Part 1

Under the Investment Advisers Act of 1940, what is the maximum fine that may be imposed for violating the act? $5,000 $1,000 $20,000 $10,000

$10,000

With regard to the keeping of records, the Uniform Securities Act states that investment advisers must keep records for 3 years, the first 2 in the principal office of the adviser 3 years 5 years 5 years, the first 2 in the principal office of the adviser

5 years, the first 2 in the principal office of the adviser

Which of the following would be included in the Uniform Securities Act definition of "sale"? (#) An offer of common stock in a new issue properly registered or exempt from registration in the state A gift of assessable stock An investor exercising warrants attached to a convertible bond purchased 5 years ago An investor pledging stock she owns to a bank as collateral for a loan

A gift of assessable stock An investor exercising warrants attached to a convertible bond purchased 5 years ago

Under federal law, the statute of limitations for civil liability is 1 year after discovery or 3 years after the action, whichever is sooner 1 year after discovery of the action 2 years after discovery or 3 years after the action, whichever is sooner 2 years after the action

1 year after discovery or 3 years after the action, whichever is sooner

Under the Uniform Securities Act, which of the following is NOT an offer or a sale? 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 100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger A gift of assessable stock The sale of a warrant

100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger

If securities of an issuer registered with the state are outstanding, how long after the effective date of registration must an issuer wait before the registration may be withdrawn? 12 months 18 months 6 months Only at the Administrator's discretion

12 months

Under the Investment Advisers Act of 1940, an adviser's registration usually becomes effective how many days after it is filed? 10 30 45 20

45

The statute of limitations for criminal offenses under the USA is 5 years 2 years 3 years 10 years

5 years

Under the Securities Act of 1933, a registration statement for a security generally becomes effective how many days after it is filed? 31 20 30 10

20

Creative Financial Solutions (CFS) is a broker-dealer registered with the SEC. CFS has its principal and only office in State A. CFS also does business with clients in State B. Which of these clients would cause CFS to have to register in State B? 6 banks doing business in State B 15 other broker-dealers 4 retail clients residing in State B 1 mutual fund registered with the SEC

4 retail clients residing in State B (There is no de minimis exemption for broker-dealers (unlike investment advisers))

According to the Investment Advisers Act of 1940, the SEC must either grant investment adviser registration or begin proceedings to determine whether registration should be denied within how many days of filing? 90 45 60 30

45

When it comes to borrowing and lending money, the Uniform Securities Act (USA) prohibits activity that would compromise the objectivity of securities professionals. Which of the following is (are) NOT a prohibited practice(s)? (#) A broker-dealer lending money to a client to purchase additional securities An agent taking out a car loan from a bank whose branch manager is a client of that agent An investment adviser borrowing money from an affiliated broker-dealer An investment adviser lending money to a client to enable that client to maintain the minimum required asset level in the account

A broker-dealer lending money to a client to purchase additional securities An agent taking out a car loan from a bank whose branch manager is a client of that agent An investment adviser borrowing money from an affiliated broker-dealer

Which of the following persons are excluded from the definition of, or exempt from registration as, a broker-dealer under the Uniform Securities Act? (#) A broker-dealer with no office in the state that effects trades exclusively with other broker-dealers in the state A trust company with an office in the state that deals with the general public A broker-dealer with no office in the state that has no more than 5 retail clients resident in the state within the past year A broker-dealer with no office in the state that effects securities trades exclusively with trust companies or other broker-dealers

A broker-dealer with no office in the state that effects trades exclusively with other broker-dealers in the state A trust company with an office in the state that deals with the general public A broker-dealer with no office in the state that effects securities trades exclusively with trust companies or other broker-dealers (Unlike with investment advisers, there is no de minimis exemption for broker-dealers)

Under the Investment Advisers Act of 1940, which of the following is included in the definition of an investment adviser? A professional research analyst who holds himself out to the public as an expert in trading the Euro and other foreign currencies A research service that offers advice on the value of gold A bank that advertises to the public that it offers a complete line of trust services A lawyer who advertises to the public that he offers comprehensive legal and investment advice to high-net-worth individuals

A lawyer who advertises to the public that he offers comprehensive legal and investment advice to high-net-worth individuals (he offers investment services as an integral part of his practice)

A licensed agent with a registered broker-dealer in a state would be permitted to engage in which of the following transactions in unregistered nonexempt securities? The sale of commercial paper with a 12-month maturity The sale of a preorganization certificate on which the agent receives no commission on the amount paid by the investor A solicited transaction in a small Canadian mining company A private placement

A private placement

Under the Uniform Securities Act, which of the following statements relating to the registration requirements of investment advisers is TRUE? If an amendment to the registration is subsequently filed, the registration becomes effective 15 days after the amendment is filed. A registration becomes effective at noon, 30 days after the application has been filed, providing the registration is not in the process of denial. A registration is automatically effective at noon, 30 days after the application has been filed. Registrations of securities professionals expire 1 year after their effective date, unless renewed.

A registration becomes effective at noon, 30 days after the application has been filed, providing the registration is not in the process of denial.

Which of the following would have to register as an investment adviser under the Uniform Securities Act? A retired aeronautical engineer who charges a nominal fee for holding seminars on opportunities in aerospace stocks An economics professor who occasionally gives a lecture to business groups about the stock market An accountant who advises clients about investments as an incidental part of services A trust company

A retired aeronautical engineer who charges a nominal fee for holding seminars on opportunities in aerospace stocks

Which of the following transactions are exempt from registration under the Uniform Securities Act? (#) A trustee of a corporation in bankruptcy liquidates securities to satisfy debt holders. An offer of a securities investment is directed to 10 individuals in the state during a 12month consecutive period. A sale of securities by the trustee of the Lorgan Family Children's Trust. Agents for an entrepreneur offer pre-organization certificates to fewer than 10 investors in the state for a modest commission.

A trustee of a corporation in bankruptcy liquidates securities to satisfy debt holders. An offer of a securities investment is directed to 10 individuals in the state during a 12month consecutive period.

Which of the following are nonissuer transactions? (#) An investment manager purchases 100,000 shares of XYZ on the NYSE. An investment adviser sells a block of YYY Corp. shares to an overseas investor in a private transaction. The president of Dot.com, Inc., sells his personal shares of Dot.com on the NYSE. Dot.com purchases its own shares on the open market in order to place them in treasury.

ALL

Which of the following securities are exempt from registration at the state level? (#) Bonds issued by the American Red Cross United States Treasury bonds American Advisers Unit Investment Trust Common Stock in AAA Commercial Bank, member of the FDIC

ALL

Which of the following securities are exempt from the registration requirements of the Uniform Securities Act? (#) An investment contract issued in connection with an employee pension plan Securities issued by St. Paul's Catholic Church in Tempe, Arizona Securities issued by a public utility Securities issued by the Canadian government

ALL

Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security for sale to the public. According to the USA, which of the following is NOT an issuer? The city of Chicago, which is involved in a distribution of tax-exempt highway improvement bonds AAA Partnership, which issues certificates of interest or participation in its oil, gas, and mining titles The AAA Manufacturing Company, which proposes to offer shares to the public but has not completed the offering The United States government, which proposes to offer Treasury bonds

AAA Partnership, which issues certificates of interest or participation in its oil, gas, and mining titles

Which of the following are included in the definition of federal covered security? (#) ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Delaware ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Maryland City of Portland, Maine, GO bond sold to a resident of Augusta, Maine City of Portland, Maine, GO bond sold to a resident of Augusta, Georgia

ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Delaware ABC common stock, domiciled in Delaware, listed on the NYSE, and sold to a resident of Maryland City of Portland, Maine, GO bond sold to a resident of Augusta, Georgia

Which of the following would NOT be defined as a sale or an offer to sell under the Uniform Securities Act? ABC issues a rights offering. A bonus given as a direct result of the purchase of another security. ABC attaches warrants to buy common stock of XYZ Corporation to a bond issue. ABC issues a $1.50 quarterly dividend to existing stockholders of record.

ABC issues a $1.50 quarterly dividend to existing stockholders of record.

An interest in which of the following is a security under the Uniform Securities Act? (#) Preorganization certificate Certificate of deposit for a security Oil and gas drilling program Cattle feeding program

ALL

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 disclosing which of the following fees? Account closing fees Advisory fees Markups and markdowns Commissions

Account closing fees (There are 3 primary expenses involved with brokerage accounts that are not included in the fee disclosure template: - commissions - markups and markdowns - advisory fees for those firms that are also registered as investment advisers)

Under certain conditions, the Uniform Securities Act provides that an Administrator may require a minimum net worth standard be met by an investment adviser. Which of the following would be an allowable asset in the computation of an investment adviser's net worth? Accounts receivable Advances or loans to partners in the case of an IA organized as a partnership Copyrights Accounts payable

Accounts receivable

Under the Investment Advisers Act of 1940, which of the following compensation arrangements would generally be prohibited? Wendy charges a set fee, regardless of how long it takes her to generate her recommendations for a given client or how well those recommendations turn out. Alan waives a client's fee if the client experiences a loss for the year. Carla charges clients a percentage of assets under management. George's fee varies with the amount of time he spends managing an account.

Alan waives a client's fee if the client experiences a loss for the year.

Which of the following are exempt transactions as defined in the Uniform Securities Act? (#) An agent sells a security issued by a foreign government with which the United States has diplomatic relations to an individual client An agent fills a buy order based upon an unsolicited request from an existing client to purchase a nonexempt security The sale of an unregistered nonexempt security in a private, nonpublicly advertised transaction to 14 noninstitutional investors over a period not exceeding 12 months The sale of unlisted securities by a trustee in bankruptcy

An agent fills a buy order based upon an unsolicited request from an existing client to purchase a nonexempt security The sale of unlisted securities by a trustee in bankruptcy (Unsolicited customer orders, regardless of the type of security involved, are always exempt transactions as are sales by fiduciaries)

Which of the following statements regarding a red herring is NOT true? A red herring is used to accept indications of interest from investors. An agent may accept funds to be placed in escrow until the effective date if the request to do so is made by a potential purchaser. Additional information may be added to a red herring at a later date. The final offering price does not appear in a red herring.

An agent may accept funds to be placed in escrow until the effective date if the request to do so is made by a potential purchaser.

Which of the following activities would NOT be considered a prohibited practice under the NASAA Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents? In order to meet production quotas, an agent opens several accounts under fictitious names An agent shares in the profits and losses in a customer's account without making a financial contribution to the account An agent opens a brokerage account at his employing broker-dealer in his wife's maiden name in order to purchase an IPO being underwritten by the firm An agent purchases a suitable stock for a client's account prior to receiving written discretionary authorization

An agent shares in the profits and losses in a customer's account without making a financial contribution to the account (As long as the agent has the consent of the customer and the employing broker-dealer, profits and losses may be shared and no financial contribution is required of the agent)

Which of the following statements best describes an investment supervisory service as described by the Investment Advisers Act of 1940? An investment advisory firm offers nondiscretionary services on a non-client-specific basis. An investment adviser sends monthly newsletters to 200 clients offering nonspecific advice. An investment adviser provides continuous advice based on the client's individual needs. No actions are taken in client accounts without first being approved by a senior supervisory person.

An investment adviser provides continuous advice based on the client's individual needs. (An investment supervisory service is an individualized service delivered to a specific client on a continual basis. General nonspecific advice given across the board is deemed impersonal advisory services)

Which of the following would fall under the USA's definition of exempt transaction? A real estate partnership sells interests to the public with no commission charge An issuer sells a new issue to a broker-dealer An investment adviser purchases securities from the issuer An agent accepts an order from a client after having sent a research report dealing with that security

An issuer sells a new issue to a broker-dealer

Which of the following statements regarding discretionary accounts is TRUE? 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. A branch manager must approve discretionary orders before entry. A principal must approve discretionary orders before entry. The rules regarding churning of accounts do not apply to discretionary accounts.

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)

Which of the following investment vehicles is NOT considered a security under the Uniform Securities Act? Annuities with a fixed rate of return Commercial paper maturing in fewer than 270 days U.S. government bonds Common stock issued and sold intrastate

Annuities with a fixed rate of return (Even though the U.S. government bonds (and, under certain conditions, the commercial paper) are exempt securities, they are still securities)

What is the term used to describe a common stock issued below its par value? Below book Subpar Nonassessable Assessable

Assessable

Under the Investment Advisers Act of 1940, which of the following is excluded from the definition of investment adviser? Attorneys for whom providing investment advice is incidental to the practice of their profession Sports or entertainment representatives Pension consultants Publishers of investment newsletters distributed based on market events.

Attorneys for whom providing investment advice is incidental to the practice of their profession

An agent in Illinois, Missouri, and Iowa has a client move from Chicago to Detroit on July 1, 2016. On September 1 of that year, he buys 100 shares of a nonexempt security in a nonexempt transaction. On August 1, 2017, the client discovered that the agent's firm never licensed him in Michigan and, therefore, he is subject to civil liability to the purchaser. The statute of limitations for this sale runs out September 1, 2018 August 1, 2019 August 1, 2020 September 1, 2019

August 1, 2019 (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 2 years after the discovery date of August 1, 2017)

Under the Investment Advisers Act of 1940, which of the following are excluded from the definition of an investment adviser? Accountants who advise on securities (only) for a fee Attorneys who advise on securities (only) for a fee Insurance companies Banks and trust companies

Banks and trust companies

ABCO Materials, Inc., is in the process of raising money from the public for the first time. Which of the following must be disclosed in ABCO's registration statement filed with the Administrator? (#) Biographical sketches of each of the members of the board of directors, as well as ABCO's principal officers Expected use of the proceeds of the offering Performance of the company's stock over the last five years or since the founding of the company, whichever is the shorter period Expected range of the public offering price

Biographical sketches of each of the members of the board of directors, as well as ABCO's principal officers Expected use of the proceeds of the offering Expected range of the public offering price

A broker-dealer is registered in States A and B. An agent of theirs is registered in State A, and one of the agent's clients moves from State A to State C. If the agent wishes to continue to do business with this client what must happen?

Both the broker-dealer and the agent must register in State C.

An agent is registered with a broker-dealer whose principal office is located in State X, but who also does business in State Y. However, the agent is only licensed in State Y and confines her business to residents of that state. The Administrator of State X has what kind of authority over this agent? Cannot check the records of the agent in state Y because it is not State X's jurisdiction Can check the records of the agent in state Y with no prior notification Can check the records of the agent in state Y only with proper prior notification Can only take action against this agent when she is physically present in State X

Cannot check the records of the agent in state Y because it is not State X's jurisdiction

Although generally prohibited, there are conditions under which a state-registered investment adviser is permitted to charge performance-based fees. Which of the following meets the necessary criteria? Charging a performance-based fee to an elderly client whose net worth is $2.2 million, with only $150,000 under the adviser's management Charging a performance-based fee to an individual who meets the definition of an accredited investor Charging a performance-based fee to an aggressive entrepreneur whose net worth is $1.8 million who has $500,000 under the adviser's management Charging a performance-based fee to an individual with a net worth in excess of $10 million without describing that there is an incentive for the adviser to take greater risks

Charging a performance-based fee to an elderly client whose net worth is $2.2 million, with only $150,000 under the adviser's management (Performance fees may be charged, regardless of the client's age, to anyone with a net worth in excess of $2.1 million or with at least $1 million under management with the firm)

Under the USA, the least active review of registration documentation is performed by state Administrators before which of the following becomes effective? Coordination Notice filing Application Qualification

Notice filing

Under the Securities Act of 1933, the definition of prospectus includes an offer of a security made orally a tombstone advertisement for a security an offer of a security made in a personal letter

an offer of a security made in a personal letter (A prospectus is a communication made in writing or by radio or TV that offers a security for sale)

Under the Securities Act of 1933, the definition of prospectus includes an offer of a security made orally a tombstone advertisement for a new issue of common stock an offer of a security made in an email communication

an offer of a security made in an email communication

The Uniform Securities Act grants exemptions to the securities of a number of issuers. If you were the Administrator, which of the following securities would NOT be eligible for an exemption in your state? Bonds issued by the Province of Alberta Debt securities issued by the ABC Savings and Loan Association, organized under the laws of a neighboring state, but not authorized to do business in your state Common stock issued by the XYZ Trust Company, organized under the laws of a neighboring state, but not authorized to do business in this state Equipment trust certificates issued by a regulated common carrier

Debt securities issued by the ABC Savings and Loan Association, organized under the laws of a neighboring state, but not authorized to do business in your state

Kapco Advisers, a federal covered investment adviser operating on a calendar-year basis, published a list of recommended securities in January 2015. A copy of this must be maintained until at least December 31, 2020 January 31, 2020 January 31, 2017 December 31, 2017

December 31, 2020 (Investment adviser records, including copies of advertisements, must be kept for at least 5 years from the end of the fiscal year in which the record originated)

Which of the following terms pertains to registration with the Administrator of a mutual fund, closed-end investment company, or unit investment trust that is registered under the Securities Act of 1933 and also registered as an investment company under the Investment Company Act of 1940? Qualification Coordination Notice filing Notification

Notice filing (Federal covered securities, securities listed on national stock exchanges, Nasdaq Stock Market or investment companies registered under the Investment Company Act are exempt from state registration)

Jessica is an investment adviser representative for an SEC-registered investment adviser. She lives in State X and receives a letter from a former college friend requesting a contribution to the friend's political campaign for governor of State Y. As it happens, Jessica's firm provides advisory services to State Y's employee retirement fund and Jessica actively solicits business from other state agencies. Which of the following actions would be permitted to Jessica under the SEC's pay-to-play rule without causing any concerns to her firm? Donating a maximum of $350 to the campaign Donating a maximum of $250 to the campaign Donating a maximum of $150 to the campaign Sending a letter to the friend indicating that the rules would not permit her to contribute to the campaign

Donating a maximum of $150 to the campaign (The rule allows covered employees to make contributions of up to $350 per official or candidate per election in which they can vote, or $150 for other elections. Because the friend is running for governor in a state that Jessica cannot vote, the lower limit applies)

Which of the following statements is NOT true? Transaction exemptions must be established before each transaction. Federal covered securities include those registered under the Investment Company Act of 1940. Federal covered securities include securities listed on national exchanges. Exempt securities must reestablish their exemptions at least annually.

Exempt securities must reestablish their exemptions at least annually.

An Administrator may revoke the registration of a securities professional who is declared mentally incompetent., true or false?

FALSE

Sales made under the provisions of Rule 506(b) of Regulation D must be reported on Form D. Form 13F. Form U4. Form 506.

Form D.

Which method of securities registration would most likely be used to register an initial public offering that is intended to be offered for sale in several states? Coordination Qualification Registration by publication Notice filing

Notice filing (Notice filing pertains to certain federal covered securities, primarily by investment companies (mutual funds)

When does a deliberate omission of a fact in a securities sale constitute fraud? Only when a new issue of securities is being offered If a reasonable person would base an investment decision on the omitted information Only if the information was known to be true Anytime the information is known by more than 15 people

If a reasonable person would base an investment decision on the omitted information

Under the Investment Advisers Act of 1940, which of the following statements regarding an adviser's registration is TRUE? If the adviser ceases to act as an adviser or goes out of business, the SEC will cancel the registration. Withdrawal from registration is done on Form ADV-W and takes effect 45 days after filing. Registrations expire on December 31 of each year. Registrations become effective in 30 days unless delayed by the SEC.

If the adviser ceases to act as an adviser or goes out of business, the SEC will cancel the registration. (advisors reg will remain in effec until revoked, suspended or cancelled)

Which of the following statements regarding the Uniform Securities Act are TRUE? (2) Criminal penalties for violations of the USA are punishable by fines of up to $10,000, imprisonment for up to 5 years, or both. If the sale of a security is in violation of the USA, the buyer may sue the selling broker-dealer to recover the money paid for the security. If the seller of a security discovers that he made an illegal sale, he may offer to repurchase the security at the price paid less interest charges. The buyer of securities may not sue if within 30 days of receipt, he failed to accept or reject a written offer from the seller to rescind the trade and to refund the money with interest added.

If the sale of a security is in violation of the USA, the buyer may sue the selling broker-dealer to recover the money paid for the security. The buyer of securities may not sue if within 30 days of receipt, he failed to accept or reject a written offer from the seller to rescind the trade and to refund the money with interest added.

An IAR is registered in New York and Vermont. While working in his New York office, he places a call to the cell phone of one of his clients, who happens to be on vacation in Ohio. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Indiana. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, which Administrator does NOT have jurisdiction? Illinois New York Ohio Indiana

Illinois

Nobody Walks Motor Company, a licensed automobile dealer, is running a promotion offering anyone who purchases a car over the weekend to receive a $1,000 corporate bond at no additional cost. Under the Uniform Securities Act, in order to make this offer, it must be made available to anyone who purchases a car during the specified period Nobody Walks Motor Company may not pay a commission on the sale of a car to any salesperson who is not registered with the Administrator as an agent Nobody Walks Motor Company must be registered as a broker-dealer in the state there are no specific requirements as the company is a licensed automobile dealer and, because of the free offer, no sale of securities is involved

Nobody Walks Motor Company must be registered as a broker-dealer in the state

Which of the following statements regarding civil liabilities under the Uniform Securities Act are TRUE? (#) In a fraudulent securities transaction, the customer is entitled to recover the amount of the transaction with interest at a rate set by the Administrator, less any income earned on the security plus attorney's fees. Causes of action under the USA survive the death of either plaintiff or defendant. No suit may be initiated more than 3 years after the transaction or 2 years after the discovery of the violation, whichever occurs first. Rights and remedies in this act are in lieu of any others that exist under other laws.

In a fraudulent securities transaction, the customer is entitled to recover the amount of the transaction with interest at a rate set by the Administrator, less any income earned on the security plus attorney's fees. Causes of action under the USA survive the death of either plaintiff or defendant. No suit may be initiated more than 3 years after the transaction or 2 years after the discovery of the violation, whichever occurs first.

a purported gift of nonassessable stock, is it considered a sale/offer to sell?

NO

A notice filing would be most appropriate for which of the following new issues? Open-end investment company shares Railroad equipment trust certificate Federal credit union shares Intrastate offering

Open-end investment company shares

The terms "offer," "offer to sell," "sale," and "sell" include which of the following? Any bona fide pledge or loan An act incidental to a class vote by stockholders pursuant to the applicable corporate statute on a merger Preemptive rights A stock dividend for which the stockholders give nothing of value

Preemptive rights

Which of the following statements regarding the differences between Rule 506(b) and Rule 506(c) of Regulation D of the Securities Act of 1933 are TRUE? (2) Rule 506(c) offerings can be advertised, while Rule 506(b) offerings cannot. Rule 506(c) offerings are limited to 35 nonaccredited investors, while Rule 506(b) offerings do not have a limit. The bad actor provisions only apply to Rule 506(c) offerings. Rule 506(c) offerings are limited exclusively to accredited investors, while nonaccredited investors can participate in Rule 506(b) offerings.

Rule 506(c) offerings can be advertised, while Rule 506(b) offerings cannot. Rule 506(c) offerings are limited exclusively to accredited investors, while nonaccredited investors can participate in Rule 506(b) offerings.

Searching Out New Growth (SONG) is a venture capital fund. As such, all of the following statements are true EXCEPT SONG only issues securities which are, except in extraordinary circumstances, non-redeemable SONG must have less than $150 million in assets in the fund SONG's investment adviser is exempt from registration SONG is not registered under the Investment Company Act of 1940

SONG must have less than $150 million in assets in the fund

Which of the following sales would be exempt from the antifraud provisions of the USA? Sale of an exempt security in an exempt transaction Sale of whole life insurance Sale of an exempt security Sale of a nonexempt security

Sale of whole life insurance (The antifraud statutes of the USA apply only to securities)

Under federal law, which act regulates the activities of broker-dealers and associated persons? Uniform Securities Act Trust Indenture Act of 1939 Investment Company Act of 1940 Securities Exchange Act of 1934

Securities Exchange Act of 1934

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? Conduct seminars on asset allocation Sell fixed annuities Use a preliminary prospectus to obtain indications of interest for a new issue but wait until he is registered before accepting any orders Limit his sales activity to immediate family members only

Sell fixed annuities (because fixed annuities are not securities, registration as an agent is not required)

Which of the following does NOT have a federally imposed exemption from registration with the SEC? Shares of bank holding companies traded on the New York Stock Exchange Securities issued or guaranteed by a state or political subdivision of a state Promissory notes and bankers' acceptances with maturities of 9 months or less where the proceeds are not used for capital expenditures Securities issued or guaranteed by the U.S. government

Shares of bank holding companies traded on the New York Stock Exchange (Under the Securities Act of 1933, shares of bank holding companies listed on the NYSE are not exempt securities and they must be registered with the SEC. However, securities of commercial banks are exempt)

Which of the following statements is TRUE? The USA only provides for civil liabilities for persons involved in illegal securities transactions in their state, while federal law provides criminal penalties. State Administrators are permitted to establish regulations relating to the registration, testing and fees for broker-dealers, agents, investment advisers and investment adviser representatives. The Uniform Securities Act is national law that each state enforces through a state Administrator. The state Administrator has authority to amend federal law to meet the needs or special circumstance in his state.

State Administrators are permitted to establish regulations relating to the registration, testing and fees for broker-dealers, agents, investment advisers and investment adviser representatives. (The Uniform Securities Act is model legislation for state regulation (not federal regulation) that each state may adapt to its own needs)

Which of the following statements are TRUE? The Uniform Securities Act is not the actual law of any state or territory of the United States. The National Securities Markets Improvement Act of 1996 requires states and the federal government to have identical registration requirements. The state securities Administrator has responsibility for the enforcement and administration of a state's securities law.

The Uniform Securities Act is not the actual law of any state or territory of the United States. The state securities Administrator has responsibility for the enforcement and administration of a state's securities law.

Federal covered securities (2) are exempt from registration under the USA are nonexempt from registration under the USA can be required to pay state filing fees cannot be required to pay state filing fees

are exempt from registration under the USA can be required to pay state filing fees

Under the Securities Act of 1933, when registering securities with the SEC, who must sign the registration statement? (#) The chief executive officer (CEO) The chief operating officer (COO) A majority of the board The chief financial officer (CFO)

The chief executive officer (CEO) A majority of the board The chief financial officer (CFO)

In which of the following cases would an individual representing an issuer in a transaction with a retail client be excluded from the Uniform Securities Act's definition of an agent? The individual sells shares of a federal credit union. 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. The individual successfully solicits an order from an insurance company to purchase 10,000 shares of the issuer's stock. The individual sells shares of a security issued by and representing an interest in a federal savings and loan association.

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 sale to an institution like an insurance company, the individual is not defined as an agent)

An Administrator could use which of the following as a reason for issuing an order denying the registration of a security? (#) The issuer's enterprise or method of business includes or would include activities that, although legal in the state of incorporation, are illegal in the Administrator's state. The company has not been paying dividends. The offering would be made with unreasonable amounts of underwriters' and sellers' discounts.

The issuer's enterprise or method of business includes or would include activities that, although legal in the state of incorporation, are illegal in the Administrator's state. The offering would be made with unreasonable amounts of underwriters' and sellers' discounts.

Which one of the following is NOT among the powers granted to the Administrator under the Uniform Securities Act (USA)? The power to require individuals associated with federal covered advisers in the capacity of investment adviser representatives to register as such in his state as long as the investment adviser has a place of business in the state. The power to require a federal covered adviser who has individual clients in his state, to file with the Administrator, prior to acting as a federal covered adviser in his state, any documents that have been filed with the Securities and Exchange Commission that the Administrator wishes. The power to permit an investment adviser to charge performance-based fees on an account of a client with net worth of $750,000 and an account balance of $200,000. The power to audit the books of a federal covered adviser with clients in his state if he suspects fraudulent business behavior.

The power to require individuals associated with federal covered advisers in the capacity of investment adviser representatives to register as such in his state as long as the investment adviser has a place of business in the state. (IARs associated with federal covered advisers are only required to register in a state in which they (the IAR) have a place of business)

Under the Uniform Securities Act, one method of securities registration is qualification. When that method is used, which of the following statements is CORRECT? (2) The registration is valid for 1 year from the effective date. The registration is valid for 1 year from the effective date unless the underwriter or issuer still has some unsold shares. The registration is valid until the next December 31st. The registration statement may be amended to increase the number of shares in the offering as long as the public offering price and the underwriter's compensation is not changed.

The registration is valid for 1 year from the effective date unless the underwriter or issuer still has some unsold shares. The registration statement may be amended to increase the number of shares in the offering as long as the public offering price and the underwriter's compensation is not changed.

According to the Uniform Securities Act, which of the following would be considered exempt transactions? (#) The sale of a unlisted corporate bond by an executor of an estate The gift of 100 shares of a NYSE-listed stock from a father to his minor child Preorganization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made An unsolicited order from an individual client to purchase a nonexempt, unregistered security

The sale of a unlisted corporate bond by an executor of an estate An unsolicited order from an individual client to purchase a nonexempt, unregistered security

According to the Investment Advisers Act of 1940, under which of the following circumstances is an exculpatory provision acceptable in a contract between an investment adviser and its clients? The client is purchasing government securities only. This provision is prohibited under all circumstances. The client has received written disclosure of this provision and has signed a written acceptance prior to any transaction. The client is a broker-dealer.

This provision is prohibited under all circumstances. (An exculpatory (culpa meaning fault) provision is never acceptable in an investment advisory contract. Its purpose is to exclude officers and directors from liability for disregard of their duties)

NASAA holds that the most important duty of an investment adviser is the disclosure of all information relating to the relationship between an adviser and a client. As far as the topic of compensation is concerned, which of the following must be disclosed? (#) Transaction-based compensation, such as commissions on recommended securities 12b-1 trails on no-load mutual funds in the client's portfolio Expenses reimbursed by third-party sources Compensation-sharing arrangements between the investment adviser and its representatives

Transaction-based compensation, such as commissions on recommended securities 12b-1 trails on no-load mutual funds in the client's portfolio Expenses reimbursed by third-party sources

When the USA refers to unsolicited orders, which of the following is TRUE? A client may not purchase, at his own initiative, securities trading in the secondary market if the agent is otherwise prohibited from soliciting the order. Under certain conditions, an Administrator may prohibit a broker-dealer registered in the state from accepting any unsolicited orders. Unsolicited orders are defined as exempt transactions under the USA. If the order ticket is appropriately marked, the Administrator may not challenge a broker-dealer's assertion that the order was unsolicited.

Unsolicited orders are defined as exempt transactions under the USA.

In which of the following situations is an agent committing a prohibited practice? Buying a security on behalf of a customer and then reselling it before the customer has paid for it Allowing the customer to place an order to sell 100 shares of ABC in the client's discretionary account Using discretion to purchase a security in a discretionary account while awaiting written receipt of trading authority Buying a security on one exchange and simultaneously selling it on another to take advantage of a price disparity

Using discretion to purchase a security in a discretionary account while awaiting written receipt of trading authority

Which of the following securities is NOT exempt from the registration procedures of the Uniform Securities Act? Variable annuities issued by an insurance company authorized to do business in this state Common stock issued by a public utility company whose rates are subject to state regulation General obligation bonds issued by a city located in this state Bonds issued by a church operating as a nonprofit organization under IRS Code Section 501(c)(3)

Variable annuities issued by an insurance company authorized to do business in this state

The Uniform Securities Act would consider which of the following insurance products to be a security? Modified endowment life insurance Variable life insurance Mortgage life insurance Fixed annuity

Variable life insurance (variable life and variable annuities are securities)

When would an individual employed by an issuer to sell its stock to the public have to register as an agent? When the employer is an insurance company When the employer is a savings institution When the employer is the U.S. Treasury When the transaction is exempt

When the employer is an insurance company

On last year's annual updating amendment filed with the SEC, Alpha Investment Advisers indicated that it had more than $140 million in assets under management. Due to a reduction in the size of the firm, this year's annual updating amendment shows that assets under management have fallen to the $75 million level and are expected to remain there. Which of the following actions are required for Alpha? Withdraw from SEC registration within 180 days of the adviser's fiscal year-end Withdraw from SEC registration within 90 days of the adviser's fiscal year-end Withdraw from SEC registration immediately Do nothing and continue as a federal covered adviser

Withdraw from SEC registration within 180 days of the adviser's fiscal year-end

If an agent chooses to appeal an Administrator's order, when must the agent file for review of the order with the appropriate court? Immediately Within 180 days after the entry of the order Within 30 days after the entry of the order Within 60 days after the entry of the order

Within 60 days after the entry of the order

Under the USA, it is unlawful to sell a nonexempt, nonregistered security issued by a foreign corporation from a country with which the U.S. government maintains diplomatic relations a security of a commercial bank not registered in the state a security registered in the state under the USA but not registered in any other state a federal covered security not registered in the state

a security of a commercial bank not registered in the state

An investment adviser is a member of a country club and provides substantial fee reductions to those members who become clients. The adviser justifies this because these club members are known for great referrals. The IA charges regular clients a fee that was larger for the same services because they were not members of the country club. Is this permissible?

YES if in brochure

The Administrator of a state securities department conducted a hearing regarding misconduct by an investment adviser registered at the state level. The Administrator required the adviser, as well as several clients who had lodged complaints against the adviser, to take a sworn oath that their testimony was true. Does the Administrator have the power to require sworn oaths? Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction. No, the Administrator was merely attempting to emphasize the seriousness of the hearing, but he holds no such power. Yes, the Administrator may require witness oaths because the Administrator is appointed as a judge. Yes, the Administrator has the power to require witness oaths because an Administrative hearing is functionally a legal proceeding.

Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction.

A customer suspiciously makes deposits totaling $12,000 in 4 installments of $3,000 each. This attempt to circumvent the currency reporting rules is known as placement. laddering. structuring. layering.

structuring.

Under the provisions of the USA, all of the following transactions are exempt EXCEPT transactions by executors liquidation of a security pledged as collateral for a loan transactions in preorganization certificates if no commission is paid, no subscriber makes any payment, and the number of subscribers does not exceed 10 a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made

a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made

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 group fraud affinity fraud ethnic fraud relationship fraud

affinity fraud

In an effort to benefit from the economies of scale, Liquid Assets Management, Inc. (LAMI) and Strategic Assets Management Company (SAMCO), both registered with the Administrator as investment advisers, have merged into a new firm with the name of Strategic and Liquid Assets Management Company (SLAMCO). This would require the filing of a new Form ADV along with the proper registration fee. require notification to the clients within a reasonable period of time. be considered an assignment of the advisory contracts and would require consent of the clients. be an unethical business practice.

be considered an assignment of the advisory contracts and would require consent of the clients.

Centripetal Investment Advisers (CIA) has its principal office in State X and is also registered in States Y and Z. CIA would be considered to be maintaining custody of client assets in all of the following cases EXCEPT checks made out to CIA are deposited within 3 business days checks made out to 3rd parties are forwarded within 3 business days CIA's advisory contract calls for the automatic deduction of advisory fees CIA has a power of attorney granting authority to withdraw funds from the custodian

checks made out to 3rd parties are forwarded within 3 business days

The Uniform Securities Act invests a great deal of power in the Administrator. These powers include all of the following EXCEPT issuing a cease and desist order waiving the requirement to take the licensing exam due to prior experience issuing a subpoena for a witness to appear at a hearing citing a witness for contempt of court for failing to appear at a hearing

citing a witness for contempt of court for failing to appear at a hearing

An unintentional omission of material facts when offering or selling a security may result in civil liabilities criminal liabilities criminal penalties

civil liabilities

Under the USA, the term "security" refers to all of the following EXCEPT bonds commodity futures contract put, call, straddle, or option certificate of deposit for a security

commodity futures contract

Strategic Capital Asset Managers (SCAM) is preparing its Form ADV Part 2B relating to certain individuals. On this form, SCAM must disclose all of the following information EXCEPT compensation earned on dealings with clients the name, title, and telephone number of the individual supervising any listed person disciplinary information about material events within the past 10 years the fact that any listed person has no formal education after high school

compensation earned on dealings with clients

An investment adviser wishes to engage the services of a third party to solicit new clients for the firm. To be in compliance with the Investment Advisers Act of 1940, (#) the solicitor must be registered as an IAR compensation may not be sales related the solicitor must not be subject to statutory disqualification disclosure of the solicitation arrangement must be made to clients upon request

compensation may not be sales related the solicitor must not be subject to statutory disqualification

The Administrator may require which of the following from a federal covered adviser? (2) copy of the IA's Form ADV filing of the IA's advertising in the state a listing of the IA's fee schedule a filing fee

copy of the IA's Form ADV a filing fee

The National Securities Markets Improvement Act of 1996 (NSMIA) overcame the restrictions of selling securities in interstate commerce defined the term "federal covered adviser" created a national market system created the concept of fraud, as used in the Uniform Securities Act

defined the term "federal covered adviser"

A sales assistant employed by a full service broker-dealer would be required to register as an agent when accepting orders for fixed annuities. commodity futures contracts. gold coins. direct participation programs.

direct participation programs.

Disclosure to customers of an investment adviser's control relationships is required in (#) agency transactions principal transactions exempt transactions

ALL

Under the Uniform Securities Act, which of the following statements are TRUE about the authority of an Administrator? (#) A cease and desist order may be issued prior to a hearing. A cease and desist order may be issued after a hearing. A cease and desist order is valid for a maximum of 30 days.

A cease and desist order may be issued prior to a hearing. A cease and desist order may be issued after a hearing.

Which of the following would NOT be an issuer? A partnership selling partnership interests An investment company A corporation selling certificates of interest in a mining lease A governmental agency borrowing money for short-term needs

A corporation selling certificates of interest in a mining lease

Which of the following are discretionary orders? (2) 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. A customer instructs an agent to buy 1,000 shares of ABC Corporation at a time and price determined by the agent. A customer instructs an agent to purchase as many shares of XYZ as the agent considers appropriate. A customer instructs an agent to sell 300 shares of LMN, Inc., when the agent deems the time and price appropriate.

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. A customer instructs an agent to purchase as many shares of XYZ as the agent considers appropriate.

Which of the following investment advisers would be permitted to use the term "investment counsel"? An investment adviser who has been admitted to the bar in the state in which the firm's principal office is located A professional providing a market timing service with an annual subscription fee of $995, with this service attempting to maximize profits by suggesting entry and exit points for over 100 listed stocks A financial planner offering a wide range of services to his clients, including tax planning, estate planning, insurance planning, and investment advice A firm whose exclusive business is placing clients' assets into model portfolios

A firm whose exclusive business is placing clients' assets into model portfolios (two criteria must be met. First, the principal business of the adviser must be the rendering of investment advice. Second, the nature of the advice must meet the definition of investment supervisory service)

If an agent, broker-dealer, investment adviser or investment adviser representative is found to be in violation of the provisions of the Uniform Securities Act, penalties could include (#) administrative action fines imprisonment

ALL

The National Securities Markets Improvement Act of 1996 (NSMIA) created a new definition known as a covered security. In general, these securities do not have to register on a state level. If XYZ common stock is listed for trading on the NYSE, which of the following XYZ securities are considered covered? (#) XYZ participating preferred stock XYZ first mortgage bonds Warrants to purchase XYZ common stock Rights issued in advance of an offering of additional XYZ common stock

ALL

The term "sale" includes which of the following? (#) A contract of sale A contract to sell The disposition for value of an interest in a security A warrant (for common stock of the issuer) given with the purchase of a bond

ALL

Under the Uniform Securities Act, in which of the following circumstances may the Administrator take action against an advisory firm? (#) Nine years ago, the Administrator of another state found that the president of the firm violated the securities laws of that other state. The firm has liabilities that exceed its assets. A minority shareholder with no management role in an investment adviser organized as a corporation cannot meet his financial obligations as they come due.

ALL

Under the Uniform Securities Act, which of the following disciplinary actions is(are) authorized as part of the Administrator's authority? The Administrator may suspend or revoke a current registration. The Administrator may censure or bar an applicant from future registration. The Administrator may restrict the securities-related business of a broker-dealer, adviser, or registered agent.

ALL

Under the provisions of the Uniform Securities Act, securities exempt from registration requirements include (#) securities issued by the U.S. government securities issued by a building and loan association organized under the laws of any state and authorized to do business in this state bonds issued by an insurance company organized under the laws of any state and authorized to do business in this state

ALL

​As defined in the Uniform Securities Act, which of the following is NOT a security? Annuity providing a fixed monthly payout Options on a federal covered security Common stock of ABC National Bank that is a member of the Federal Reserve System Interest real estate limited partnership (RELP) program

Annuity providing a fixed monthly payout

Which of the following describe indications of interest secured during the 20-day cooling-off period? (2) Binding on the customer Nonbinding on the customer Binding on the broker-dealer Nonbinding on the broker-dealer

Nonbinding on the customer Nonbinding on the broker-dealer

While the Administrator has great power, the USA does place some limitations on the office. Which of the following statements regarding those powers are TRUE? (2) In conducting an investigation, an Administrator can compel the testimony of witnesses. Investigations of serious violations must be open to the public. An Administrator in Illinois may only enforce subpoenas from South Carolina if the violation originally occurred in Illinois. An Administrator may deny the registration of a securities professional who has been convicted of any felony within the past 10 years.

In conducting an investigation, an Administrator can compel the testimony of witnesses. An Administrator may deny the registration of a securities professional who has been convicted of any felony within the past 10 years.

Which of the following is required for a preorganization subscription to be an exempt transaction? No commission has been paid. Prior notification of intent to incorporate must be given to the Administrator. There may be no more than 15 subscribers. Full payment has been made.

No commission has been paid.

John is a client of Greater Growth Opportunities, Inc. (GGOI), a state-registered investment adviser. Which of the following constitute(s) John giving the GGOI authority to trade his account? (#) John tells his adviser representative over the telephone to buy 200 shares of a certain security and when to make the purchase. John tells his adviser representative to be on the lookout for securities that seem likely to fit his investment objectives. John gives his adviser representative a written discretionary authorization form to buy or sell securities for his account as she sees fit.

John tells his adviser representative over the telephone to buy 200 shares of a certain security and when to make the purchase. John gives his adviser representative a written discretionary authorization form to buy or sell securities for his account as she sees fit. (When the client specifies all three "A's" (the asset, the action, and the amount) as is done in choice I, that gives the authority to the securities professional to act on the client's behalf and place the trade. Nothing is required in writing because no discretion has been used)

The definition of a federal covered security excludes which of the following securities? Jonesy Gold Stock, a common stock traded OTC, but not on the Nasdaq Stock Market Arctic Blue Preferred stock traded on the NYSE American LLC (formerly known as the American Stock Exchange [AMEX]) PMT Manufacturing common stock, traded on the Nasdaq Stock Market U.S. government Treasury notes sold at auction

Jonesy Gold Stock, a common stock traded OTC, but not on the Nasdaq Stock Market

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? (2) 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.​ Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. 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. 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.

Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. 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.

The Investment Advisers Act of 1940 addresses the issue of investment advisers (IA) maintaining custody of client funds and/or securities. In which of the following cases would that act consider the IA to have custody? (#) Possession of client funds or securities Any arrangement under which the IA is authorized or permitted to withdraw client funds or securities maintained with a custodian upon the IA's instruction to the custodian Any capacity that gives the IA or a supervised person legal ownership of or access to client funds or securities Receipt of a check made out to a third party

Possession of client funds or securities Any arrangement under which the IA is authorized or permitted to withdraw client funds or securities maintained with a custodian upon the IA's instruction to the custodian Any capacity that gives the IA or a supervised person legal ownership of or access to client funds or securities

Which of the following are exempt securities under the Uniform Securities Act? (#) Common stock, not listed on any regulated exchange, purchased by an open-end investment company registered under the Investment Company Act of 1940 Preferred stock issued by an insurance company authorized to do business in this state Municipal bonds issued by Toronto, Ontario Private placements

Preferred stock issued by an insurance company authorized to do business in this state Municipal bonds issued by Toronto, Ontario

Under the NASAA Model Rule on Custody Requirements for Investment Advisers, if an investment adviser has custody of customer funds and securities, how often must the adviser send the customer a statement of account activity? Monthly Quarterly Within 3 business days after any transaction Annually

Quarterly

Fairweather Securities Corp. (FSC), a registered broker-dealer, has invited several IARs from Econometric Advisory Services (ESA), a registered invested adviser that directs transactional business to FSC, to a seminar featuring a disquisition on current economic trends being presented by a leading economist. It would be permitted for FSC to cover which of the following expenses? Registration fees for the seminar None; because ESA directs commission business to FSC, it would be an unethical business practice for FSC to pay any portion of the expenses Registration fees for the seminar plus travel expenses Travel and transportation fees, but not the seminar fee

Registration fees for the seminar

Under the Uniform Securities Act, which of the following statements is NOT true regarding registration of securities? The Administrator may require the proceeds of the sale of securities be escrowed until sales reach a certain level. A post-effective amendment must be filed if there are any material changes in the information on file. Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. The Administrator may require periodic sales and other reports to be filed.

Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940.

Thomas Smith, a registered agent of XYZ Broker-Dealer, believed that his client's security was overvalued. If Smith exaggerated the amount by which the security was overpriced to protect the client from a downturn in the price of the security, each of the following statements is true EXCEPT Smith acted in a dishonest and unethical manner Smith engaged in fraud in connection with the sale of a security Smith provided investment advice while acting in a sales capacity, which is a prohibited practice Smith made an untrue statement in connection with the sale of a security

Smith provided investment advice while acting in a sales capacity, which is a prohibited practice (The advice to sell the securities was good investment advice, but the sales method was fraudulent)

Which of the following would be included in the Uniform Securities Act's definition of a "sale"? Donation of interests in rights, warrants, or options on a nonexempt security Sale of a large fixed annuity contract to a taxable institution Conveying, for value, precious metals to a jewelry distributor Transfers, for value, of unit trusts to a nontaxable organization

Transfers, for value, of unit trusts to a nontaxable organization (For a security to be sold, it must be exchanged for value)

Under the NASAA Model Custody Rule, an investment adviser would be considered to have custody of client assets if that adviser inadvertently receives (2) a check from a client made out to the IA and does not return the check within 24 hours a check from a client made out to a third party and does not forward the check within 3 business days stock certificates from a client and does not forward them within 3 business days stock certificates from a client and does not return them within 3 business days

a check from a client made out to a third party and does not forward the check within 3 business days stock certificates from a client and does not return them within 3 business days (sidenote: When fees are automatically withdrawn from the client's account, custody of client funds can be presumed)

A transactional exemption would be offered when a sale is made by a court-appointed guardian for a minor a broker-dealer a custodian for a minor appointed under the Uniform Transfer to Minors Act an investment adviser

a court-appointed guardian for a minor (Among the list of exempt transactions are sales made by fiduciaries, such as court-appointed guardians)

An investment adviser making investment decisions within parameters agreed upon with the client is managing the portfolio on a best-efforts basis. an advisory basis. a nondiscretionary basis. a discretionary basis.

a discretionary basis.

As defined in the Uniform Securities Act, the term "offer to sell" would include a gift of warrants. the sale of U.S. Treasury bills. a gift of nonassessable stock. the attempt to sell gold coins.

a gift of warrants. (Even though a gift is not normally a sale or an offer to sell, when it is of a warrant, a right, or any convertible security, it is considered to be an offer to sell the underlying security)

As an incentive to encourage clients to invest in a particular stock recommended by the broker-dealer, clients are told that anytime within 6 months after the purchase date, they may sell the stock back to the firm at original cost plus interest at the state's legal rate. This would be a prohibited guarantee against loss a violation of the antifraud provisions of the Uniform Securities Act a right of rescission an offer that could only be made to accredited investors

a prohibited guarantee against loss

A registered investment adviser has been investigated by the Administrator for fraudulent misrepresentations purportedly made to several clients. If the IA is found to have been in violation of the Uniform Securities Act, this may result in (2) a $10,000 fine per violation a receiver being appointed over the adviser's assets a prison term of 5 years per violation the requirement that the investment adviser make restitution to the victims

a receiver being appointed over the adviser's assets the requirement that the investment adviser make restitution to the victims

Under the USA, all of the following are exempt transactions EXCEPT isolated nonissuer transaction transaction executed by a trustee in bankruptcy unsolicited customer orders a sale of a primary offering registered with the SEC

a sale of a primary offering registered with the SEC

All of the following securities transactions are exempt under the USA EXCEPT an offer of preorganization certificates made to 25 persons that involves no commission or payment a sale of private placement securities to 25 noninstitutional investors in a state a sale of stock to a pension trust a purchase of stock by an underwriter from the issuer in a firm commitment underwriting

a sale of private placement securities to 25 noninstitutional investors in a state

Included in the USA's definition of an exempt transaction would be any transaction by any of the following EXCEPT a guardian a marshal a trustee in bankruptcy a trustee of an irrevocable trust

a trustee of an irrevocable trust (Although the term trustee is found in the list of persons engaged in exempt transaction, the USA limits it to trustees in bankruptcy)

The Uniform Securities Act requires that a consent to service of process be filed by each of the following EXCEPT an applicant for registration as a broker-dealer in the state an applicant for registration as an investment adviser in the state an issuer that proposes to offer a security in the state a trustee operating in a fiduciary capacity in the state

a trustee operating in a fiduciary capacity in the state

In the securities industry, the term "discretionary" refers to an account in which someone has been given custodial power over another individual's account account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades account in which a person has power of attorney over an incompetent individual's account order that specifies size, security, or action but leaves the choice of time or price up to the agent

account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades

All of the following activities comply with the requirements for agency cross transactions EXCEPT a client consents (in writing) to the adviser's dual role in the transaction as both adviser to the client and broker to the other party an adviser sends an annual statement to clients that reveals the total number of agency cross transactions for the client and the total amount of commissions the adviser received from those transactions after proper written disclosure, an adviser recommends the transaction to both the seller and the buyer before obtaining a client's written consent in an agency cross transaction, the adviser must disclose that it will receive commissions from both parties and that the transactions involve a conflict of interest

after proper written disclosure, an adviser recommends the transaction to both the seller and the buyer (The adviser can act as broker to both parties upon proper written disclosure and consent, provided the adviser did not recommend the transaction to both sides)

The Investment Advisers Act of 1940 would consider each of the following investment advisers to be exempt from registration EXCEPT an adviser whose only clients are banks an adviser who maintains an office in only one state, advises only residents of that state (none of whom is a private fund), and gives advice relating solely to securities not traded on any national exchange an adviser whose only clients are venture capital funds an adviser whose only clients are insurance companies

an adviser whose only clients are banks

According to the USA, the sale of a security to an insurance company is an exempt transaction only if the insurance company is authorized to do business in this state an exempt transaction always a private placement an exempt security

an exempt transaction

An investment adviser runs an advertisement in the business section of the local newspaper. The ad describes the nature of the firm's model portfolio and indicates that it has outperformed the overall market by 800% over the past 10 years, and the firm therefore guarantees that clients will more than keep pace with inflation. At the bottom of the ad, in smaller print, is the following statement: "Results are not guaranteed. Past performance is not indicative of future results. These results are not normal and cannot be expected to be repeated." This is an example of an improper hedge clause a properly worded disclaimer a wrap fee account a violation of an investment adviser's fiduciary responsibility

an improper hedge clause (Hedge clauses may not be used to disclaim statements that are inherently misleading)

Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser EXCEPT a federal covered adviser an individual providing advice on municipal bonds banks broker-dealers and their agents

an individual providing advice on municipal bonds

SYZ Corporation is having a rights offering that will enable existing shareholders to acquire 1 share of SYZ common stock for each 10 shares they currently own. Under the Uniform Securities Act, this would be considered (2) an offer of SYZ rights a sale of SYZ rights an offer of SYZ common stock a sale of SYZ common stock

an offer of SYZ rights an offer of SYZ common stock

The first of the federal securities acts was the Securities Act of 1933. This act requires persons selling a new offering to their clients to be properly registered prior to making the offer deliver a preliminary (red herring) prospectus prior to the sale deliver a copy of the registration statement no later than with confirmation of the sale deliver an effective (final) prospectus no later than with confirmation of the sale

deliver an effective (final) prospectus no later than with confirmation of the sale

Under the Uniform Securities Act, the requirements for filing of advertising and sales literature dealing with an exempt security with the Administrator apply only to advertising always apply do not apply apply only to sales literature

do not apply (An exempt security or transaction is exempt from the registration requirements and the requirements for filing of advertising and sales literature)

In 1933, Congress passed the Securities Act which required the registration of new issues before their offering to the public. However, the law contained a number of exemptions, including that for corporate common stock listed on the NYSE obligations of the Canadian government equipment trust certificates issued by a regulated common carrier stock issued by regulated insurance company

equipment trust certificates issued by a regulated common carrier

Abel Kane is an agent for Garden City Securities, a broker-dealer registered with the SEC and all 50 states. It would be considered an unethical or dishonest business practice for Kane to (#) fail to make prompt delivery of certificates when requested by the customer fail to obtain written authorization for a discretionary account prior to the first trade in that account accept an order from a client's spouse without written trading authorization prior to receiving the order share commissions with another agent registered with Garden City Securities

fail to obtain written authorization for a discretionary account prior to the first trade in that account accept an order from a client's spouse without written trading authorization prior to receiving the order

An issuer properly files Form D in accordance with Rule 503 of Regulation D of the Securities Act of 1933. As such, the securities that are the subject of any transaction are federal covered securities required to register with the state(s) in which they are sold available only to institutional purchasers required to register with the SEC

federal covered securities

When a security is being registered under coordination, all of the following are required EXCEPT payment of the appropriate fee prompt filing with the Administrator of any amendments filed with the SEC filing with the Administrator of a statement of the maximum and minimum proposed offering price and maximum underwriting discounts or commissions concurrently with the filing of the registration statement with the SEC a description of the proposed use of the proceeds of the underwriting

filing with the Administrator of a statement of the maximum and minimum proposed offering price and maximum underwriting discounts or commissions concurrently with the filing of the registration statement with the SEC

A state-registered investment adviser organized as a corporation is required to preserve a copy of its articles of incorporation for 3 years after the end of the fiscal year in which the most recent entry was made. for 5 years after the end of the fiscal year in which the most recent entry was made. easily accessible for 2 years in the firm's principal office. for 3 years after the termination of the enterprise.

for 3 years after the termination of the enterprise.

An adviser has custody of a client's securities or funds if the adviser uses a broker-dealer to hold the customer's funds and securities and has limited trading authority over the account accepts prepayment of advisory fees or has discretion over a customer's account has authority to withdraw funds from a client's account for the benefit of the adviser for the payment of the quarterly advisory fees maintains the customer's funds and securities in a joint account with the registered investment adviser

has authority to withdraw funds from a client's account for the benefit of the adviser for the payment of the quarterly advisory fees

Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, it would be considered a prohibited practice for a broker-dealer to fail to maintain the required net capital maintain an office in the state, but fail to register with the Administrator have a history of repeatedly delaying the delivery of securities to its customers inform customers that past performance is no guarantee of future results

have a history of repeatedly delaying the delivery of securities to its customers (Broker-dealers are obligated to make prompt delivery of securities to their clients. Failing to maintain the required net capital and failing to register are violations of the law, not prohibited business practices)

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 improperly; the order should have been placed on Monday properly because the agent used discretion as to price and time properly because the agent saved the client money improperly; the order should have been placed on Thursday

improperly; the order should have been placed on Thursday

Under the Uniform Securities Act, registration by coordination becomes effective when the registration with the SEC becomes effective immediately in 30 days in 10 days

in 30 days

A person who has no place of business in this state would not be considered a broker-dealer if he effects transactions in this state exclusively with all of the following except insurance companies. the issuers of the securities involved in the transaction. investment advisers. other broker-dealers.

investment advisers.

Exceptional Results Advisers (ERA) has $15 billion in AUM and does not accept new clients who are unable to place at least $25 million under ERA's management. From time to time, ERA's clients ask for recommendations for friends or family who don't meet ERA's minimum investment level. In most cases, ERA recommends these prospects to Rational Investment Planning (RIP) and receives a referral fee for each person who becomes a client of RIP. The practice is prohibited under any circumstance. would only be acceptable if the fee was used to reduce the referring client's advisory fees. would only be acceptable if the fee was nominal and not based on the size of the account. is acceptable because the referral fee is being paid to a registered investment adviser.

is acceptable because the referral fee is being paid to a registered investment adviser.

Anyone who represents an issuer in effecting transactions between the underwriter and the issuer: must be registered as an agent. must be registered as an investment adviser. must be registered as an administrator. is excluded from the definition of agent under the Uniform Securities Act.

is excluded from the definition of agent under the Uniform Securities Act. (When an individual represents an issuer not a broker-dealer, the Uniform Securities Act provides several exclusions from the definition of an agent. One of those is representing the issuer in an exempt transaction)

An agent made written disclosure to his employing broker-dealer that he intends to execute a series of private securities transactions with individuals who do not have accounts with his broker-dealer. The agent did not acquire express written permission from the broker-dealer and did not receive compensation for executing the transactions, but did receive written acknowledgment of receipt of the agent's notice. In this case, the agent engaged in an agency cross transaction. is guilty of selling away. is required to register as a broker-dealer. performed a matched order.

is guilty of selling away.

With regard to a state-registered investment adviser using Form ADV Part 2 as its brochure, it would be correct to state that it must be delivered not later than 48 hours after entering into an advisory agreement with a new client it must be delivered to all new clients if requested by a client, it must be sent within 5 days of the request it is filed through the IARD system

it is filed through the IARD system

Regarding performance-based fees charged by ​covered ​investment advisers, all of the following statements are correct EXCEPT performance-based fees are generally prohibited performance-based fees may be charged against the assets of a closed-end investment company listed on the NYSE to determine performance, the results of the client's investment portfolio must be compared against an appropriate index or benchmark it must be disclosed that performance-based fees may motivate the investment adviser to assume greater investment risk than would apply with other compensation methods

it must be disclosed that performance-based fees may motivate the investment adviser to assume greater investment risk than would apply with other compensation methods

Broker-dealers are required to furnish clients with a fee disclosure document. All of the following are true statements about that document except changes to the fee schedule may be shown on the firm's website. it must be up-to-date. changes to the fee schedule must be announced in advance. it must be filed with the Administrator of the state in which the broker-dealer's principal office is located.

it must be filed with the Administrator of the state in which the broker-dealer's principal office is located. (There is no requirement that the fee schedule be filed with the Administrator)

One business succession issue that applies to virtually all investment advisers is death of the sole proprietor loss of the designated regulatory contact person permanent disability of a member of the board of directors departure of a partner holding a majority interest

loss of the designated regulatory contact person (Disability or death of a member of the board of directors will probably have no effect on succession, and only partnerships are concerned with a partner (of any size) leaving)

Under IA-1092, an investment adviser (2) makes advice his principal activity makes advice his regular activity is compensated directly for advice is compensated directly or indirectly for advice

makes advice his regular activity is compensated directly or indirectly for advice

The Uniform Securities Act prohibits broker-dealers from engaging in activity that has the effect of manipulating stock market prices. These would include: matched orders selling unregistered nonexempt securities churning higher than reasonable commissions or markups

matched orders

The National Securities Markets Improvement Act of 1996 (NSMIA), which amended the Uniform Securities Act, preempts state registration of federal covered securities. Under the NSMIA, all of the following are federal covered securities EXCEPT securities issued by unit investment trusts registered under the Investment Company Act of 1940 warrants trading on the OTC Bulletin Board offered by a company whose common stock trades on the Nasdaq Stock Market securities offered pursuant to the provisions of Rule 506 of Regulation D under the Securities Act of 1933 municipal securities of an issuer within the state of issuance

municipal securities of an issuer within the state of issuance

If a nonexempt company has authorized a stock split that will give each shareholder 2 shares for every 1 share owned without charge, this action must be registered because it is the issuance of new nonexempt securities need not be registered because the shares of the corporation have already been registered must have the prior written approval of each state Administrator in which the shares trade need not be registered because it is neither an offer to sell or a sale

need not be registered because it is neither an offer to sell or a sale

An investor who resides in New York reads a newspaper ad for advisory services in a newspaper published in New Jersey. More than 80% of the newspaper's circulation is in the state of New York. According to the Uniform Securities Act, an offer has been made in New Jersey New Jersey and New York New York neither New Jersey nor New York

neither New Jersey nor New York

If a client owns 1,000 shares in a growth company and receives a 25% stock dividend, according to the Uniform Securities Act, this would be considered a secondary transaction an offer a sale neither a sale nor an offer

neither a sale nor an offer

An issuer wishing to comply with Regulation D of the Securities Act of 1933 must file a Form D with the SEC no later than the time of the first sale no less than 20 days prior to the first expected date of sale no later than 30 days after the first sale no later than 15 days after the first sale

no later than 15 days after the first sale

Due to health reasons, Danny has decided to withdraw his registration as an agent. The withdrawal will take effect on the 30th day after filing of the Form U5 unless the Administrator determines an earlier date immediately on the 30th day after filing of the Form U5 when authorized by his employing broker-dealer

on the 30th day after filing of the Form U5 unless the Administrator determines an earlier date

The currency reporting threshold for cash and equivalent instruments is over $3,000 over $25,000 over $10,000 over $5,000

over $10,000

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 straddling pegging front running matched orders

pegging

Under the Investment Advisers Act of 1940, cash payment to a broker-dealer from an investment adviser in return for client referrals is permitted with no restrictions permitted if the investment adviser and broker-dealer are affiliated not permitted under any circumstances permitted if the investment adviser makes certain disclosures to the clients and meets other requirements

permitted if the investment adviser makes certain disclosures to the clients and meets other requirements (Cash payments for referrals are permitted. All such compensation must be disclosed to affected clients)

Under the USA, a guaranteed security is protected by someone other than the issuer against loss of all of these EXCEPT interest on debt securities principal on equity issues principal repayment at maturity on debt securities dividends on equity securities

principal on equity issues (capital gains are never included in this type of guarantee)

A prospectus for securities registered by qualification must be given to each offeree prior to or concurrent with the sale only upon request of the offeree prior to or concurrent with the effective date prior to or concurrent with the filing of the registration statement

prior to or concurrent with the sale (There is no prospectus prior to or concurrent with the filing. Because the prospectus is not available until the effective date, one can't be distributed prior to the effective date)

An agent employed at First Securities, an independent broker-dealer, shares commissions with his uncle, who is employed at ABC Securities, an independent broker-dealer with offices in the same state. This arrangement is prohibited because the broker-dealers are not private partnerships prohibited because the broker-dealers are not under common ownership or control prohibited because the broker-dealers must be in separate states to justify sharing commissions not prohibited if the agents have written permission from their respective clients

prohibited because the broker-dealers are not under common ownership or control

ABC Advisers, a federal covered investment adviser, is moving the firm's headquarters to a new office park in the suburbs. ABC is required to file this change with the SEC within 60 days within 30 days within 90 days promptly

promptly

In order to be in compliance with the rules, an investment adviser would have to disclose that the firm was acting in a principal capacity when engaging in an agency cross transaction purchasing shares directly from advisory clients the trade is being executed by an officer or partner of the firm directing securities transactions to an affiliated broker-dealer

purchasing shares directly from advisory clients (There are 2 principals in every securities trade: the buyer and the seller. In this case, buying shares directly from clients who own those shares places the IA in the position of being one of the principal)

Under NASAA's Model Rule dealing with Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, an investment adviser would have to disclose that the firm was acting in a principal capacity when the trade is being executed by an officer or partner of the firm directing securities transactions to an affiliated broker-dealer purchasing shares from advisory clients that were originally acquired as a result of the adviser's previous buy recommendation engaging in an agency cross transaction

purchasing shares from advisory clients that were originally acquired as a result of the adviser's previous buy recommendation (There are 2 principals in every securities trade: the buyer and the seller. In this case, buying shares directly from clients who own those shares places the IA in the position of being one of the principals)

An investment adviser affiliated with a broker-dealer would be considered to be maintaining custody when charging fees on an hourly basis receiving performance-based compensation receiving a check made payable to that broker-dealer having the power to make buy-and-sell decisions in an account

receiving a check made payable to that broker-dealer

If an investment adviser wishes to engage in an agency cross transaction involving advisory clients, it would be prohibited from recommending the trade to both sides representing both the buyer and the seller earning a commission on both the purchase and the sale obtaining written consent from the parties prior to engaging in agency cross transactions

recommending the trade to both sides

Broker-dealers and investment advisers must keep all of the following records EXCEPT account books records of incoming and outgoing telephone calls electronic correspondence memoranda

records of incoming and outgoing telephone calls

Rachel is an agent registered with a broker-dealer in this state. It would prohibited for her to share in the profits and losses in a client account without a financial contribution to the account disclose to a client that a transaction in a thinly traded stock will result in a higher-than-normal commission solicit sales of a security whose registration is not yet effective execute a transaction in a discretionary account after having received the necessary documentation

solicit sales of a security whose registration is not yet effective

Ways in which offerings under Rule 506(c) of Regulation D of the Securities Act of 1933 differ from those under Rule 506(b) include each of these EXCEPT the issuer must take "reasonable steps" to verify that all purchasers are accredited investors in a 506(c) offering, while no such obligation falls upon issuers in a 506(b) offering all purchasers of the Rule 506(c) securities must be accredited investors as defined in Rule 501, whereas Rule 506(b) permits a limited number of sophisticated but not accredited investors general solicitation is permitted under Rule 506(c) offerings; no advertising is permitted under Rule 506(b) securities issued under Rule 506(c) are federal covered, while those under Rule 506(b) are not

securities issued under Rule 506(c) are federal covered, while those under Rule 506(b) are not

Under provisions of the Investment Advisers Act of 1940, investment advisers that maintain custody of client securities are required to do all of the following EXCEPT maintain a separate ledger for each client showing all purchases and sales arrange for a surprise audit by an independent public accounting firm at least annually and subsequently file a report of the examination with the SEC keep copies of all confirmations sent to clients send an itemized statement to clients at least monthly

send an itemized statement to clients at least monthly

One way in which an investment adviser acting in the capacity of an agent in a transaction with a client differs from a broker-dealer performing the same task is that the investment adviser: shall obtain client consent before completion of the transaction shall disclose the agency capacity before the transaction may not charge a commission on the transaction shall notify the Administrator of its capacity in the proposed transaction

shall obtain client consent before completion of the transaction (In order to act as an agent (or principal) in a trade with an advisory client, there are 2 requirements: The client receives full written disclosure as to the capacity in which the adviser proposes to act Consent of the client Both of these are required before the completion of the transaction.)

Under the USA, a state securities Administrator can? (#) start an investigation against a registrant even if a violation has not yet occurred subpoena witnesses living in the Administrator's state only subpoena witnesses living outside the state begin an investigation only after a violation of the act has occurred

start an investigation against a registrant even if a violation has not yet occurred subpoena witnesses living outside the state

Under the Uniform Securities Act, an offer to sell would NOT include? stock acquired through a merger the issuance of warrants or convertible securities the issuance of stock rights to existing shareholders

stock acquired through a merger

A pattern of currency deposits designed to avoid currency reporting requirements is termed layering. spinning. structuring. laddering.

structuring.

FinCEN Form 112, the Currency Transaction Report, is filed with the SEC the Federal Bureau of Investigation (FBI) the Department of the Treasury the National Security Agency

the Department of the Treasury

When a security registers by using coordination, under normal circumstances, the effective date is determined by the issuer the SEC the underwriter the Administrator

the SEC

XYZ is an investment adviser registered in States B, C, and D. Part of its service is offering a comprehensive financial plan, for which there is an initial fee of $2,500. During a discussion with a prospect, one of its investment adviser representatives seeks to allay the individual's concerns by informing her that once the firm delivers its brochure and receives the client's payment, there is a 3-day period during which the client may cancel the contact and receive a refund of that fee. In this case, the investment adviser representative is in violation because the brochure must be delivered at least 48 hours before signing the contract there is no violation because firms and their representatives can always make their rules more stringent than the regulators' rules the investment adviser representative is in violation because the time period is 5 days there is no violation because the 5-day penalty-free withdrawal feature is only found in state law and does not apply to SEC-registered advisers

the investment adviser representative is in violation because the time period is 5 days (advisers' brochures requires a 5-day penalty-free period when the brochure is not delivered at least 48 hours prior to entering into the contract)

Twenty-five individuals have formed an investment company. They have heard wonderful things about you as an investment adviser and ask if you would be interested in managing their portfolio. You reply that you would be interested but will only take the account if you can structure a compensation arrangement that calls for you to receive a base fee plus 18% of the profits to the extent that the account's performance exceeds a standard benchmark. Under the Uniform Securities Act, this type of agreement is allowable if the investment company has net worth of at least in excess of $2.1 million or will place at least $1 million in assets under management with the IA the individual in charge of the investment company is a qualified investor a majority of the shareholders in the investment company are qualified investors the contract is signed by one of the investors who is an accredited investor

the investment company has net worth of at least in excess of $2.1 million or will place at least $1 million in assets under management with the IA

A client wants to purchase commercial paper. The licensed agent may indicate to the client that the security need not be registered if? (#) the minimum denomination is $50,000 the maximum maturity is 270 days it is rated in 1 of the 3 highest rating categories by a recognized rating agency it is in book entry form

the minimum denomination is $50,000 the maximum maturity is 270 days it is rated in 1 of the 3 highest rating categories by a recognized rating agency

Under the Uniform Securities Act, a registration statement of an issuer must contain all of the following information EXCEPT the names of all the owners of the company's stock the business of the issuer the identity of the officers and directors and the extent of their holdings in the issuer the current balance sheet and profit/loss statements

the names of all the owners of the company's stock

All of the following information is required on the SEC registration Form ADV EXCEPT the basis on which the adviser will be compensated the form of business organization the name of the adviser's business the personal securities holdings of the principals and associated persons of the firm

the personal securities holdings of the principals and associated persons of the firm

One of the exemptions from registration under state and federal law applies to investment advisers to private funds. One characteristic of all private funds is that they have assets of less than $150 million their advisers are exempt from filing reports on Form ADV they have no more than 100 investors they are not registered as investment companies

they are not registered as investment companies

A state-registered investment adviser would be permitted to make annual delivery of the brochure within 150 days of the end of the fiscal year use Part 2 of the Form ADV to satisfy the brochure requirement use Part 1 of the Form ADV to satisfy the brochure requirement deliver the brochure to a new client within 48 hours of entering into the contract

use Part 2 of the Form ADV to satisfy the brochure requirement

Under the Investment Advisers Act of 1940, a cash referral fee may be paid by an IA with no restrictions only if the referring party is registered as an IAR when a written agreement providing certain disclosures has been entered into between the IA and the third party under no circumstances

when a written agreement providing certain disclosures has been entered into between the IA and the third party

If an agent chooses to appeal an Administrator's order, the agent must file for review of the order with the appropriate court immediately within 180 days of order entry within 60 days of order entry within 30 days of order entry

within 60 days of order entry

The NASAA Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents contains an extensive list of prohibited practices, but concludes with the statement that the list is not inclusive. This means that even practices not specifically enumerated will be prohibited if they are in violation of the standards of ethical behavior. One such circumstance that may arise is an agent making an initial sale of shares of an open-end investment company in a quantity just below a breakpoint published in the fund's prospectus. In this case, the agent has violated the suitability standards by failing to explain the risks inherent in making an investment below a breakpoint recognized the limitations of the client's ability to invest any further sum of money would violate those ethical standards by failing to disclose that adding a small amount to the purchase would save a significant amount of sales charge must explain the procedure for taking advantage of rights of accumulation on future purchases

would violate those ethical standards by failing to disclose that adding a small amount to the purchase would save a significant amount of sales charge