65 Chapter 5

Under the Uniform Securities Act, violations of the act may result in criminal penalties of up to

$5,000

The statute of limitations for criminal offenses under the USA is

5 years

If an investment adviser representative commits a criminal violation of the Uniform Securities Act, she is subject to legal action for

5 years after the alleged violation

Under the USA, an agent may file for a review of an Administrator's revocation order within how many days of revocation?

60 days

Under the Uniform Securities Act, which of the following statements is (are) TRUE regarding civil liability of advisers and broker-dealers?

A lawsuit against a broker-dealer or adviser can be avoided if restitution, costs, and interest are paid to a client.

Which of the following statements relating to penalties under the USA is CORRECT?

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 termination of registration of a securities professional registered under the USA is TRUE?

An Administrator may cancel the registration of a securities professional if mailings addressed to that registrant are returned with the notification "no forwarding address."

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 sale

An Administrator may restrict the activities of a registered agent who is

determined to have become insolvent

An agent in New Hampshire mails an offer to sell securities to clients in New York. Under the Uniform Securities Act, which of the following is (are) TRUE?

I. An offer to sell has been made in New York if a client III. receives it in New York. The agent is subject to the statutes of both New Hampshire and New York.

Under the USA, which of the following are grounds for suspension, denial, or revocation of an issuer's registration statement?

I. Information in the registration statement is incomplete II. Unreasonable compensation to the underwriters III. Failure to pay filing fees IV. The security is subject to an administrative stop order in a federal court.

An Administrator may summarily suspend a 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

I. appropriate prior notice to the applicant as well as the employer or prospective employer of the applicant II. opportunity for a hearing III. findings of fact and conclusions of law

When an Administrator issues a final order, an agent subject to the order may

I. obtain a review of the order in an appropriate court of law II. request that additional evidence be presented to the court

In conducting investigations, the Administrator may

I. require a person to file a statement in writing and under oath II. publish information of any violation over the vigorous objections of a violator III. make investigations both inside the state and in other states to determine whether violations of the USA have occurred in his state

If an agent unknowingly sold securities that were not properly registered in the state, the agent

II. is subject to civil action IV. engaged in a prohibited business practice

A properly licensed agent in Illinois, Missouri, and Iowa has a client who moves from Illinois to Michigan on July 1, 2014. On September 1 of that year, the agent sells him 100 shares of a nonexempt security in a nonexempt transaction. On October 1, 2015, 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

September 1, 2017 The statute of limitations for civil liability is the earlier of 3 years after the date of the sale or 2 years after discovery of the violation. In this case, the earliest date is 3 years after the sale on September 1, 2014.

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?

Suspending an agent's registration without an opportunity for a hearing

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?

The Administrators of both State L and State W may perform unannounced onsite examinations during normal business hours.

Under which of the following circumstances may an Administrator revoke a state registered investment adviser's registration?

The adviser has been convicted of a nonsecurities-related felony.

Which of the following would not be justification for the Administrator to cancel the registration of an agent?

The agent violated several provisions of the Uniform Securities Act

Which of the following would be included in the Uniform Securities Act's definition of a "sale"?

Transfers, for value, of unit trusts to a nontaxable organization

Which of the following is TRUE regarding a state Administrator's authority?

With certain limited exceptions, the Administrator has authority over any transaction made in the state where officiating.

John was convicted 5 years ago of failure to pay child support, a misdemeanor in his home state. John would now like to register as an IAR in a neighboring state where that crime is considered a felony. Under the Uniform Securities Act, the Administrator of the neighboring state will

disregard that conviction when determining John's qualifications for registration

A client of a broker-dealer files a civil suit claiming damages for sale of an unregistered security. During the proceedings, the client suffers a fatal stroke. The suit

is continued by the deceased's executor

One way in which the penalty for a civil infraction differs from that for a criminal one is that in the civil case, the guilty party cannot

receive a jail sentence

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

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 Administrator has jurisdiction over an offer to sell securities if it is made in a newspaper published out of state

under no circumstances