Series 63 - Unit 2

Which of the following securities is most likely to register by qualification under the USA?

A public offering of a stock to be offered exclusively in 1 state

Which of the following items is NOT a security under the USA?

A whole life insurance contract issued by an incorporated life insurance company having its shares trade on the New York Stock Exchange (NYSE)

Under the Uniform Securities Act, which of the following best describes the obligations of an issuer of stock listed on the NYSE?

Although the security is exempt from registering with the state, the issuer must not many any misrepresentations in the sale of their security.

Under the USA, which of the following would NOT be considered an exempt transaction?

An agent sells U.S. Treasury notes to an individual client

Which of the following is NOT a security?

Annuity that provides for a fixed monthly income

The Uniform Securities Act specifically exempts certain issues from the registration and advertising filing requirements of the act. Which of the following securities does NOT carry that exemption?

Bank holding company stock

Which of the following entities would NOT be considered to be exempt issuers under the Uniform Securities Act?

City of Cancun, Mexico

If a manufacturing company in the registration process with the SEC is considering registering its securities in a state, the method that it would use to register in the state is:

Coordination

An interest in which of the following is a security under the Uniform Securities Act? I. Merchandising marketing scheme II. Multilevel distributorship arrangement III. Oil and gas drilling program IV. Cattle feeding program

I, II, III, and IV

If Ann Smith, an agent with ABC Securities, Inc., sold a security to an investment company registered under the Investment Company Act of 1940, this sale would be considered and example of a(n)

exempt transaction in a security (Smith's sale of the security to a registered investment company is an example of an exempt transaction, not an exempt security.)

Federal covered securities, as defined under the Uniform Securities Act,

include shares of an investment company registered with the SEC under the Investment Company Act of 1940

The term "federal covered security" includes all of the following EXCEPT

GHIJ common stock, a biotech concern traded on the OTC Bulletin Board

The Uniform Securities Act prohibits which of the following? I. Agents soliciting orders for a security registered in a neighboring state, but not in this state. II. Broker-dealers hiring agents to sell registered securities to clients of the firm. III. Agents soliciting orders for unregistered nonexempt securities.

I and III

Under the USA, the least active review of registration documentation is performed by state Administrators before which of the following becomes effective? I. Coordination II. Qualification III. Notice Filing IV. Recapitulation

I and III

According the USA, which of the following would be considered exempt transactions? I. The sale of a unlisted bond by an executor of an estate II. The gift of 100 shares of a NYSE-listed stock from a father to his minor child III. Pre-organization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made IV. An unsolicited order from an individual client to purchase a nonexempt, unregistered security

I and IV

According to the USA, which of the following would be considered exempt transactions? I. The sale of a unlisted corporate bond by an executor of an estate II. The gift of 100 shares of a NYSE-listed stock from a father to his minor child III. Pre-organization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made IV. An unsolicited order from an individual client to purchase a nonexempt, unregistered security

I and IV (Fiduciary transactions and unsolicited orders, regardless of the security being purchased or sold, are always exempt transactions under the USA.)

Under the Uniform Securities Act, a security that is exempt from the registration requirements is also exempt from the I. requirements for filing of advertising and sales literature II. antifraud provisions III. civil liabilities provisions

I only

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? I. An agent employed out of state but who seeks registration in a state in which business is conducted. II. 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 III. a broker-dealer registered in 25 states that seeks registration in a 26th state IV. An investment adviser with less than $100 million of assets under management who is not covered by federal legislation

I, II, III, and IV

Which of the following securities is (are) NOT subject to state registration under the USA? I. Equipment trust certificates issued by a railroad subject to federal regulation II. Preferred stock of a bank holding company listed on the NYSE III. Subordinated convertible debentures issued by the Dominion Electric Company of Canada, a public utility regulated by the Canadian federal government IV. Shares of a savings and loan institution authorized to do business in the state

I, II, III, and IV

The James Henry Company (JHC), an SEC-registered securities broker-dealer with offices in Chicago and LA, limits its clientele to banks and trust companies. JHC makes a sale of US Gov securities to the Wall Street Bank located in NYC. Which of the following statements is (are) TRUE under the USA? I. The security itself is exempt from registration II. The transaction is exempt III. The broker-dealer is not required to be registered in the state of New York

I, II, and III

Under the USA, the Administrator may deny or revoke the exemption from registration for which of the following? I. A security issued by a nonprofit organization II. Investment contracts of employee benefit plans III. An exempt transaction not involving a federal covered security

I, II, and III

Under the provisions of the USA, securities exempt from registration requirements include I. securities issued by the U.S. Government II. securities issued by a building and loan association organized under the laws of any state and authorized to do business in the state III. bonds issued by an insurance company organized under the laws of any state and authorized to do business in this state

I, II, and III

Which of the following are defined as securities under the Uniform Securities Act? I. An investment in a managed pool of rental condominiums II. Unsecured debentures sold in a private placement only to accredited investors III. Bills, notes, and bonds issued by the US Treasury IV. A Roth IRA

I, II, and III

Under the USA, which of the following are exempt from the requirements to file advertising and sales literature with the Administrator? I. Any unsolicited transaction involving an exempt security II. Any unsolicited transaction involving a nonexempt security III. Any solicited transaction involving an exempt security IV. An solicited transaction involving a nonexempt security

I, II, and III (If a transaction is exempt, it is exempt from the requirement to file advertising and sales literature with the Administrator. All unsolicited transactions fit into the category of exempt transactions; exempt securities, whether traded in a solicited or unsolicited transaction, are always exempt from the filing requirements.)

Securities of which of the following issuers are exempt under the USA? I. National banks II. State banks III. Bank holding companies IV. Federal savings and loan associations

I, II, and IV (bank holding companies (as separate or corporate entities) are subject to state registration if not otherwise exempt. thus, securities issued by bank holding companies are not exempt securities under the act.)

Which of the following activities are prohibited practices under the Uniform Securities Act? I. Selling an unregistered non-exempt security to a financial institution II. Offering shares of an unregistered, nonexempt security to individual customers III. Offering a Canadian government bond to a resident of a state in which the agent of broker-dealer is not registered.

II and III

Which of the following are NOT exempt securities under the Uniform Securities Act?

Preferred stock traded on the OTC Link of the OTC Markets Group (formerly known as the Pink Sheets)

Under the USA, which of the following types of transactions can be entered into legally unregistered, nonexempt securities?

Private placement offered to more than 50 institutional purchasers in the state

Securities issued by which of the following are exempt from registration? I. Any savings and loan association organized under the laws of any state. II. Any bank organized and supervised under the laws of any state. III. Any bank organized under the laws of the United States. IV. Any federal credit union

II, III, and IV

To which of the following situations does the transaction exemption apply? I. City of Chicago bond offering II. Canadian government bond offering III. Offering an unregistered security to a maximum of 12 individual customers in a 10-month period. IV. The sale of an estate's holding of IBM shares by an executor

IV only

The United States Supreme Court ruled in the Howey decision that an instrument that represents the investment of money in a common enterprise with an expectation of profit solely through the managerial efforts of others is a security. In following the Howey decision, the USA would consider which of the following a security?

Investment in options to acquire a security

Which of the following is NOT an exempt transaction as defined in Section 402 of the USA?

Isolated sale of a corporate bond on behalf of the bond's issuer (an isolated sale of a corporate bond on behalf of the bond's issuer is not exempt)

All of the following would be defined as exempt transactions EXCEPT

Joe Smith, an employee in the consumer lending department of Amalgamated National Bank, buys securities from ABC Securities, a broker-dealer registered in the state. (The purchase of securities from a broker-dealer by an employee of a bank is a nonexempt transaction bc it it a sale of a security by a broker-dealer to a member of he public.)

A notice filing would be most appropriate for which of the following new issues?

Open-end investment company shares

Which of the following statements best describes the effect of the NSMIA on securities regulation?

Preempts state registration of covered securities

Securities of a new company's initial public offering have been SEC registered, and the Registration Statement is effective. The securities were not registered in State X before the effective date, and the Administrator has determined that an offering of the securities in State X is not considered to be in connection with the same offering. A broker-dealer in State X wishes to publicly offer the securities in that state. These securities must be registered with the Administrator of State X in which of the following ways?

Qualification (If the Administrator determines (perhaps bc of a long delay between the effectiveness of the federal registration and the filing with the state) the securities to be registered with the state are not part of the same offering, the securities would not be eligible for filing by coordination; the securities must be registered by qualification.)

Which of the following is an example of a non-issuer transaction?

Secondary offering by an institutional seller (Investors or shareholders routinely receive the proceeds from a secondary transaction. About the only time a secondary offering is an issuer transaction is if the issuer were reselling treasury stock since the proceeds go to the issuer.)

Under the USA, which of the following is TRUE regarding the registration of securities?

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. (Registration by coordination becomes effective simultaneously with the federal registration)

Which of the following statements concerning transactions exempt from registration under the USA is TRUE?

The antifraud provisions of the USA apply to exempt transactions

An agent is registered in State X but not in State Y. The agent sells a resident of State X a new State Y municipal revenue bond. If the bond is not registered for sale in State X, which of the following statements is TRUE?

The sale was legal because the bond is not required to be registered for sale is State X.

What is the smallest order that can be placed for an institutional account?

There is no limit on institutional order sizes

According to the USA, the sale of a security to an insurance company is

an exempt transaction (When a security is sold to a financial institution, such as an insurance company, a bank, or an investment company, the USA conducers that to be an exempt transactions. It has nothing to do with whether or not the security is exempt.)

Under the National Securities Markets Improvement Act of 1996 (NSMIA), investment companies registered under the Investment Company Act of 1940 are required to register

as securities at the federal level only

Under the USA, an agent who offers a nonexempt, unregistered security for sale

may be civilly liable to the purchases if the transaction is not exempt

If Perfect Pasta, Inc., a privately held company in State I that owns four restaurants, wants to issue shares to public investors who are residents of State I, the company

must register by qualification (PP must register by qualification bc the other methods listed are not available to an initial public offering for an intrastate offering.)

Under the USA, all of the following statements regarding private placements are true EXCEPT

no payment is received from non institutional clients

A transactional exemption would be available when a sale is made in all of the following situations EXCEPT

to a lawyer as an incidental part of his legal practice

Certain securities transactions are considered exempt from the registration and advertising filing requirements of the USA. Included in that group would be all of the following EXCEPT

sale of a security limited in its offering to no more than 10 retail investors in any calendar year (12-month period, not calendar year)

Because, under the USA, many different securities qualify for an exemption from registration, proof of qualification for an exemption is the responsibility of

the person requesting the exemption

When a security registration statement filed under the USA with the state Administrator becomes effective, this means

the securities that are the subject of that registration statement may be lawfully sold. (For a security to be offered for sale within a state, either as a new issue or in a secondary transaction, the security must be either registered with the state or exempt from registration with the state.)

Under the Uniform Securities Act, a non-exempt transaction may take place in the state only if

the security is registered, exempt, or federal covered