63
A broker-dealer with no place of business in the state would not be required to register with the Administrator unless one of its clients was A) an employee benefit plan with assets of less than $1 million B) another broker-dealer C) a unit investment trust registered under the Investment Company Act of 1940 D) a savings institution
A
4 characteristics of a security
1. investment of money 2. common enterprise 3. with expectation of profits 4. derived primarily from the efforts of a person other than the investor
A broker-dealer holds customer securities for safekeeping. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, the broker-dealer A) must segregate them B) may lend them to make delivery on short sales C) must pay interest to the clients D) would be in violation unless a properly executed margin agreement was in effect
A
When may an individual sell securities as a registered agent for more than one broker-dealer? A) If the broker-dealers are under common control B) If the agent sells only exempt securities C) If the agent sells different securities for each broker-dealer D) If the agent sells only nonexempt securities
A
Under the Uniform Securities Act, Administrators of all of the following states have jurisdiction EXCEPT A) the state from which an offer to sell securities originated B) the state in which an offer to sell securities was accepted C) the state into which an offer to sell securities was directed D) the state from which payment for the purchase of securities was made
D
Registration statement
Amount of securities issued in the state, states where security is to be offered (not amounts), any adverse judging, anticipated effective date, anticipated use of proceeds
Disclosure to the client is required when I. an investment adviser representative, in preparing a recommendation, uses research provided by the broker-dealer with whom the IAR is affiliated II. an investment adviser representative intends to sell the client the insurance policy he recommended for his financial plan and receive a commission for doing so III. transactions recommended to the client are not the same as those for other clients with similar objectives IV. recommending a new issue where the major stockholder is the investment adviser's brother A) I, II, III and IV B) II and IV C) I and III D) I, II and III
B
If a state-registered investment adviser moves to another location, the Administrator must be notified A) within 15 days B) promptly C) within 30 days D) within 7 days
B
A broker-dealer suddenly incurs a liability that materially affects its net capital. Which of the following statements under the Uniform Securities Act is TRUE? A) The broker-dealer need not file an amendment to its registration if it is scheduled for an examination by the Administrator. B) The broker-dealer must promptly notify the Administrator. C) The broker-dealer is not required to file an amendment to its registration with the Administrator. D) The broker-dealer need only be sure that the next scheduled filing with the Administrator reflects the change.
B
A stock that is listed on the New York Stock Exchange is A) approved for sale in the state of New York B) exempt from state registration requirements C) certain to pay dividends D) guaranteed to appreciate in value
B
A type of fraud using social media where the fraudsters pretend to be member of a group, sometimes using respected leaders of the group to spread the word about the scheme is known as A) ethnic fraud B) affinity fraud C) group fraud D) relationship fraud
B
Among the many exempt transactions under the Uniform Securities Act are the private placement and the preorganization certificate or subscription. While these two exemptions have several requirements in common, they have which of the following differences? I. The private placement exemption places a limit on the number of sales to retail investors while the preorganization certificate places a limit on the number of offers to all investors. II. Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. III. It is expected that noninstitutional buyers of the private placement are purchasing for investment only, while no such requirement exists for the investors in a preorganization certificate. IV. Commissions may be paid on the sale of a private placement to noninstitutional clients, while no remuneration is payable on the sale of a preorganization subscription. A) I and IV B) II and III C) I and III D) II and IV
B
If an agent receives a written complaint letter from a customer and believes the complaint is entirely unfounded, the agent should A) immediately forward a copy of the written complaint to the Administrator of the state where the office to which the agent reports is located B) immediately present the complaint letter to a principal of the broker-dealer C) immediately forward a copy of the letter of complaint to the Administrators of the Department of Securities in the state where the customer resides D) personally seek to rectify the complaint with the customer
B
An agent wishes to share commissions with an administrative assistant who provides many useful services. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, A) this is permitted only if the administrative assistant is employed by the same or affiliated broker-dealer B) administrative personnel may never receive sales related compensation C) this is permitted if the assistant is properly licensed D) this is permitted if there is a written agreement between the agent and the administrative assistant that has been signed by the broker-dealer
C
An issuer employs its officers and directors to sell newly issued shares of the company to the public. To comply with the USA, the officers and directors would have to be registered as agents of A) the broker-dealer and the issuer B) neither a broker-dealer nor the issuer because the transactions are exempt C) the issuer D) the broker-dealer
C
If an individual acting on behalf of an issuer engages in the sale of securities issued by a savings institution organized and supervised under the laws of any state, which of the following statements is TRUE? A) The individual is engaging in a prohibited transaction. B) The individual can only participate in this transaction with permission from the Administrator. C) The individual is not required to be registered. D) The individual is acting as a broker-dealer and must be registered as a broker-dealer.
C
In general, a broker-dealer will disclose any changes to its fee schedule A) to the Administrator and then to the clients B) within 30 days following the change C) by notifying clients of the change in advance D) when requested by the client
C
Under the USA, a state securities Administrator can I. start an investigation against a registrant even if a violation has not yet occurred II. subpoena witnesses living in the Administrator's state only III. subpoena witnesses living outside the state IV. begin an investigation only after a violation of the act has occurred A) I and II B) II and III C) I and III D) II and IV
C
Under the Uniform Securities Act, all of the following are exempt from registration EXCEPT A) equipment trust certificates issued by a regulated common carrier B) securities issued by a religious organization C) common stock only sold intrastate D) airport authority bonds
C
A closed-end investment company is registered under the Investment Company Act of 1940. Its shares trade on the Nasdaq Stock Market. To qualify their shares for sale in the state, they would probably use A) coordination B) qualification C) notice filing D) supplementation
C
A sales agent who is only registered in Nebraska works for a broker-dealer that is registered in all 50 states. A customer who is a resident of North Dakota calls the representative in Nebraska and offers to purchase securities. Under the Uniform Securities Act, the agent should A) accept the order because her broker-dealer is registered in all 50 states B) accept the order because she received it in Nebraska C) reject the order because she is not registered in North Dakota D) accept the order because it is unsolicited
C
According to the Uniform Securities Act, the investment adviser brochure must include the business backgrounds of A) an affiliated broker-dealer B) institutional clients C) each member of the investment committee or group that determines general investment advice to be given to clients D) all employees of the adviser
C
A consent to service of process allows the Administrator to A) terminate a registrant's application B) ensure that the legal appeal process is expedited as a result of the Administrator's access to information C) verify the accuracy and completeness of registration without obtaining the registrant's prior approval D) exercise the power of attorney on behalf of the registrant
D
Which securities are exempt from state registration?
Exchange-listed securities, investment company securities, securities issued by the US or banks regulated by FRB, Munis (out of state), Reg D
What is NOT a security
Insurance plans, interest in a retirement plan, collectibles, commodities and futures, personal residences, currency, fixed annuities
Exempt transactions
Isolated nonissuer trans (issuer does not get proceeds) Unsolicited Underwriter transactions Bankruptcy/guardian/executors Institutional investor transactions Private placements Preorganization certificates Transactions with existing security holders Nonissuer transactions by pledgees Unit secured transactions Control transactions Recission offers
What is coordination
Most common for non-fed covered aka OTC Coordinates a federal registration with a state registration Issuers file: consent to service of process, copies of latest form of prospectus if Admin requires, copies of articles of incorporation and bylaws, copy of the underwriting agreement, or a specimen copy of the security, copies of any other info filed by the issuer if Admin requests, each amendment to the federal prospectus promptly after it is filed with the SEC
What is qualification
Registrant supplies any info required by the state securities Admin Normal for securities issued intrastate Supplies: consent to service of process, name/address/form of organization:description of process and nature of business, info on directors/officers/owners with 10% or more and renumeration paid to owners in last 12 months, description of issuers cap/lt debt, estimated proceeds and the use of proceeds, type/amount of securities offered/price/selling and underwriting costs, stock options in connection with the offering, copy of any prospectus or sales literature to be used in the offering, specimen copy of the security/opinion of the counsel as to legality, audited balance sheet within four months of the offering
What is notice filing
State admins require the issuers of federally covered securities to file: documents filed along with their registration statements filed with the SEC, docs filed as amendments to the initial federal registration statement, report on the value of such securities offered in the state, consent to service of process. Done as a condition for sale of their securities in the state
Exempt securities
US and CAD govt/muni securities Foreign gov't securities Depository institutions (banks/savings/trusts/credit unions) Insurance company securities (stocks and bonds) Public utility (railroad/common carrier) Fed covered securities Nonprofits Employee benefit plans Commercial paper/bankers acceptances ST debt maturities (matures in 9 mo or less, minimum denom of 50,000, and receives one of the 3 highest ratings)
The term "agent", as defined in the Uniform Securities Act, would not include which of the following individuals? A) One who represents a registered broker-dealer selling unregistered exempt securities B) One who represents a registered broker-dealer selling securities listed on the NYSE to individual clients C) One who represents an issuer of any exempt security D) One who represents an issuer in effecting exempt transactions
d
The Uniform Securities Act is designed to protect the general public and not restrict investment activities of institutional or professional investors. A transaction between a broker-dealer and any of the following would be considered exempt from the registration and advertising filing requirements of the USA EXCEPT A) chief executive officers of companies listed on the NYSE B) savings institutions C) broker-dealers D) banks
A
Transactions meeting certain conditions are exempt from the Uniform Securities Act's registration and advertising filing requirements. Which of the following transactions does NOT meet those conditions to qualify as an exempt transaction? A) The sale of U.S. government securities to a wealthy client's IRA by a registered broker-dealer B) An offer of a security for which a registration statement has been filed but has not yet become effective C) A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid D) A sale of securities by the executor of an estate
A
Under the provisions of the Uniform Securities Act, a securities agent may NOT A) accept an unsolicited order for an exempt security from a retail client of the broker-dealer who resides in a state in which the agent is not registered B) be licensed by both an independent insurance company and a securities broker-dealer C) be registered with two broker-dealers under common control D) be registered with a licensed real estate broker as well as with a licensed securities broker-dealer
A
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 a broker-dealer is not registered A) II and III B) I only C) II only D) I, II and III
A
An investment adviser maintains custody of customer's funds and securities. In order to comply with the Uniform Securities Act, the adviser must, at least quarterly, send written notice to each custodial client stating the location of the assets under custody changes to the location of the assets under custody amount of prepaid fee to be refunded upon early termination of the contract value of the assets under custody A) III and IV B) I and IV C) II and III D) I and II
B
If information filed with the Administrator by a broker-dealer as part of its registration changes in a material way, the registrant must A) submit an entirely new registration form within 30 days of the material change in information B) amend the registration statement within 60 days of the material change C) amend or update the information promptly regardless of the renewal date D) update the information on the registration on the next annual renewal date
B
Under the Uniform Securities Act, which of the following is an investment adviser? A) Jane advises customers regarding the value of gold and silver coins. B) Jill is an attorney specializing in estate planning who, as a side job, structures portfolios for the beneficiaries of her deceased clients at a reduced fee. C) The Trust Department of ABC Bank provides investment advice to its clients. D) Tom writes a newspaper column that analyzes and recommends securities.
B
Alice Allison, an agent with Winmore Securities, a registered broker-dealer, introduced some of her clients to an old college friend who was raising funds for a new start-up venture. Those who invested in the deal did so by having Alice transfer funds from their account at Winmore to the start-up. Alice did not charge or receive any compensation for doing this. Because of this limited role, Alice did not notify her supervisor at Winmore. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, Alice has engaged in the unethical business practice of A) churning. B) front running. C) selling away. D) sharing in accounts.
C
An Administrator may initiate a suspension or revocation proceeding against a broker-dealer registered in his state I. up to 2 years after a broker-dealer voluntarily withdraws its registration II. when an agent of the broker-dealer is convicted of a felony violation of the Securities Exchange Act of 1934 III. upon discovery that the broker-dealer's license had been suspended in another state IV. upon discovery of new facts unknown to the Administrator at the time of the broker-dealer's initial registration A) I, II, III and IV B) II, III and IV C) III and IV D) I and II
C
An Administrator may issue a stop order if it is in the public interest and the A) Administrator disapproves of the quality of the products manufactured by the registrant B) registrant refuses to pay the Administrator a personal fee in addition to filing fees C) registrant is subject to an administrative stop order of a neighboring state D) registrant is not registered in all states in which the security is proposed to be registered
C
An agent engages in a practice prohibited under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents by I. borrowing money from his father who is a client and making full disclosure to the employing broker-dealer II. sharing in profits and losses with clients and making full disclosure of this arrangement to the employing broker-dealer III. not disclosing risks of a transaction to an unsophisticated client who would not understand the explanation IV. not recording small transactions on the books of the employing broker-dealer A) I and II B) I only C) I, II, III and IV D) III and IV
C
A working group convened by NASAA has developed a model fee disclosure schedule to help investors better understand the costs involved in doing business with their broker-dealer. The template has broker-dealers disclose all of the following fees EXCEPT A) charges for late payments B) issuance of a stock certificate C) account inactivity fee D) advisory fees
D
According to the Uniform Securities Act, which of the following is NOT an exempt transaction? A) Bonds with a rating below investment grade are sold to the ABC High Yield Bond Fund B) A broker-dealer sells an entire new issue of shares traded on the OTC Bulletin Board to 5 bank clients C) The executor of an individual's estate liquidates individual stocks and invests the proceeds in a money market account at a bank D) A broker-dealer makes an offer of private placement securities to 15 individual investors within a 30-day period
D
Adell, a retiring social worker, has some money to invest. An agent suggests she look into investing in a private placement security that is raising money to build apartment buildings in Puerto Rico. According to the Uniform Securities Act I. building projects are not appropriate for retirees who typically need immediate income II. private placements are not usually appropriate for retiring individuals because they are not liquid III. no rule has been violated because the customer has only been offered the product IV. if the customer lives in Puerto Rico, the proposed investment may be suitable because there may be a ready marketA) II and III B) I and III C) II and IV D) I and II
D
An employee of a commercial bank selling the bank's bonds to its banking clients is acting in the capacity of a(n) A) broker-dealer B) agent of a broker-dealer C) agent of the issuer D) person excluded from the definition of an agent
D
Consent of the client before completion of a trade made between the firm and a client must be made when A) a broker-dealer will be acting in the capacity of an agent B) a broker-dealer will be acting as a contra-party to the trade C) a broker-dealer will be acting in the capacity of a principal D) an investment adviser will be acting in the capacity of a principal
D
In order to function as a broker-dealer on the premises of a financial institution A) the bank must own the broker-dealer B) any networking arrangements between the bank and the broker-dealer must be clearly disclosed C) all agents must be employees of the bank D) the broker-dealer must clearly distinguish between the operations of the broker-dealer and the retail banking operation
D
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) Customer name, customer address, execution price, time of execution or cancellation B) Customer name, execution price, time of order entry, and time of execution or cancellation C) Account number, customer address, time of order entry, and terms and conditions of the order D) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order
D
Trade confirmations sent by broker-dealers to their customers must always include A) the current market price of the security traded B) the tax identification number of the customer C) the amount of markup or markdown charged D) the amount of commission charged
D
