1.6 - The SEC Act of 1934
Which of the following is considered an associated person of a broker-dealer? A) A boker-dealer's officer who represents the broker-dealer in effecting or attempting to effect the purchase or sale of securities. B)A clerical person who is not authorized to accept or execute orders for clients. C)A secretary who assists brokers with clerical tasks. D)A secretary to a general partner of a broker-dealer.
A) A broker-dealer's officer who represents the broker-dealer in effecting or attempting to effect the purchase or sale of securities. An associated person is either an officer or a broker-dealer employee who represents the broker-dealer in soliciting the purchase or sale of securities. Associated person also includes any individual authorized to accept customers' orders for the broker-dealer.
The Securities and Exchange Commission does NOT have any regulatory jurisdiction over which of the following? A) Federal Reserve Board. B) FINRA C) Ntional securities exchanges. D) Mnicipal Securities Rulemaking Board.
A) Federal Reserve Board. The Federal Reserve Board is not regulated by the SEC.
The procedure for entering an order to purchase a security for the account of a customer is to complete an order ticket. Which of the following would be found on an order ticket? A) Account number, customer address, time of order entry, and terms and conditions of the order. B) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order. C) Customer name, customer address, execution price, time of execution or cancellation. D) Customer name, execution price, time of order entry, and time of execution or cancellation.
B) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order. This is one of those questions where the best way to find the answer is by determining what is NOT correct. Customer name and/or address would never be on an order ticket and that knocks out three of the choices. The account number (not name), the execution price (once the order is completed), the time of entry and execution (or cancellation if it is a day order that is not executed) and the terms and conditions (limit, market, stop, etc.) are all on the order ticket.
Under the Securities Exchange Act of 1934, commissioners of the SEC: I. are appointed by a joint House/Senate panel. II. are appointed by the President. III. may not engage in any other business. A) II only. B) II and III. C) I and II. D) III only.
B) II and III. The SEC was created by the Securities Exchange Act of 1934 with the power to enforce the Securities Act of 1933 and all subsequent federal securities acts. The policies of the SEC are determined by 5 commissioners appointed by the President of the United States, with the advice and consent of the Senate, to staggered 5-year terms (with 1 expiring each year). No more than 3 commissioners may belong to the same political party, and commissioners may not engage in any outside employment.
Which of the following constitutes a discretionary account? A) The agent's personal trading account B) An account in which the investor gives the broker-dealer authority as to pricing or timing of an investment C) An account in which the investor gives the broker-dealer written authority to buy or sell securities D) The broker-dealer's trading account
C) An account in which the investor gives the broker-dealer written authority to buy or sell securities In a discretionary account, an agent has received authority to select the amount and type of investment for a client; the authorization must be in writing. Timing and price of a trade are not considered discretionary.
The term "churning" means: I. switching a client's account from an income fund to a growth fund. II. excessively trading securities in the account of a client primarily for the purpose of generating commissions for the agent. III. trading unsuitable securities in a client's account. IV. a bond swap in a customer's account for tax benefits A) I and III. B) II and IV. C) II only. D) I and II
C) II only. Churning is conducting excessive transactions in a customer's account for the purpose of generating commissions and is prohibited.
Which of the following is regulated by the Securities Exchange Act of 1934? A) Registration of new issues of stock. B) Exemptions of new issues from registration requirements. C) Regulation of exchanges. D) Requirements for the provisions of a prospectus.
C) Regulation of exchanges. The purpose of the Securities Exchange Act of 1934 is to regulate secondary market trading of securities that have already been issued. It created the SEC and requires that all securities exchanges and firms register with the SEC if they are involved in interstate commerce. It was the Securities Act of 1933 that dealt with registration and exemption from registration of new issues and prospectus delivery requirements.
The Securities Exchange Act of 1934 granted the SEC the power to regulate all of the following EXCEPT: A) broker-dealers. B) securities information processors (SIPs). C) margin requirements. D) transfer agents.
C) margin requirements. The Securities Exchange Act of 1934 granted the Board of Governors of the Federal Reserve System the power to regulate margin requirements.
If an individual accumulates a holding of more than five percent in the voting stock of a publicly traded company, notification must be made to all of the following EXCEPT: A) the exchange where the security is traded. B) the issuer's board of directors. C) the Administrator of the state in which the customer resides. D) the SEC.
C) the Administrator of the state in which the customer resides. When an individual accumulates a holding of more than 5% in the voting stock of a publicly traded company, notification must be made on Schedule 13D within 10 business days to the SEC, the exchange where the issue is listed, and the issuer's board of directors. Notification to the state securities Administrator is not required.
Jimmy Merchant is an agent with FLATT securities, a registered broker-dealer. When Jimmy submits an order ticket to purchase securities for a client, all of the following would appear EXCEPT A) Jimmy's name B) the account number C) the current market price of the security D) the broker-dealer's name
C) the current market price of the security Any order ticket submitted by an agent for execution at a broker-dealer will always include the account number, the agent's name, and that of the BD. All order details must be listed (e.g., the number of shares, limit or market, etc.), but the current market price is never included. Once the order is executed, the execution price is entered.
The SEC has jurisdiction over all of the following EXCEPT: A) the stock exchanges and broker-dealers. B) FINRA. C) the MSRB. D) the Federal Reserve System.
D) the Federal Reserve System. The SEC has jurisdiction over the MSRB, FINRA, stock exchanges, and broker-dealers. The Federal Reserve is not under the jurisdiction of the SEC.
What law was enacted requiring transactions by officers, directors, and principal shareholders to be reported and ensuring equitable and fair practices in the secondary trading of securities? A) Securities Exchange Act of 1934. B) Investment Company Act of 1940. C) Securities Act of 1933. D) Securities Investor Protection Act of 1970
A) Securities Exchange Act of 1934. The Securities Exchange Act of 1934 created the SEC to regulate trading practices of exchanges, broker-dealers, issuing companies, and individuals who trade securities.
An account where a securities professional may invest the client's money, without consulting the client about the amount or type of security for the trades that are placed for the account, is known as A) a wrap account B) a margin account C) an advisory account D) a discretionary account
D) a discretionary account This is the basic definition of a discretionary account.
Over which of the following would the investment adviser representative have discretionary authority? A) An account in which the investment adviser representative chooses portfolio securities on behalf of the client. B) An order that specifies the size of the trade and name of the security, but leaves the choice of price and time up to the investment adviser representative. C) An account in which a customer has power of attorney over another individual's account. D) An account in which a trustee has power of attorney over another individual's account.
A) An account in which the investment adviser representative chooses portfolio securities on behalf of the client. An order is discretionary when it is placed for a customer's account by the member firm or its representative, without the customer's express authorization. Also, for the order to be considered discretionary, the firm must choose at least one of the following: size of the trade, whether to buy or sell, or the security. Choosing time and price is not considered to be an exercise of discretion.
Which of the following statements regarding discretionary accounts is TRUE? A) An order in which an investor designates the security's name, the number of shares, and whether to buy or sell and gives the agent discretion as to time and price only is not considered discretionary. B) A principal must approve discretionary orders before entry. C) A branch manager must approve discretionary orders before entry. D) The rules regarding churning of accounts do not apply to discretionary accounts.
A) An order in which an investor designates the security's name, the number of shares, and whether to buy or sell and gives the agent discretion as to time and price only is not considered discretionary. An order is discretionary only if an agent selects the size of the trade, the security, or whether to buy or sell. Selecting only price and/or time does not constitute discretion. Churning rules apply to discretionary accounts, and a principal must approve order tickets after the trades, not before.
An agent receives an order from a client to purchase $20,000 worth of stock in whatever company looks good. In what type of account could the agent accept this type of order? A) Discretionary. B) Margin. C) Cash. D) Custodial account managed by an administrator for the client's deceased cousin.
A) Discretionary. If the agent has the ability to make the decision with respect to the specific security, even though the client specified the action (buy) and the quantity ($20,000), discretionary authorization is required.
Seven years ago, Ivan was found guilty of embezzling securities from clients. He now wishes to join another brokerage firm. Which of the following statements is TRUE regarding this situation? A) He cannot be employed because he is still subject to statutory disqualification provisions. B) He may be employed in a sales position, provided the firm agrees to be liable for any losses due to his misconduct. C) He may be employed by a brokerage firm, provided he is not involved directly in any dealings with clients. D) There are no provisions restricting his employment because the restriction time period has elapsed.
A) He cannot be employed because he is still subject to statutory disqualification provisions. Under the Securities Exchange Act of 1934, there are a number of items that disqualify a person from becoming a member of, or from associating with, a member of a self- regulatory organization (SRO). The items include being currently under suspension, revocation, or injunction by any court, regulatory authority, or SRO (foreign or domestic); currently employing a person statutorily disqualified; having been convicted in the past 10 years of a felony or a securities- or financially-related crime; or falsifying an application for registration. Ivan cannot be employed by a brokerage firm, because he was convicted 7 years ago. Because the Securities Exchange Act of 1934 requires a broker-dealer to join one or more SROs, being statutorily disqualified eliminates the possibility of employment.
The Securities Exchange Act of 1934 requires written authority for a discretionary account, unless the securities professional's discretionary authority is limited to determining: I.the price of the stock. II.the amount of the stock. III.the time of the order. A) I and III. B) II and III. C) I and II. D) I only.
A) I and III. The securities professional's ability to determine the time and/or price at which a specific customer order will be executed does not constitute discretionary power and, therefore, does not require written authorization.
Which of the following are regulated under the Securities Exchange Act of 1934? I.Broker-dealers. II.Investment advisers. III.Pension plans. IV.Transfer agents. A) I and IV. B) I and II. C) III and IV. D) II and III.
A) I and IV. The Securities Exchange Act of 1934 regulates broker-dealers and transfer agents. Investment advisers are regulated under the Investment Advisers Act of 1940 (and, to a certain extent, the Investment Company Act of 1940), whereas pension plans in the private sector are regulated under ERISA.
Under the Securities Exchange Act of 1934, which of the following would NOT be considered associated with XYZ Corp., a broker-dealer? A) Robust, Inc., a tiny fraction of whose stock XYZ has purchased for its own account. B) Paula, who is on XYZ's board of directors but who has no other connection with the firm. C) Brian, an XYZ vice president. D) Arvin, one of XYZ's agents.
A) Robust, Inc., a tiny fraction of whose stock XYZ has purchased for its own account. An associated person of a broker-dealer includes any partner, branch manager, officer, or director of a broker-dealer, including outside directors. It also includes employees such as account executives or sales representatives who are not clerks or ministerial personnel, and anyone who controls, is controlled by, or is under common control with the broker-dealer.
In the securities industry, the term "discretionary" refers to an A) account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades. B) account in which someone has been given custodial power over another individual's account. C) order that specifies size, security, or action but leaves the choice of time or price up to the agent. D) account in which a person has power of attorney over an incompetent individual's account.
A) account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades. An order is discretionary when the broker-dealer's agent places it for a customer's account without the customer's express authorization for that order. Additionally, for the order to be considered discretionary, the agent must choose at least one of the following: the security, the number of shares (or dollar amount), or whether to buy or sell. Although a person with a POA over another person's account would involve discretionary authority, that choice implies that discretion is limited only to the case where the client is mentally incompetent.
Protection of the investing public is one of the major objectives of the SEC. Much of the protection comes from the disclosure requirements enveloping the industry. Among the disclosure forms used is Form 13F. To come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over: A) a portfolio of at least $50 million. B) a portfolio of at least $100 million. C) a portfolio of at least $100 million of 13(f) securities. D) more than 10% of the outstanding voting securities of a reporting company.
An institutional money manager, with at least $100 million in 13(f) securities under discretionary management, is required to file Form 13F. This form must be filed within 45 days of the end of the quarter.
The procedure for entering an order to purchase a security for the account of a customer is to complete an order ticket. Which of the following would be found on an order ticket? A) Account number, customer address, time of order entry, and terms and conditions of the order. B) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order. C) Customer name, customer address, execution price, time of execution or cancellation. D) Customer name, execution price, time of order entry, and time of execution or cancellation.
B) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order. This is one of those questions where the best way to find the answer is by determining what is NOT correct. Customer name and/or address would never be on an order ticket and that knocks out three of the choices. The account number (not name), the execution price (once the order is completed), the time of entry and execution (or cancellation if it is a day order that is not executed) and the terms and conditions (limit, market, stop, etc.) are all on the order ticket.
Which of the following is(are) TRUE regarding the Securities Exchange Act of 1934? I.The act bars the use of credit to purchase new issues. II.The act prohibits the simultaneous purchase and sale of a security to create the appearance of trading. III.The act prohibits the spread of false rumors to induce others to trade. A) I and II. B) I, II and III. C) I and III. D) II and III.
B) I, II and III. The Securities Exchange Act of 1934 specifically bars the use of credit to purchase new issues and also prohibits installment payments when making such purchases. The act also prohibits any form of manipulation of securities prices or any practices that would influence the market price of a security. This includes wash trades, which are simultaneous purchases and sales that create the appearance of trading activity, and the use of rumors to induce others to trade.
Mary bought 1,000 shares in the morning and sold 1,000 shares of the same security in the afternoon. Under the Securities Exchange Act of 1934's rules dealing with the regulation of the use of manipulative and deceptive devices, which of the following statements is TRUE? A) She has violated the act if a profit was made. B) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance. C) Her broker has violated the act. D) She has violated the act.
B) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance. The purchase and sale of the same security on the same day are permissible as long as the investor is not attempting to create the appearance of market activity. There is nothing in the act prohibiting "day-trading"; only trading made for the purpose of manipulating market prices.
Which of the following would be considered when determining whether excessive trading has occurred in a client's account? A) The number of years the account has been opened. B) The nature of the client's financial objectives. C) The size of the companies issuing the securities. D) The performance of the account in comparison to other client's accounts.
B) The nature of the client's financial objectives. An agent is engaging in unethical conduct if she induced a client to trade securities too frequently in view of the financial resources, investment objectives, and character of the client's account. Frequent trading and trading in large amounts is not necessarily wrong. It is only wrong if the trades are not suitable for a particular client. Thus, the only factor listed that must be considered in determining whether trading is excessive is the nature of the client's financial objectives.
Which of the following may an agent determine without written discretionary authority? A) Which security should be purchased B) The time or price at which to enter an order C) Whether to buy or sell a particular security D) How many shares of a particular security should be purchased
B) The time or price at which to enter an order An agent must have written discretionary authority to determine which security, what action, and how many shares to purchase or sell; time and price decisions alone do not require discretionary authority.
An agent's client calls on Monday to discuss the current market situation. They discuss how 100 shares of Kapco common stock would be an appropriate addition to the client's portfolio. On Thursday, the client calls and tells the agent to place an order for the Kapco stock at whatever price the agent feels is best. The agent waits until Friday, purchasing the stock at a price $2 per share below Thursday's low. In this case the agent acted A) improperly; the order should have been placed on Monday B) improperly; the order should have been placed on Thursday C) properly because the agent saved the client money D) properly because the agent used discretion as to price and time
B) improperly; the order should have been placed on Thursday In this question, the client specified that the agent should determine the best price. Nothing other than oral permission is necessary in order for an agent to use discretion as to time or price. However, time or price discretion are only good for that day - those are considered "day" orders, so the agent is able to use judgment, but the order must be placed during the day it was received.
The Securities Exchange Act of 1934 covers all of the following EXCEPT: A) trading of corporate securities. B) issuance of corporate securities. C) issuance of financial reports by corporations. D) trading on exchanges.
B) issuance of corporate securities. The Securities Exchange Act of 1934 regulates secondary trading or trading markets, including reporting requirements. The Securities Act of 1933 regulates the issuance of new, nonexempt securities.
Which of the following are discretionary orders? I.A customer sends a check for $25,000 to an agent and instructs the agent to purchase bank and insurance company stocks when the price appears favorable. II.A customer instructs an agent to buy 1,000 shares of ABC Corporation at a time and price determined by the agent. III.A customer instructs an agent to purchase as many shares of XYZ as the agent considers appropriate. IV.A customer instructs an agent to sell 300 shares of LMN, Inc., when the agent deems the time and price appropriate. A) II and IV B) I and IV C) I and III D) II and III
C) I and III Discretion authorizes a representative to choose the security, the amount of shares, or whether to buy or sell. Time and price alone are not discretionary decisions.
Which of the following are required to execute orders in a customer's discretionary account? I. The customer must authorize each transaction in writing. II. Trades must be in accordance with the account holder's investment objectives. III. The rules relating to best execution are the same as for a nondiscretionary account. IV. Discretionary orders must take place before nondiscretionary orders. A) III and IV. B) I and II. C) II and III. D) I and IV.
C) II and III. If a customer provides discretionary authority in writing to an agent, written consent is not required for each transaction. Execution of discretionary orders, like all orders, is expected to be done at the best price available and to be in accordance with the customer's means and investment objectives.
The XYZ corporation, listed on the NYSE, has 100 million shares of common stock outstanding. Warren has owned 4 million shares since 1999. If Warren were to acquire 1.1 million additional shares, which of the following statements is CORRECT? A) Because Warren does not own more than 10% of the outstanding shares, no form is required to be filed. B) Form 144 would have to be filed concurrent with the transaction. C) Schedule 13D would have to be filed within 10 business days of the transaction. D) Schedule 13D would have to be filed before the end of the 2nd business day following the transaction.
C) Schedule 13D would have to be filed within 10 business days of the transaction. Section 13(d) of the Securities Exchange Act of 1934 requires filing of a Schedule 13D within 10 business days of the transaction once a person becomes an owner of more than 5% of the outstanding voting shares of a reporting company. Section 16 of the Act requires filing within 2 business days of any transaction by a control person, which is not the case here.
According to the Securities Exchange Act of 1934, who appoints the SEC Commissioners? A )The Federal Reserve Board governors B) The entire Senate C) The President D) A Senate committee
C) The President SEC Commissioners are appointed by the President of the United States, with the advice and consent of the Senate, to staggered 5-year terms, with 1 term expiring each year. There are 5 Commissioners, and no more than 3 may belong to the same political party. SEC Commissioners may not engage in any outside employment or securities transactions, other than those in securities issued by the U.S. government.
Which of the following is TRUE of SEC Commissioners under the Securities Exchange Act of 1934? A) Their political affiliation is of no concern. B) They are appointed by a senate panel. C) They may not invest in any securities other than those issued or guaranteed by the U.S. government. D) They are appointed for life.
C) They may not invest in any securities other than those issued or guaranteed by the U.S. government. Other than securities issued or guaranteed by the U.S. government, SEC commissioners are prohibited from investing during their term in office. The policies of the SEC are determined by 5 Commissioners appointed to staggered, 5-year terms by the President of the United States with the advice and consent of the Senate. No more than 3 may belong to the same political party, and Commissioners may not engage in any outside employment.
A broker-dealer makes a market in XYZ stock and places large orders for it on the open market either at or slightly above its current price with the aim of stabilizing the price. This unethical practice is best described as: A) straddling. B) matched orders. C) pegging. D) front running.
C) pegging. Pegging involves entering buy orders for the purpose of supporting a stock price (i.e., to keep it from falling). This is a form of market manipulation and is illegal. Front running involves a representative or firm entering orders ahead of client orders. Straddles are an option position that combines a put and a call on the same stock; there is nothing improper with that strategy. Matched orders involves buying and selling a stock from one hand to the other to create the false appearance of trading volume and is another form of market manipulation.
Which of the following statements is (are) TRUE regarding the jurisdiction of the SEC under the Securities Exchange Act of 1934? I.The SEC has jurisdiction over exchanges and SROs. II.The SEC has jurisdiction over broker-dealers, investment advisers, and registered representatives that are required to be registered under federal law. III.The SEC has jurisdiction over banks and savings and loans regarding their securities activities. A) I, II and III. B) I only. C) II only. D) I and II.
D) 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 statements regarding the handling of discretionary accounts are TRUE? I. Discretionary accounts must be reviewed frequently by the designated supervisory person. II. An investment adviser representative may decide, without discretionary authority, the security to buy or sell and the amount to buy or sell. III. A husband or wife may at any time exercise discretionary authority in the spouse's account without specific written authorization. IV. An investment adviser representative may decide, without discretionary authority, the time at which to execute a trade. A) II and III. B) I and III. C) II and IV. D) I and IV
D) I and IV Discretionary accounts must be reviewed frequently by the designated supervisory person, and an investment adviser representative may decide both the time and price at which to execute a trade without discretionary authority. Only if he is to decide action (whether to buy or sell), asset (what to buy or sell), or amount (how much to buy or sell) is discretionary authority required.
Which of the following is(are) considered an associated person(s) of a broker-dealer under the Securities Exchange Act of 1934? I.Any employee of a broker-dealer, except for clerical or ministerial employees. II.Any officer, partner, or manager associated with the broker-dealer. III.Any employee, other than a clerical or ministerial employee, who is supervised by, supervises, or is under common supervision of the broker-dealer. A) I and III. B) II and III. C) I and II. D) I, II and III.
D) I, II and III. An associated person is any officer or person in a control position to the broker-dealer or any employee of the broker-dealer, except for clerical or ministerial employees.
An agent for a broker-dealer member of FINRA may exercise his judgment as to which of the following without written authorization from the customer? I.Quantity. II.Time. III.Security. IV.Price. A) III and IV. B) I and II. C) I and III. D) II and IV.
D) II and IV. Agents (or any of the other securities professionals) have the authority to decide the timing and price of a trade. Under prevailing securities law, time and/or price does not constitute discretion. Decisions involving the quantity and security require written trading authorization from the client.
Which of the following acts requires publicly traded corporations to issue annual reports? A) Securities Act of 1933. B) Investment Company Act of 1940. C) Trust Indenture Act of 1939. D) Securities Exchange Act of 1934.
D) Securities Exchange Act of 1934. The Securities Exchange Act of 1934 mandates that public issuers file annual and quarterly reports with the SEC.
Under federal law, which act regulates the activities of broker-dealers and associated persons? A) Investment Company Act of 1940. B) Trust Indenture Act of 1939. C) Uniform Securities Act. D) Securities Exchange Act of 1934.
D) Securities Exchange Act of 1934. The Securities Exchange Act of 1934 regulates the secondary market and its employees and firms.
Which of the following documents must an existing customer sign to establish a discretionary account? A) options B) New account application C) Customer's agreement D) Trading authorization
D) Trading authorization To establish a discretionary account, the agent must receive written authorization from the customer(s) in whose name(s) the account has been established. An existing customer has already completed the new account application and signed any required customer agreements.
Under the Securities Exchange Act of 1934, an exchange is: A) a disposition of a security for value. B) an organization of securities professionals designed to promote fair practices in doing business with the public. C) any transaction involving a security. D) an organization which provides facilities for bringing together buyers and sellers of securities.
D) an organization which provides facilities for bringing together buyers and sellers of securities. Under the Securities Exchange Act of 1934, exchange does not refer to a transaction, but to an organization or facilities for bringing together buyers and sellers of securities. It is important to distinguish this function from other activities carried out by persons in the secondary market, such as transfer agents, securities information processors, or broker-dealers.
The Securities Exchange Act of 1934 regulates or mandates each of the following EXCEPT: A) extension of credit to customers. B) manipulation of the secondary market. C) creation of the SEC. D) full and fair disclosure on new offerings.
D) full and fair disclosure on new offerings. The Securities Exchange Act of 1934 created the SEC and regulates the secondary market. The Securities Exchange Act of 1934 does not address full and fair disclosure issues; the Securities Act of 1933 addresses such issues.
Which of the following are discretionary orders? I.A customer sends a check for $25,000 to an agent and instructs the agent to purchase bank and insurance company stocks when the price appears favorable. II.A customer instructs an agent to buy 1,000 shares of ABC Corporation at a time or price determined by the agent. III.A customer instructs an agent to purchase as many shares of XYZ as the agent considers appropriate. IV.A customer instructs an agent to sell 300 shares of LMN, Inc., when the agent deems the time or price appropriate.
I and II Discretion authorizes a representative to choose the security, the amount of shares, or whether to buy or sell. Time or price alone are not discretionary decisions.
Which of the following are regulated under the Securities Exchange Act of 1934? I.New issues. II.Broker-dealers. III.Transfer agents.
II and III The Securities Exchange Act of 1934 was designed to regulate securities transactions, securities markets, and the securities firms who do the trading. While the Securities Act of 1933 covers requirements relating to new issues, the Securities Exchange Act of 1934 covers almost everything else in the securities industry. Its greatest impact is on the securities firms and the people who sell securities (i.e., broker-dealers and their agents) in the secondary market. Of the choices listed, new issues would be regulated by the Securities Act of 1933.
Under the Securities Exchange Act of 1934, which of the following would NOT be grounds for disqualification of a broker-dealer's registration? A) Violating a securities act. B) Being sued by a client. C) Prohibition by court order from practicing as an investment adviser. D) Conviction of misappropriation of client funds.
B) Being sued by a client. Being sued by a client is NOT grounds for disqualification. Items that would disqualify a registration include being currently under suspension, revocation, or injunction by any court, regulatory authority or SRO, domestic or foreign; currently employing a person statutorily disqualified; having been convicted in the past 10 years of a felony or a securities or financially related crime; or falsifying an application for registration.
