Unit 12 Review
D) The administrators of both State L and State W may perform unannounced onsite examinations during normal business hours.
A broker-dealer is registered in State W, but its principal and only place of business is in State L. Which of the following statements regarding the ability of the administrator to perform an onsite examination is correct? A) Neither administrator would be able to perform an onsite examination without giving 15 days written notice to the broker-dealer. B) Because the broker-dealer's principal office is located in State L, only that state's administrator has the jurisdiction to perform an onsite examination. C) Because the broker-dealer does not have a place of business in State W, it is impossible for the administrator of that state to perform an onsite examination. D) The administrators of both State L and State W may perform unannounced onsite examinations during normal business hours.
C) a sale.
A broker-dealer sends an email to all of its clients stating that anyone purchasing at least 100 shares of an IPO that has just become effective will receive, at no additional cost, a bonus of 10 shares of a Nasdaq-traded stock. Under the Uniform Securities Act, delivery of this stock to a qualifying client would represent A) an offer. B) a gift. C) a sale. D) a prohibited transaction.
A) September 1, 2024.
A properly licensed agent in Illinois, Missouri, and Iowa has a client who moves from Illinois to Michigan on July 1, 2021. On September 1 of that year, the agent sells him 100 shares of a nonexempt security in a nonexempt transaction. On October 1, 2022, the client discovers that the agent's firm never licensed him in Michigan and that the agent is subject to civil liability to the purchaser. The statute of limitations for this sale runs out on A) September 1, 2024. B) September 1, 2023. C) October 1, 2025. D) October 1, 2024.
C) I, II, and III
An Administrator may summarily suspend the registration of an agent or an IAR pending final determination of proceedings under the Uniform Securities Act. However, the Administrator may not enter a final order without which of these? Appropriate prior notice to the applicant as well as the employer or prospective employer of the applicant An opportunity for a hearing Findings of fact and conclusions of law Prior written acknowledgment of the applicant A) I only B) I and II C) I, II, and III D) I, II, III, and IV
A) under no circumstances.
An administrator has jurisdiction over an offer to sell securities if it is made in a newspaper published out of state A) under no circumstances. B) with at least ½ of its circulation in the state. C) with at least ⅔ of its circulation in the state. D) with at least ⅓ of its circulation in the state.
D) August 1, 2021.
An agent in Illinois, Missouri, and Iowa had a client move from Chicago to Detroit on July 1, 2018. On September 1 of that year, he bought 100 shares of a nonexempt security in a nonexempt transaction. On August 1, 2019, the client discovered that the agent's firm never licensed him in Michigan; therefore, he is subject to civil liability to the purchaser. The statute of limitations for this sale runs out A) September 1, 2020. B) September 1, 2021. C) August 1, 2022. D) August 1, 2021.
A) II and IV
An individual applying for registration as an investment adviser representative could be denied registration by the Administrator for what reasons? The applicant had no previous securities experience. The application was incomplete. The applicant was not a resident of the state. There was an order of suspension in effect in another jurisdiction. A) II and IV B) II and III C) I and IV D) I and II
B) the money paid for the advice, any losses resulting from the advice plus interest, costs, and attorney's fees, less any revenue gained from the advice.
An investment adviser is sued by a client. If the client is successful in the civil proceeding, under the Uniform Securities Act, the client may be awarded A) the money paid for the advice and all costs and attorney's fees. B) the money paid for the advice, any losses resulting from the advice plus interest, costs, and attorney's fees, less any revenue gained from the advice. C) the money paid for the advice, any losses resulting from the advice, and all costs and attorney's fees. D) any losses resulting from the advice plus interest, costs, and attorney's fees.
C) the attempt to dispose of a security for value.
An offer to sell describes A) the receipt of a stock dividend. B) the exercise of warrants. C) the attempt to dispose of a security for value. D) the purchase of a new issue.
C) 5 years after the alleged violation.
If an investment adviser representative commits a criminal violation of the Uniform Securities Act, she is subject to legal action for A) the sooner of 2 years after discovery or 3 years after the violation. B) 10 years after the alleged violation. C) 5 years after the alleged violation. D) 3 years after the alleged violation.
C) I, II, III, and IV
If the Administrator believes that a violation of the act has occurred or is about to occur, the Uniform Securities Act grants the office which of these powers? The power to issue a cease and desist order The power to seek an injunction against the alleged violation The power to seek to have a receiver appointed over the violator's assets The power to seek to have the violator make restitution to investors A) I, II, and III B) III and IV C) I, II, III, and IV D) I and II
C) request that the court appoint a receiver to freeze the bank accounts of a broker-dealer who is the subject of an injunction.
Included among the powers of the Administrator is the ability to A) sentence an investment adviser representative who has been convicted of fraud to a prison sentence, not to exceed three years. B) deny the registration of a securities professional, if doing so is in the public interest. C) request that the court appoint a receiver to freeze the bank accounts of a broker-dealer who is the subject of an injunction. D) arrest an agent who violates the USA.
B) disregard that conviction when determining John's qualifications for registration.
John was convicted five years ago of failure to pay child support, a misdemeanor in his home state. John would now like to register as an investment adviser representative in a neighboring state where that crime is considered a felony. Under the Uniform Securities Act, the administrator of the neighboring state will A) consider John to be statutorily disqualified because in this state his crime is a felony. B) disregard that conviction when determining John's qualifications for registration. C) determine John's status on the basis of the extent to which his child support payments are being paid. D) consider granting registration to John but only if he receives heightened supervision.
A) the applicant has no prior experience in the securities industry.
One of the powers granted to the Administrator under the Uniform Securities Act is the ability to deny a person's application for registration as an agent. There are a number of reasons for disqualifying the application, but one of those would not be A) the applicant has no prior experience in the securities industry. B) the applicant files an incomplete application. C) the applicant has a misleading statement on the application form. D) the applicant has been convicted of a securities-related crime.
B) revoke your registration.
The Administrator has a number of punitive powers. If, while registered, you did something improper, the worst thing that the Administrator could do to you is A) cancel your registration. B) revoke your registration. C) deny your registration. D) suspend your registration.
C) Suspending an agent's registration without an opportunity for a hearing
The Uniform Securities Act invests the Administrator with many powers over the activities of agents and broker-dealers. Which of the following actions does not fall within the Administrator's powers? A) Issuing subpoenas to persons residing outside the Administrator's state B) Conducting investigations of broker-dealers residing outside the Administrator's state C) Suspending an agent's registration without an opportunity for a hearing D) Issuing cease and desist orders without a hearing
B) issue an injunction.
The Uniform Securities Act invests the office of the administrator with a number of powers. However, the act does not permit the administrator to A) insist that specific forms be used to register securities. B) issue an injunction. C) issue a cease and desist order without prior notice. D) subpoena witnesses.
C) I, II, and III
The Uniform Securities Act provides for both civil and criminal prosecution. In which of these cases might an agent face civil liability? A sale was made of an unregistered, nonexempt security. During a sales presentation, the agent misstated a material fact that resulted in the prospect deciding to make the purchase. The agent was included in the judgment, along with the broker-dealer, for a civil infraction. A) I and II B) I and III C) I, II, and III D) II and III
B) that the applicant is not qualified due to a lack of experience.
The Uniform Securities Act provides that the state Administrator may deny the registration of a broker-dealer for all of the following reasons except A) that the applicant is financially insolvent. B) that the applicant is not qualified due to a lack of experience. C) that the applicant is enjoined temporarily from engaging in the securities business. D) that a willful violation of the Uniform Securities Act has occurred.
A) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business.
The administrator may by order deny, suspend, or revoke any registration, or bar or censure any registrant or any officer, director, partner, or person occupying a similar status or performing similar functions for a registrant, from employment with a registered broker-dealer or investment adviser, or may restrict or limit a registrant as to any function or activity of the business for which registration is required in this state, if he finds that the order is in the public interest and that the applicant or registrant A) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business. B) has been charged, within the past 10 years, with any misdemeanor involving a security or any aspect of the securities business or with any felony. C) has engaged in honest or ethical practices in the securities business. D) is not qualified solely on the basis of lack of experience.
A) I, II, III, and IV
The underwriter, issuer, broker-dealer, investment adviser, and agent agree to defraud customers. Which of the following are subject to civil and criminal penalties? The underwriter The issuer The broker-dealer The investment adviser A) I, II, III, and IV B) II and IV C) I, III, and IV D) I, II, and III
A) II and III
Under the Investment Advisers Act of 1940, what is the SEC empowered to do? Set bail. Take evidence. Subpoena witnesses. A) II and III B) I and II C) I, II, and III D) I and III
D) 60 days
Under the USA, an agent may file for a review of an administrator's revocation order within how many days of revocation? A) 30 days B) 270 days C) 90 days D) 60 days
A) I and III
Under the Uniform Securities Act (USA), requirements for registration as an investment adviser in a state include which of the following? Included in the registration requirements is the filing of Form ADV Part 1B. There are minimum financial requirements for federal covered advisers with a place of business in the state who have custody of customer funds and/or securities, or have discretionary authority over customer accounts. For those needing a surety bond, it must provide that any customer who can prove a violation is entitled to collect against the bond. A) I and III B) II and III C) I, II, and III D) I and II
B) I, II, III, and IV
Under the Uniform Securities Act, an offer and sale does not exist if it is which of these? The result of a class vote by stockholders regarding a merger or consolidation A bona fide pledge or loan An act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares A gift of nonassessable securities A) I and II B) I, II, III, and IV C) I, II, and III D) II and IV
B) a bona fide pledge is considered an offer and sale.
Under the Uniform Securities Act, each of the following statements regarding a sale, an offer, or an offer and sale is true except A) 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. B) a bona fide pledge is considered an offer and sale. C) 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. D) a purported gift of assessable stock is considered to involve an offer and sale.
B) file a civil suit against a broker-dealer who has sold an unregistered nonexempt security to a resident of this state.
Under the Uniform Securities Act, the Administrator is empowered to do all of the following except A) issue a cease and desist order. B) file a civil suit against a broker-dealer who has sold an unregistered nonexempt security to a resident of this state. C) require an agent to submit a written statement relating to an investigation. D) publish information relating to violations committed in the state.
A) make rules, orders, and forms the Administrator considers necessary to carry out the provisions of the act.
Under the Uniform Securities Act, the Administrator may A) make rules, orders, and forms the Administrator considers necessary to carry out the provisions of the act. B) waive only those requirements of the act that are nonbinding. C) waive any requirement of the act he deems inappropriate. D) relax the antifraud provisions for investment adviser representatives not residing in the state.
D) serve subpoenas.
Under the Uniform Securities Act, the Administrator may designate another officer to A) grant registration exemptions. B) issue a cease and desist order. C) set recordkeeping requirements. D) serve subpoenas.
A) violation of another state's securities laws within the last 10 years.
Under the Uniform Securities Act, the state Administrator may by order deny, suspend, or revoke an investment adviser's registration for A) violation of another state's securities laws within the last 10 years. B) conviction of a non-securities-related felony more than 15 years ago. C) conviction of a securities-related misdemeanor more than 15 years ago. D) lack of experience as an investment adviser.
D) I and III
Under the Uniform Securities Act, which of the following are defined as sales? A gift of an assessable stock A gift of a nonassessable stock A security given as a bonus for purchasing a bond An offer of securities A) II and IV B) I and II C) III and IV D) I and III
D) Absent any disciplinary proceedings, withdrawal is effective 60 days after application.
Under the Uniform Securities Act, which of the following concerning the withdrawal of an agent's registration is not true? A) At the Administrator's discretion, disciplinary proceedings may delay effectiveness of a withdrawal application indefinitely. B) Disciplinary proceedings may be taken against an agent after the agent's withdrawal is effective. C) Absent any disciplinary proceedings, withdrawal is effective 30 days after application. D) Absent any disciplinary proceedings, withdrawal is effective 60 days after application.
A) 100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger
Under the Uniform Securities Act, which of the following is not an offer or a sale? A) 100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger B) A gift of assessable stock C) A broker-dealer offering 10 shares of XYZ common stock as a free gift to any client who invests at least $10,000 in mutual funds D) The sale of a warrant
A) The adviser has been convicted of a non-securities-related felony.
Under which of the following circumstances may an administrator revoke a state-registered investment adviser's registration? A) The adviser has been convicted of a non-securities-related felony. B) The adviser cannot be located after a reasonable search by the administrator. C) The adviser is no longer in business. D) The adviser has been declared mentally incompetent by a court of jurisdiction.
C) the broker-dealer's membership in FINRA was revoked because of a violation of FINRA rules.
Using the powers granted under the Uniform Securities Act, the Administrator would have the right to deny the registration of a broker-dealer if A) the broker-dealer's membership in FINRA was revoked because of a violation of FINRA rules, but only if the activity involved was a violation of the Uniform Securities Act. B) the broker-dealer had agents registered in the state. C) the broker-dealer's membership in FINRA was revoked because of a violation of FINRA rules. D) the broker-dealer's net capital only met SEC requirements, but not those of the state.
C) I and III
Violations of the Investment Advisers Act of 1940 are punishable by which of these? A fine of up to $10,000 A prison term of up to 20 years Suspension of registration A) I and II B) I, II, and III C) I and III D) II and III
A) II and III
When an Administrator acts summarily to postpone or suspend a registration of a security, which of the following statements is true under the Uniform Securities Act? The suspension will not go into effect until after a hearing. The registrant must be promptly notified of the action and given an opportunity for a hearing. A hearing must be held within 15 days of written request of the registrant. A) II and III B) I and III C) I, II, and III D) I only
A) III and IV
When may an Administrator initiate a suspension or revocation proceeding against a broker-dealer registered in his state? Up to two years after a broker-dealer voluntarily withdraws its registration When an agent of the broker-dealer is convicted of a felony violation of the Securities Exchange Act of 1934 Upon discovery that the broker-dealer's license was suspended in another state Upon discovery of new facts unknown to the Administrator at the time of the broker-dealer's initial registration A) III and IV B) I, II, III, and IV C) II, III, and IV D) I and II
D) I and III
Which of the following are causes listed in the Uniform Securities Act that could lead to the revocation of the registration of a broker-dealer? A principal officer was convicted of a securities-related crime. The firm had no employees. The firm was unable to meet its obligations as they came due. A) I and II B) I, II, and III C) II and III D) I and III
D) I and IV
Which of the following statements regarding agent registration under the Uniform Securities Act are true? In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day. The Administrator may initiate a disciplinary action within two years of an agent's withdrawal of registration. The administrator may request the agent furnish a statement of assets and liabilities. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments. A) I and II B) III and IV C) II and III D) I and IV
A) A purchaser of a security where a violation of the USA occurred may recover the original purchase price plus legal costs and interest, less any earnings already received.
Which of the following statements relating to penalties under the USA is correct? A) A purchaser of a security where a violation of the USA occurred may recover the original purchase price plus legal costs and interest, less any earnings already received. B) A seller who notices that a sale was made in violation of the act may offer a right of rescission to the purchaser that must be accepted either two years after notice of the violation or three years after the sale, whichever comes sooner. C) Unknowing violation of the USA by an agent is cause for imprisonment under the criminal liability provisions of the act. D) Any person aggrieved by an order of the administrator may request an appeal of the order within 15 days, which, in effect, functions as a stay of the order during the appeal period.
D) Transfers, for value, of unit trusts to a nontaxable organization
Which of the following would be included in the Uniform Securities Act's definition of sale? A) Donation of interests in rights, warrants, or options on a nonexempt security B) Sale of a large fixed annuity contract to a taxable institution C) Conveying, for value, precious metals to a jewelry distributor D) Transfers, for value, of unit trusts to a nontaxable organization
A) I, II, and III
With regard to the powers of the Administrator, which of the following statements are not correct? The Administrator must seek an injunction to issue a cease and desist order. The USA requires an Administrator to conduct a full hearing, public or private, prior to issuing a cease and desist order. The USA grants the Administrator the power to issue injunctions to force compliance with the provisions of the act. A) I, II, and III B) I and III C) I and II D) II and III
