nonexempt security in his home state. Within days, he learns that the underwriting is not registered in that state. Relieved that no customer orders were placed, he ceases soliciting orders in this security. In this situation, the agent has acted A) unlawfully, because he did not mark the orders as solicited B) lawfully, because no customer orders were executed C) unlawfully, because soliciting orders in nonexempt, unregistered securities is prohibited D) lawfully, because he ceased soliciting orders immediately after learning that the security is not properly registered
C) unlawfully, because soliciting orders in nonexempt, unregistered securities is prohibited Soliciting orders in unregistered, nonexempt securities is unlawful, regardless of whether or not orders are placed. Stopping was the correct action, but that does not relieve him of his initial error.
Under the USA, which of the following types of transactions can be entered into legally with unregistered, nonexempt securities? A) Public offering of stock in a new corporation B) Solicited transactions with individual clients located within the state C) Rights offering to existing shareholders with underwriting compensation of $.05 per share to the soliciting broker-dealers D) Private placement offered to more than 50 institutional purchasers in the state
D) Private placement offered to more than 50 institutional purchasers in the state Private placements involve the sale of nonexempt securities to investors without the need for registration. There is no numerical limit to the number of offers that may be made to institutional buyers. However, offers to noninstitutional buyers are limited to a maximum of 10 in any 12-month period. Rights offerings are only exempt if there is no compensation, and only unsolicited orders are exempt transactions.
A broker-dealer is registered in all 50 states. Which of the following statements is correct regarding the firm's obligations regarding maintaining of books and records? A) The broker-dealer must satisfy the requirements of the most stringent state. B) The broker-dealer must satisfy the requirements of the Administrator for the state in which their principal office is located. C) The broker-dealer must satisfy the requirements of the state in which the majority of its agents are registered. D) The broker-dealer need only satisfy the requirements of the SEC.
D) The broker-dealer need only satisfy the requirements of the SEC. Under the NSMIA, Administrators are prohibited from setting financial requirements in excess of those required by the SEC. In virtually every question like this, the SEC "rules".
Which of the following transactions is exempt under provisions incorporated into the Uniform Securities Act? A) Transactions involving investment clubs B) Transactions between an agent and a client who is an immediate family member C) Transactions that do not result in a capital gain D) Transactions between the issuer and the underwriter
D) Transactions between the issuer and the underwriter The Uniform Securities Act specifically exempts transactions between an issuer and an underwriter. There is no exemption for investment clubs or transactions that result in a loss. Immediate family members are treated the same as any other retail client.
Under the USA, each of the following is an exempt transaction EXCEPT A) a customer contacts an agent and places an order for 500 shares of a stock the agent has never heard of; the agent finds the stock and fills the order B) XYZ brokerage firm underwrites 1,000,000 shares of ABC and distributes them only to other underwriters C) a broker-dealer places an entire new issue of securities among 15 different insurance companies D) a Canadian government bond maturing in 10 years
D) a Canadian government bond maturing in 10 years The Canadian government bond is an exempt security, not an exempt transaction. Unsolicited orders, transactions between broker-dealers, and trades with institutional investors, such as insurance companies, are all examples of exempt transactions. Remember, with a transaction, there must be an action—either a purchase or a sale.
In order for a security to lawfully be sold or offered under the USA, it must meet at least one of the following requirements EXCEPT that it is A) sold in an exempt transaction B) properly registered with the Administrator C) an exempt or federal covered security D) registered with the SEC
D) registered with the SEC It is unlawful to sell a security in a state unless the security is a federal covered security, exempt from registration under the USA, sold in an exempt transaction, or registered under the act. There is no requirement that a security be registered with the SEC; that is the primary purpose of registration by qualification - registering a security on the state level that is not SEC registered.
All of the following statements are consistent with the Uniform Securities Act EXCEPT A) state Administrators may require federal covered investment companies to file documents with the Administrator using a procedure known as notice filing B) a security for which a registration statement is filed under the Securities Act of 1933 may simultaneously register with the state by the procedure known as registration by coordination C) any security may be registered with the state by the procedure known as registration by qualification D) state Administrators do not require consent to service of process to be submitted with notice filings for covered securities
D) state Administrators do not require consent to service of process to be submitted with notice filings for covered securities The Administrator will require the filing of a consent to service of process with any securities registration. Notice filing is the state registration procedure followed by federal covered securities. Any security may be registered by qualification, and coordination is the simultaneous registration with the SEC and the states.
A transactional exemption would be available when a sale is made in all of the following situations EXCEPT A) to a federally chartered credit union B) to a broker-dealer by a non-affiliated broker-dealer C) by a federal marshal to individual investors D) to a lawyer as an incidental part of his legal practice
D) to a lawyer as an incidental part of his legal practice Unless we are told the order was unsolicited or effected in some other way to qualify for an exemption, a sale to a lawyer is treated like any other sale to a retail client. Don't confuse this with the lawyer's exclusion from the definition of an investment adviser. Under the USA, any sale made by a marshal or sheriff, as well as a sale to a financial institution, such as a credit union, is considered an exempt transaction. Transactions between broker-dealers are included in the list of exempt transactions.
Who is included in the definition of institutional investor?
-Depository institutions -International banks -Insurance companies -Investment companies as defined in the Investment Company Act of 1940 -Broker-dealers
Which of the following is not an exempt transaction? A) A 90-day U.S. Treasury bill B) A nonissuer unsolicited transaction C) A sale of stock to a bank D) A transaction executed by a trustee appointed by a bankruptcy court
A) A 90-day U.S. Treasury bill The Treasury bill is an exempt security, not an exempt transaction. In order to have an exempt transaction, there must be an "action". Unsolicited transactions and sales of securities to financial institutions (i.e., bank or savings and loan) are exempt transactions. Transactions executed by a fiduciary, such as by a trustee in the course of a bankruptcy proceeding, are also exempt transactions under the Uniform Securities Act.
Under the registration provisions of the Uniform Securities Act, it is unlawful for an agent in the state to sell XYZ securities unless A) the agent is a nonregistered, nonexempt person B) XYZ is a federal covered security C) XYZ is a nonregistered, nonexempt security D) both the agent and XYZ are nonexempt and nonregistered
B) XYZ is a federal covered security If XYZ is a federal covered security it is not required to register with the state. Nonexempt securities and nonexempt persons must be registered to be sold (securities) or to do business (persons).
A president of a bank sells shares of the bank to public investors. Under the Uniform Securities Act, he or she is A) an investment adviser B) not defined as an agent under the Uniform Securities Act C) underwriting the issue in the role of a broker-dealer D) an agent under the Uniform Securities Act
B) not defined as an agent under the Uniform Securities Act Any individual selling securities on behalf of an issuer of certain exempt securities (bank securities are in that list) is not an agent under the USA.
Which of the following entities would NOT be considered to be exempt issuers under the Uniform Securities Act? A) State of Michigan B) City of Calgary, Alberta C) City of Cancun, Mexico D) United States Treasury
C) City of Cancun, Mexico Foreign national governments, such as Mexico, with whom the United States has diplomatic relations, but NOT their political subdivisions, such as any city in Mexico, are considered exempt issuers. The United States or any of its agencies, such as Fannie Mae, or any state or Canadian province, or political subdivision thereof, is considered an exempt issuer.
The Administrator may do all of the following with respect to federal covered securities EXCEPT A) require submission of a consent to service of process B) require the payment of a filing fee to the state C) require that the issuer meet minimum financial standards D) initiate enforcement action in the case of fraud committed in the Administrator's state
C) require that the issuer meet minimum financial standards One of the effects of the NSMIA is that a state securities Administrator may not require any financial standards be met by an issuer of federal covered securities. The Administrator, however, may initiate enforcement action, require payment of filing fees to the state, and require submission of a consent to service of process.
Registration statements for securities under the Uniform Securities Act are generally effective for A) a period of time determined by the Administrator for each issue B) 1 year from the previous December 31st C) 1 year from the date of issue D) 1 year from the effective date
D) 1 year from the effective date Securities registration statements are generally effective for 1 year from the effective date. However, if the issuer or underwriter still has unsold shares, the effective date may be extended until those shares are sold. That would be a more complete answer, but you weren't given that choice.
