Unit 11
Which of the following must register as an agent under the Uniform Securities Act? A) A sales assistant who takes orders on behalf of agents in a branch office B) A broker-dealer with offices in the state C) An administrative assistant who provides securities quotes to clients D) An individual who sells securities of an issuer to the issuer's employees without earning a commission
A) A sales assistant who takes orders on behalf of agents in a branch office A sales assistant who takes orders on behalf of agents in a branch office is required to register under the Uniform Securities Act. An administrative assistant who provides securities quotes to clients is not functioning as an agent and need not register. An individual who sells securities of an issuer to the issuer's employees without earning a commission need not register under the terms of the USA. Remember, a broker-dealer is excluded from the definition of an agent under the USA.
Which of the following statements is true regarding the jurisdiction of the SEC under the Securities Exchange Act of 1934? 1. The SEC has jurisdiction over exchanges and SROs. 2. The SEC has jurisdiction over broker-dealers, investment advisers, and associated persons that are required to be registered under federal law. 3. The SEC has jurisdiction over banks and savings and loans regarding their securities activities. A) I and II B) I only C) II only D) I, II, and III
A) I and II The SEC was created by the Securities Exchange Act of 1934 and has the responsibility of administering all federal securities laws. The SEC has jurisdiction over exchanges, SROs, and all persons required to be registered under federal law. The SEC does not enforce state securities statutes, nor does it have jurisdiction over banks or savings and loans regarding their securities activities. Banking authorities, such as the Federal Reserve Board, the Federal Deposit Insurance Corporation, and others, regulate banks and savings and loans.
Which of the following would be agents as the term is defined in the Uniform Securities Act? 1. An individual representing a registered broker-dealer in the sale of securities to the general public 2. An assistant to the president of a broker-dealer who accepts orders from clients on behalf of the senior partners 3. A subsidiary of a major commercial bank registered as a broker-dealer that sells securities to the public 4. An issuer of nonexempt securities registered in the state and sold to the general public A) I and II B) III and IV C) I, II, III, and IV D) I, II, and III
A) I and II Under the USA, only individuals can be agents. A person who sells securities for a broker-dealer is an agent. An administrative person, such as the assistant to the president of a broker-dealer, is considered an agent if he takes securities orders from clients. Corporate entities are excluded from the definition of an agent. Broker-dealers and issuers are not agents.
A publicly traded corporation offers its employees an opportunity to purchase shares of the company's common stock directly from the issuer. A specific employee of the company is designated to process any orders for that stock. Under the USA, the employee A) must register as an agent only if he will receive commissions or remuneration, either directly or indirectly related to the volume of sales. B) may receive commissions without registration. C) must register as an agent of the issuer. D) need not register as an agent of the issuer under any circumstances.
A) must register as an agent only if he will receive commissions or remuneration, either directly or indirectly related to the volume of sales. Under the USA, an individual is an agent when effecting transactions with an issuer's existing employees if commissions or other remuneration related to the sale are paid. Therefore, there are cases where the employee would have to register as an agent. When the individual is paid a straight salary for this work, no registration is required.
When applying for registration as an agent, which of the following must be disclosed? A) Residential history for the past three years B) Certain financial information such as any unsatisfied judgments or liens against the applicant C) Complete employment history for the past five years D) Highest educational level achieved and the institution attended
B) Certain financial information such as any unsatisfied judgments or liens against the applicant This question probably contains more detailed information than will be covered on the exam. Negative financial information, such as unsatisfied judgments or liens and bankruptcy filings, must be disclosed. Employment history for the past 10 years and residential history for the past 5 years must be shown. If, during the past 10 years, the applicant was a full-time student, then that must be shown, but that is the extent of educational information required.
It would not be a violation of the Uniform Securities Act for an applicant for registration as an agent to do which of the following while the application is pending? A) Limit his sales activity to immediate family members only B) Sell fixed annuities C) Conduct seminars on asset allocation D) Use a preliminary prospectus to obtain indications of interest for a new issue but wait until he is registered before accepting any orders
B) Sell fixed annuities While registration as an agent is pending, the applicant can take no active role in the sale or offering of securities. However, because fixed annuities are not securities, registration as an agent is not required. Yes, we know that an insurance license would be required, but apparently NASAA doesn't care about that.
Included in the Uniform Securities Act's definition of broker-dealer would be A) savings institutions. B) a broker-dealer with a place of business in the state whose only clients are insurance companies. C) individuals who are registered as agents. D) issuers of securities.
B) a broker-dealer with a place of business in the state whose only clients are insurance companies. When the firm has a place of business in the state, regardless of its clientele, it is a broker-dealer. Exclusions from the definition include agents, issuers, and most financial institutions, such as banks and savings institutions. Also excluded are broker-dealers with no place of business in the state who only deal with institutional clients, such as banks and insurance companies.
Alex is planning on registering as an agent for a broker-dealer. Which of the following would be the least likely requirement for a successful application? A) Paying the filing fees B) Filing an application for registration C) Submitting fingerprints D) Taking and passing an examination
C) Submitting fingerprints Fingerprints are not a specific requirement of the Uniform Securities Act. We know we are dealing with state law because the term agent is used, and that term describes representatives of broker-dealers under state law. This is one of those cases where you have to remember this is a NASAA exam, not a FINRA exam (where fingerprints are generally required).
In which of the following cases would an individual representing an issuer in a transaction with a client be excluded from the Uniform Securities Act's definition of an agent? A) The individual sells shares of a public utility regulated in respect of its rates and charges by a governmental authority of the United States or any state. B) The individual sells shares of a federal credit union. C) The individual successfully solicits an order from an insurance company to purchase 10,000 shares of the issuer's stock. D) The individual sells shares of a security issued by and representing an interest in a federal savings and loan association.
C) The individual successfully solicits an order from an insurance company to purchase 10,000 shares of the issuer's stock. Individuals representing issuers in the sale of their securities may or may not be defined as agents. When the transaction is exempt, such as in the sale to an institution like an insurance company, the individual is not defined as an agent. There are two ways to earn the exclusion. One of them is when the transaction in the issuer's security is exempt. The other is when the issuer is in one of the five categories of exempt security listed in the USA. Each of the other three choices represents an exempt security, but none of the three are included in the USA's list of those where the individual representing the issuer is not an agent.
If information filed with the Administrator by a broker-dealer as part of its registration changes in a material way, the registrant must A) update the information on the registration on the next annual renewal date. B) amend the registration statement within 60 days of the material change. C) submit an entirely new registration form within 30 days of the material change in information. D) amend or update the information promptly, regardless of the renewal date.
D) amend or update the information promptly, regardless of the renewal date. When material information changes, the registrant must promptly amend or update the information, regardless of the renewal date. The requirement to amend a registration applies to investment advisers, broker-dealers, and securities. However, the Uniform Securities Act does not define the term promptly.
Under the Uniform Securities Act, the Administrator may require a broker-dealer to post a surety bond of A) $10,000. B) $50,000. C) $25,000. D) an amount not in excess of that set by the SEC.
D) an amount not in excess of that set by the SEC. Unlike investment advisers where the USA specifies posting a surety bond in the amount of $35,000, the Uniform Securities Act does not specify an amount for broker-dealers. However, the NSMIA states that the Administrator may not require a broker-dealer to be bonded in an amount above that set by the SEC. Furthermore, bonds will not be required of broker-dealers that maintain a specified net capital.
The antifraud provisions of the Uniform Securities Act apply to all of the following except A) newsletter publishers who do not give advice to subscribers on the subscribers' specific investment situations. B) a broker-dealer registered pursuant to the limited registration option available to Canadian broker-dealers and their agents. C) persons availing themselves of the de minimis exemption. D) an individual employed by a registered broker-dealer whose sole function is selling commodity futures contracts.
D) an individual employed by a registered broker-dealer whose sole function is selling commodity futures contracts. The Uniform Securities Act's antifraud provisions deal with securities; commodities are not a security. Even if one is exempt from registration due to meeting the de minimis exemption or is excluded from the definition of investment adviser under the publisher's exclusion, the antifraud provisions still apply. The same is true for those Canadian securities professionals who do business in the United States by using the limited registration option available to them.
