unit 1
Which of the following would be included in the Uniform Securities Act definition of "sale"?
A gift of assessable stock. An investor exercising warrants attached to a convertible bond purchased 5 years ago.
Under the Investment Advisers Act of 1940, the following are the definition of an investment adviser?
Accountants who advise on securities (only) for a fee, Insurance companies, Attorneys who advise on securities (only) for a fee.
the following statements are TRUE
An Administrator can suspend a pending registration on a summary basis. An Administrator may not issue a stop order without prior notice and opportunity for a hearing.
Disciplinary proceedings under the Uniform Securities Act require the Administrator to provide which of the following?
An opportunity for a hearing. Written findings of facts and conclusions of law. Appropriate prior notice.
Under Regulation D, accredited investors in a private placement must meet minimum standards that may include which of the following?
Annual income in excess of $200,000 for at least the last 2 years, Net worth, excluding the primary residence, in excess of $1 million.
Which of the following statements best describes a SIP?
Any person engaged in the business of collecting, processing, or preparing for distribution or publication; or assisting, participating in, or coordinating the distribution or publication of information with respect to transactions in or quotations for any nonexempt security.
In addition to the normal required filings, an investment adviser who maintains custody of client funds and or securities will be required to complete:
Form ADV-E.
the following statements regarding the Uniform Securities Act are TRUE
If the sale of a security is in violation of the USA, the buyer may sue the selling broker-dealer to recover the money paid for the security. The buyer of securities may not sue if within 30 days of receipt, he failed to accept or reject a written offer from the seller to rescind the trade and to refund the money with interest added.
Kapco Advisers registers with the Administrator on April 1. Pete Patel, an IAR with Kapco, registers on the same day. Both of them file renewal papers, accompanied by the appropriate fees, on March 31 of the following year. Which of the following statements are TRUE?
Kapco's renewal was late. Patel's renewal was late.
If a federal covered investment adviser wishes to sell his business to another advisory firm
No approvals are required.
the following is required for a preorganization subscription to be an exempt transaction?
No commission has been paid.
Under the Uniform Securities Act, which of the following is are requirements for a preorganization subscription to be an exempt transaction?
No payment may be made by any subscriber, No commission may be paid to anyone for soliciting potential subscribers, There may be no more than ten subscribers.
Under the Uniform Securities Act, requirements for registration as an investment adviser in a state include?
The Administrator may require an announcement of the application for registration in one or more newspapers in the state. For those needing a surety bond, it must provide that any customer who can prove a violation is entitled to collect against the bond.
The Administrator has just notified Rockland Securities that its application to operate as a broker-dealer in this state is now effective. Which of the following parties would be considered registered?
The firm, Its officers, Its directors.
Which of the following would NOT be considered evidence of custody of a client's funds or securities?
The investment adviser has discretionary authority over the client's account.
When the USA refers to unsolicited orders
Unsolicited orders are defined as exempt transactions under the USA.
Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, when may an investment adviser borrow money from a client?
When the client is a bank or financial institution in the business of loaning money
An investment adviser must meet the net worth requirements of the Administrator. When doing the computation, the following assets would be included:
a sofa in the reception area.
An investment adviser renews its registration with the SEC by filing:
an annual updating amendment.
Under the Uniform Securities Act, a person whose business model is selling reports on a subscription basis concerning specific securities to investors based on their individual objectives will be defined as
an investment adviser
All of the following qualify as management companies
closed-end investment companies. open-end investment companies.
The Administrator may require which of the following from a federal covered adviser?
copy of the IA's Form ADV. a filing fee.
Under the Uniform Securities Act, persons providing investment advice do not have to register as investment advisers if they have no place of business in the state and they
deal only with institutional investors, have five or fewer noninstitutional clients in the state during any 12-month period, deal only with other registered investment advisers
A federal covered investment adviser has decided that it is necessary to increase its fee schedule and charge commissions on securities trades. However, they are going to leave the fee structure in place for existing customers. This information must be:
disclosed promptly only to those customers who will be affected by the change through a new brochure, disclosed in the summary of material changes in the annual updating amendment to the SEC.
In designing a client's portfolio, a registered investment adviser representative of Greater Wealth Advisory Services recommends the purchase of several stocks from the inventory of Greater Wealth's wholly owned broker-dealer. Under the Investment Advisers Act of 1940 this activity requires written
disclosure to the client and consent prior to completion of the transaction
Under the Uniform Securities Act, each of the following statements regarding a sale, an offer, or an offer and sale is true
every sale or offer of a warrant or stock right to purchase or subscribe to another security, is considered to include an offer of the other security. any security given or delivered, with or as a bonus for any purchase of securities, is considered to have been offered and sold for value. a purported gift of assessable stock is considered to involve an offer and sale.
Under IA-1092, an investment adviser:
makes advice his regular activity. is compensated directly or indirectly for advice.
If Perfect Pasta, Inc., a privately held company in Illinois that owns four restaurants, wants to issue shares to public investors who are residents of Illinois, the company:
must register by qualification.
Rule 482 of the Securities Act of 1933 deals with:
omitting prospectuses.
Under the NSMIA, the term "federal covered adviser" includes a person:
registered with the SEC under the Investment Advisers Act of 1940. excluded from the definition of an investment adviser under the Investment Advisers Act of 1940.
The purpose of the Investment Advisers Act of 1940 is to provide:
standards at the federal level for the regulation of investment advisers.
An Administrator has specific authority under the USA to:
suspend the registration of a security if the suspension is in the public interest and the offering has excessive underwriting fees, enforce subpoenas in the state at request of an Administrator of another state for alleged violations that occurred in another state, require that the proceeds from an offering be held in escrow until issuer receives a certain percentage of the sale of the securities offered.
A Canadian broker-dealer is registered in Province Q. The firm has clients who vacation in several New England states and they would like to continue to do business with them while on their holidays. Under the Uniform Securities Act:
this is permissible if the broker-dealer is properly registered in Province Q, deals only with existing clients, and registers in each of the states.
Under the Investment Advisers Act of 1940, which are exempt from the requirements for registration?
Foreign investment advisers with fewer than 15 clients per year who do not hold themselves out as investment advisers to the public and have less than $25 million in AUM in the United States, Investment advisers who conduct all of their business in 1 state and who do not provide advice on securities listed on an exchange and have no private funds as clients.
Which of the following have a federally imposed exemption from registration with the SEC?
Securities issued or guaranteed by a state or political subdivision of a state. Promissory notes and bankers' acceptances with maturities of 9 months or less where the proceeds are not used for capital expenditures. Securities issued or guaranteed by the U.S. government.
According to the Uniform Securities Act, which of the following would be considered exempt transactions?
The sale of a unlisted corporate bond by an executor of an estate. An unsolicited order from an individual client to purchase a nonexempt, unregistered security
The Uniform Securities Act provides an exemption from registration for certain securities and for certain transactions. However, the Administrator is not empowered to deny an exemption from state registration to:
U.S. government securities. municipal bonds issued by another state.
Each of the following is a not a prohibited practice under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents
a broker-dealer obtaining a mortgage for its new building from a bank that is a client of the firm, a broker-dealer charging a higher-than-normal commission on a trade involving a thinly traded stock, a broker-dealer placing an order in a customer's account that was received from an authorized third party
All of the following statements about an agent's need to be registered in a state:
registration is not required in a state where the agent has no place of business and only deals with existing clients who are vacationing in that state.registration is required when they limit their activity to the sale of exempt securities.registration is required if they solicit the sale of securities by telephone to fewer than 6 individuals residing in that state.
All of the following securities are exempt from registration under the USA
stock issued by an insurance company traded on the Nasdaq Stock Market bonds traded on the NYSE American LLC (formerly known as the American Stock Exchange [AMEX]) bonds issued by the City of Winnipeg
A client of an investment adviser is thrilled with her portfolio's results and posts a note on her bridge club's cork board suggesting that some of the other members would probably benefit from the adviser's skills. Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers,
this would be permissible because it was done without the knowledge of the adviser
Included in the Investment Advisers Act of 1940 are a number of different recordkeeping requirements. Wealth Preservation Specialists is a covered adviser that is organized as a partnership. If the firm were to dissolve, partnership agreements must be kept for
three years after the dissolution
An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients:
when informed by the investment adviser that the representative's registration is effective.
