Registration and Licensing Quiz 2 Missed Questions
All of the following statements are true about surety bond coverage required for a registration application EXCEPT: A. if there is a surety bond requirement, the Administrator is not permitted to accept cash or securities as a substitute B. in lieu of posting a surety bond, the Administrator must accept a deposit of cash in the appropriate amount C. in lieu of posting a surety bond, the Administrator must accept a deposit of securities in the appropriate amount D. the Administrator is permitted to waive the surety bond requirement for registrants whose net capital or net worth exceeds a stated dollar amount
A It is untrue that if there is a surety bond requirement, the Administrator is not permitted to accept cash or securities as a substitute. It is true that, in lieu of posting a surety bond, the Administrator must accept a deposit of cash in the appropriate amount, or a deposit of securities in the appropriate amount. The Administrator is permitted to waive the surety bond requirement for registrants whose net capital or net worth exceeds a stated dollar amount.
All of the following persons are excluded from the definition of a broker-dealer or are exempt from registration as a broker-dealer under the Uniform Securities Act, EXCEPT a firm: A. with an office in the State that effects trades exclusively with other broker-dealers B. with no office in the State that effects trades exclusively with trust companies and other financial institutions C. with no office in a State with a broker-dealer "de minimis" exemption that has a few clients in the State in the preceding 12 months D. with an office in that State that is a trust company that deals with the public
A A firm is not defined as a broker-dealer if it has no place of business in the State and transacts solely with issuers, other broker-dealers, and financial institutions. However, if a firm that effects securities trades has an office in a State, it is defined as a broker-dealer and must register in the State. Thus, the broker-dealer in Choice A must register
A Registered Investment Adviser that is headquartered in State A has offices in States A, B and C. The IARs in each State only solicit clients in that State. The RIA must comply with the recordkeeping rules of: A. State A only B. States A, B and C respectively covering the transactions occurring in each State C. the most restrictive State only D. the Securities and Exchange Commission
A The Uniform Securities Act provides that State-registered advisers with offices in many States only have to comply with the recordkeeping rules set forth by the Administrator of the State in which the Adviser is headquartered.
An investment adviser registered in State Y effects all of its portfolio transactions through a broker-dealer registered with the SEC and State Y. Regarding required filings from the broker-dealer in State Y, the Administrator of State Y: A. can only require the same filings as it requires from the investment adviser that does its portfolio trades through that broker-dealer B. can only require the filing of the broker-dealer's reports that are filed with the SEC C. can require the filing of any records demanded by the Administrator of State Y D. cannot require the filing of any records because of the federal supremacy of the broker-dealer filings that are required with the SEC
B Broker-dealers are registered federally with the SEC under the Securities Exchange Act of 1934 and, additionally, must register in each State where they have a physical presence or where they solicit securities business. As part of the National Securities Markets Improvements Act of 1996, it was made clear that because broker-dealers are regulated at the federal level, the States cannot require anything that is already required federally. Broker-dealer recordkeeping and reporting rules are set under Section 17 of the Securities Exchange Act of 1934 - so these rules prevail. All that the State can do is ask for a copy of any record or report that the broker-dealer keeps in accordance with the 1934 Act.
If a representative that transacts business in a State terminates employment with an investment adviser: A. the representative must notify the Administrator promptly B. the investment adviser must notify the Administrator promptly C. both the representative and the investment adviser must notify the Administrator promptly D. both the representative and the investment adviser must notify the Administrator within 30 days
B If a representative of an investment adviser terminates employment, the adviser must notify the Administrator promptly. Notice that this is different than the requirement for a broker-dealer, where both the terminated agent and the broker-dealer must notify the Administrator. Also note that this is different than the requirement for a federal covered adviser, where only the investment adviser representative must notify the State Administrator.
After successfully completing the Uniform State Law exam, an agent can solicit: I immediately II after registration has been granted by the Administrator III if the individual is affiliated with a broker-dealer IV if the individual has met minimum experience standards A. I and III B. II and III C. I, II, IV D. II, III, IV
B After passing the Uniform State Law exam, an agent can solicit when the registration becomes effective (not immediately). This occurs 30 days after the date the exam is passed, if no problems arise. To be registered as an agent, an individual must be affiliated with a broker-dealer. There is no experience requirement for an agent to be registered.
An employee of a company is being paid to assist in the sale of stock options to the company's employees and will receive a bonus based on sales results. This company employee: A. must register in the State as an Investment Adviser B. must register in the State as an Investment Adviser Representative C. must register as an Agent in the State D. is not required to register in the State
C An employee of an issuer who is compensated for selling that company's securities to its employees is defined as an "agent" under the Uniform Securities Act and must register in the State.
A Registered Investment Adviser with 25 clients in State A is expanding its operations to States B, C, and D. It currently has 6 clients in State B, but has not opened an office in that State. It currently has 3 clients in State C, where a small office has been opened. It has 5 clients in State D, and is considering opening an office there. In which States is the RIA required to register? A. State A only B. States B and C only C. States A, B, and C D. States A, B, C and D
C Because the RIA has offices in States A and C, it must register in those States. The "de minimis" exemption from registration only applies to advisers with no office in the State that have 5 or fewer clients in that State. Since the adviser has 6 clients in State B, it must register in State B. The fact that it has no office there has no bearing on this. On the other hand, the "de minimis" exemption applies to State D, since the adviser has no office there and has the maximum permitted number of clients (5) before registration is required.
A broker-dealer has a client who is a transient oil rig worker. The client has spent the last year on an oil rig in the Gulf of Mexico off the coast of Louisiana and has just gotten a job for 6 months on an oil rig in North Dakota. After completing the job, the client intends to move back to Louisiana. The broker-dealer is registered in the State of Louisiana but not in the State of North Dakota. Which statement is TRUE about the broker-dealer doing business with the client in the State of North Dakota? A. The broker-dealer can do business with the client in North Dakota without registering there because it is registered in Louisiana B. The broker-dealer can do business with the client in North Dakota without registering there because the client is not a permanent resident of North Dakota C. The broker-dealer must register in the State of North Dakota D. The broker-dealer must register in the State of North Dakota only if it makes recommendations to the client
C The "vacationing" customer exemption only applies to customers who are temporarily in another State, which, though not defined by State law, is generally viewed as a stay of less than 30 days. A client who is in North Dakota for 6 months is not vacationing. He or she is viewed as a resident of the State and the broker-dealer (and agent) must register in the State to continue doing business with the client.
The Administrator may deny or revoke an agent's license for which of the following reasons? I The agent has filed an application that is materially incomplete II The agent has made material misrepresentations to the Administrator III The agent has failed to post a surety bond IV The agent has failed to maintain minimum net capital A. I and II only B. III and IV only C. I, II, III D. I, II, IV
C There is no minimum net capital standard for agents - only for broker-dealers and investment advisers. The Administrator can deny or revoke an agent's license if the registration application is materially incomplete or if it contains material misrepresentations. The Administrator can also require the posting of a surety bond and the passing of an examination.
An individual who represents an issuer in selling securities of that issuer to the issuer's employees; and who does not earn a commission for this work; is defined under the Uniform Securities Act as a(n): A. agent B. broker-dealer C. issuer D. none of the above
D An agent is an individual who represents a broker-dealer selling any type of security - whether it is exempt or non-exempt. Individuals who represent issuers in trading exempt securities or in exempt transactions are not defined as agents. Thus, only an individual who represents an issuer selling non-exempt securities (for example, that issuer's common stock) to the public is defined as an agent. This person also does not fall under the definition of an agent; a broker-dealer; or an issuer
An agent of a broker-dealer located in the State of New York, that has its sole office in New York, wishes to sell to a customer in New Jersey. Which statements are TRUE? I The agent must be registered in the State of New Jersey II The agent must be registered in the State of New York III The broker-dealer must be registered in the State of New Jersey IV The broker-dealer must be registered in the State of New York A. I and II only B. III and IV only C. II, III, and IV D. I, II, III, IV
D If the agent wishes to sell to a customer in a neighboring State, both the broker-dealer and agent must be registered in that State, as well as in their "home" State unless an exemption is available.
An agent of a broker-dealer in State A has filed a registration application with State A that is not yet effective. During this time period, the agent may: A. solicit orders from customers in State A, but not in other States B. accept unsolicited orders from customers that reside in any State C. be compensated based on sales of securities made to customers D. answer questions from customers about information included on customer account statements and confirmations
D Individuals that are not registered as agents in the State cannot recommend securities to customers, nor can they accept customer orders - either solicited or unsolicited. They cannot be compensated based on sales of securities made to customers because they are not yet licensed to do so. They may perform clerical functions, such as answering customer questions about information on account statements and confirmations.
All of the following may be required to be filed with the Administrator EXCEPT: A. Advertising B. Sales Literature C. Circulars D. Customer Complaints
D The Administrator can require the filing of advertising, sales literature, pamphlets, prospectuses, form letters, etc. used by any registrant. There is no requirement to file customer complaints with the Administrator.
All of the following may be required by the Administrator to be licensed as a broker-dealer EXCEPT: A. Minimum Net Capital B. Minimum Surety Bond Coverage C. Minimum Competency As Demonstrated By Passing An Examination D. Minimum Time Periods Of Securities Business Experience
D There is no minimum time period requirement for a person to have been in the securities business to be licensed as a broker-dealer.
A fee payment is NOT required to be made when a(n): A. agent of a broker-dealer registers in a State for the first time B. new broker-dealer files as a successor to a firm that has ceased operations C. renewal registration is filed by an investment adviser by December 31st of that year D. notice filing is made in the State by a Federal Covered Adviser
If a new broker-dealer is created as a successor firm to an existing registered broker-dealer that has ceased business operations at some point during the year, then the State does not require a new filing fee to be paid. The fee is paid at the initial registration and for every annual (on December 31st) renewal registration thereafter. When the successor firm files its year-end registration renewal, the full fee for the next year must be paid.