Series 66

7 Exclusions from the definition of investment advisers under state law (Uniform Securities Act):

1) Any bank and bank holding company, savings institution, or trust company. Unavailable for credit unions and inv. adviser subsidiaries 2) Any lawyer, accountant, teacher, or engineer whose advice is solely incidental to the practice of their profession 3) Any broker-dealer or registered rep of b/d's whose services is solely incidental to the conduct of its business 4) Publishers may qualify, must meet: a) publication must be of a general and impersonal nature b) bona fide, or genuine, in that it contains disinterested commentary and analysis as opposed to promotional c) of general and regular circulation, in that it is not timed to specific market activity or events 5) Certain individuals who are employed by investement advisers (representatives) 6) Any person who is a federal covered adviser 7) Any other person the Administrator specified is included

Exemption for federal covered securities covers what?

1) securities issued by an open-end or closed-end investment company, UIT, or face-amount certificate compnay registered under the Investment Company Act of 1940 2) securities listed on the NYSE, Nasdaq, and several other U.S exchanges. Rights/warrants or senior securities (bonds/pref stk) also considered federal covered 3) securities offered pursuant to the provisions of Rule 506(b) or 506(c) of Regulation D under the Securities Act of 1933 (private placement transactions exemption) 4) most securities exempt frrom registration under the Securities Act of 1933 (Muni bonds are exempt from registration in every state it sells except its own. Ex: a bond issued by the city of Columbus OH is a federal covered security everywhere but in the state of Ohio)

How often are 12b-1 fees subject to approval?

12b-1 fees are subject to annual approval by a vote of the board of directors of the company and of the directors who are not interested persons (outside directors) of the company.

Under the Uniform Securities Act, the statute of limitations for criminal violations of the Act is:

5 years

A customer recently purchased shares of an SEC-reporting issuer through a Regulation D private placement. From the date of purchase, how long must the customer wait before being permitted to re-sell the shares?

6 months. Restricted shares of an SEC-reporting issuer have not been registered with the SEC and must be held for six months before the purchaser can resell them. However, if the issuer is a non-reporting issuer, the shares must be held for one year before the purchaser is permitted to resell them. If restricted stock is being sold on an exchange, the selling shareholder must also comply with Rule 144, which limits the number of shares that can be sold in a 90-day period.

A letter of intent for a mutual fund purchase may be backdated to include previous investments in the same fund during the past:

90 calendar days

What is a Section 457 plan and how is it taxed?

A Section 457 plan is a type of retirement plan used by many public sector workers. These 457 plans grow on a tax-deferred basis and are generally subject to the same contribution limits as 401(k) and 403(b) plans. All have similar tax features and contribution allowances. The difference between the plans is the type of employee who may use them. A 401(k) plan is used by for-profit employees, a 403(b) plan by nonprofit employees, and a 457 by some local government workers.

What are the justifiable cause for denial of an application for registration as a securities professional?

A conviction for any felony or securities-related misdemeanor within the past 10 years is justifiable cause

It would be most accurate to refer to a 12b-1 charge as

A fee to cover distribution expenses Some funds charge ongoing fees under Section 12b-1 of the Investment Company Act of 1940. These fees are deducted annually and are used to pay for the cost of marketing and distribution. It is not a deferred sales charge because those only refer to fees charged when the investor liquidates shares. No-load funds are permitted to have a 12b-1 charge as long as it does not exceed 0.25%.

Under the USA, when is registration effective?

A registration is effective at noon 30 days after the application has been filed if there is no denial or stop order in process. Registrations of securities professionals expire on December 31, unless renewed. If an amendment to the registration is subsequently filed, the registration becomes effective 30 days after the amendment is filed; filing the amendment starts the process anew.

Under the Uniform Securities Act, an Administrator who believes a violation has occurred or is about to occur may take what actions?

Administrators have the power to issue cease and desist orders, apply to a court for a temporary or permanent injunction, or apply to a court for restitution to investors or to have the court appoint a receiver for a violator's assets. In issuing the cease and desist order, the Administrator may do so with prior notice and hearing or may issue the order summarily (without such notice and hearing).

For Federal Covered Advisers, who must register with the SEC regardless of AUM?

Advisers to investment companies Advisers to business development companies Advisers that are not regulated by the state in which they operate in (Wyoming only) Pension Consultants that provide advice to employee benefit plans that have assets of at least $200MM Internet advisers that provide advice through an interactive website Advisers to private funds with assets of $150+ New advisers that believe they will be eligible for SEC registration within 120 days of registering Multi-state advisers that would otherwise be required to register in 15 or more states

Under the Uniform Securities Act, unless renewed, the registration of which securities professionals expires on December 31?

Agents Broker-dealers Investment advisers Investment adviser representatives

Who is considered an associated person of a broker-dealer?

An associated person is either an officer or a broker-dealer employee who represents the broker-dealer in soliciting the purchase or sale of securities. Associated person also includes any individual authorized to accept customers' orders for the broker-dealer.

If Ann, an agent with ABC Securities, Inc., sold a security to a federal covered investment company, this sale would be considered an example of

Ann's sale of the security to a federal covered investment company is an example of an exempt transaction, not an exempt security. These transactions are exempt from the advertising and sales literature filing requirements under the Uniform Securities Act.

How often must an adviser give an updated version of its brochure?

Annually. Delivery must take place within 120 days after the end of the advisers fiscal year

When does registration by filing become effective?

At the same time as the federal registration, provided no stop order has been entered by the SEC or the Administrator. In addition, the required information and documents must have been on file for at least five days and the registration fee must have been paid. If the federal registration became effective at an earlier time, the state registration becomes effective when all required conditions are met.

A security is being registered with the state Administrator by the issuer using registration by qualification. When investors purchase the security from the issuer, when must the prospectus be delivered?

Before the sale

Who is required to have a business continuity plan (BCP)?

Both broker-dealers and investment advisers

When an agent ends his employment with a broker-dealer, who must notify the Administrator about the agent's employment and registration status?

Both the broker-dealer and the agent are responsible for notifying the Administrator when an agent's employment is terminated.

What are the fee structures between Class A, B, C and R shares?

Class A shares have a front-end load, but a low- or no asset-based sales charge. Class B and C shares don't have a front-end load but do have a higher asset-based sales charge. Class R shares can have a 12b-1 charge as high as 0.60%, more than Class A, but less than Classes B and C.

Out of Open-end investment companies, ETFs, ETNs, and UITs, which is NOT registered with the SEC under the Investment Company Act of 1940?

ETNs register as debt securities under the Securities Act of 1933

Under the Securities Act of 1933, what are the exempt securities and exempt transactions?

Exempt securities are: Securities issued by the U.S. government and U.S. government agencies Securities issued by municipalities Securities issued by non-profit organizations Securities issued by domestic banks and trust companies (including savings and loan associations, but not bank holding companies) Securities issued by small business investment companies Securities issued by railroads Securities issued by religious, educational, or charitable institutions Short-term corporate debt issued by a corporation that has a maximum maturity of 270 days (CP) Exempt Transactions are: Reg D Rule 506 (Private placements/non-public offering) sold to no more than 35 non-accredited investors (accredited unlimited). Accredited = net worth of at least 1mm, gross inc of 200k (300k couples). Might need a purchaser representative Rule 144 - sale of restricted securities and control securities\ Rule 147 - intrastate exemption (80% operations in state, 100% purchasers are principal residents in state) Reg A - Small-issue exemption from SEC registration if capital raised is under: Tier 1 $20mm, Tier 2 $75mm

When is form ADV required to be filed for both federal covered advisers and state registered investment advisers?

FCA - Form ADV with SEC within 90 days of fiscal year end RIA - Form ADV within 90 days of calendar year end

Investment Adviser exemptions

Federal law exemptions: Intrastate advisers & advisers to insurance companies State law exemptions: those who have no place of business in the state but are registered in another state, provided thier clients in the state are: broker dealers, other investment advisers, institutional investors, existing clients who are not residents but temporarily in state, limited to 5 or fewer clients who resident in the state during the preceding 12 months, any others the administrator exempts by rule or order

Under Rule 147, securities sold within the borders of one state are exempt from...?

Federal registration Rule 147, also known as Intrastate Offerings, are exempt from federal registration. However, state registration may be required.

Although private fund advisers and venture capital fund advisers are exempt from registration requirements, what must they do?

File Form ADV Part 1A with the SEC within 60 days of their first reliance on the exemption. Similar to a registered investment adviser, an ERA must amend its ADV at least annually within 90 days of its fiscal year or promptly if any material information changes.

Under SEC Release IA-1092, what is the definition of an investment adviser?

Financial planners, pension consultants, and others who offer investment advice as part of their financial practices.

In defining an investment adviser under SEC Release IA-1092, what are the 3 criteria's to meet the business standard?

First, they must hold themselves out (advertise) as persons who provide investment advice. Second, they must provide such advice on a frequent or regular basis, but it need not be their principal business activity. Third, they must receive separate or additional compensation for doing so.

If an investment adviser uses a social media site as a form of advertising, all records of its use must be maintained for at least:

Five years (any advertisement)

the Uniform Securities Act states that investment advisers must keep records for

For state-registered investment advisers, records must be kept for a total of five years. For the first two of those years, they must be located in the principal office of the adviser.

When must institutional investment managers file a Form 13F

Form 13F is a quarterly report that must be filed by managers whose control exceeds $100mm on the last trading day of any month. Must be filed with the SEC within 45 days of the end of each calendar quarter

What is Form ADV, its purpose and the different parts?

Form ADV is the general registration form for Investment Advisers. Part 1: Disclosure of information about an advisers business, ownership, clients, employees, business practices, affiliations, and any disciplinary events Part 2: Disclosure of requirements for an IA's brochure (describes overall business and conflict of interest) Part 2A - Appendix 1 - for wrap fee programs part 2B - Brochure supplement w/ resume of supervised persons * A state registered IA must deliver the brochure not less than 48 hours prior to entering into any contract OR at time of entering the contract if client has right to terminate within 5 days

An individual is dually registered with her broker-dealer as both an agent and IAR. Recently, she moved and updated her legal name. Regarding the updating of the individual's uniform forms, what is needed?

Form U4 must be updated in the CRD and IARD within 30 days. Material changes to a registration (e.g., name change) must be updated promptly (i.e., within 30 days). Both agents and IARs register using Form U4; however, agents file with the Central Registration Depository (CRD) and IARs file with the Investment Adviser Registration Depository (IARD). Form ADV is used for the registration of an advisory firm, not its employees. Form U5 is filed when a person leaves the industry and is no longer registered. (13371)

When is an audited balance sheet required by an adviser?

Has custody of client funds or securities Has full discretionary authority over a client's account Solicits prepayment of advisory fees - For federal-registered advisers: more than $1,200 in fees per client, six months or more in advance - For state-registered advisers: more than $500 in fees per client, six months or more in advance

What are the exempt transactions under the Uniform Securities Act? (state)

Isolated nonissuer transactions (occur infrequently) Unsolicited brokerage transactions (initiated by the client) Underwriter transactions Bankruptcy, guardian, or conservator transations Institutional investor transactions Limited offering transactions (private placements, directed at not more than 10 persons other than institutional investors during the previous 12 consecutive months) Preorganization certificates (only if: no commission, number of suscribers does not exceed 10, no payment is made by subscriber) Transactions with existing security holders (convertibles, rights, warrants)

Which of the following mutual fund share classes generally has a 1% CDSC that is eliminated once the shares have been held more than one year?

It is the Class C shares that have no front-end load, but they do have a 1% CDSC for a period of one year.

Who must a consent to service of process be filed for registration?

Its required by IARs, investment advisers, broker-dealers and agents. The consent to service of process is required for all initial registrations with the Administrator. It appoints the state Administrator as attorney for the registrant so that legal papers may be properly served. On the exam, the consent to service of process is considered to be a permanent document not subject to annual renewal.

How are mutual funds priced?

Mutual fund pricing is based on the forward pricing rule. That is, the price is based on the next calculated net asset value per share after the order is received. That calculation is always done after the 4:00 pm ET close of the market. Therefore, an order received anytime on Wednesday before 4:00 pm will be executed based on the NAV calculated at that time. That 4:00 pm price will be shown in the financial section of Thursday morning's newspapers. Remember, when purchasing shares, the price is always the POP.

Does a unit investment trust have a board of directors?

No - it has a board of trustees. A UIT must follow a stated investment objective (as must any investment company) and does not charge a management fee because it is not a managed portfolio.

What are the three requirements for a preorganization subscription to qualify as an exempt transaction?

No payment may be made by any subscriber. No commission may be paid to anyone for soliciting potential subscribers. No commission may be paid to anyone for soliciting potential subscribers.

If an insurance company issues stock in a state it does not offer policies, would they ben exempt from registration?

No. If they were authorized to do business in the state, the securities offering would be exempt.

What are the days required for a broker-dealer to provide a prospectus in different scenarios?

Non-listed IPO - 90 days Non-listed follow-on offering - 40 days An IPO to be listed on an exchange - 25 days An exchange-listed, follow-on offering - no requirement (already providing financial reports to shareholders, 10-k etc.)

When doe a security's registration expire?

One year after its effective date

Do State, Federal or both registered advisers have to send audited balance sheets to clients they hold custody of assets for?

Only state-registered advisers. Additionally, state laws require it if they collect fees more than $500 for six or more months in advance.

If an investment adviser representative terminates employment with a federal covered investment adviser and then registers with a different federal covered investment adviser in the state where the individual has an office, who has to notify the Administrator?

Only the investment adviser representative A federal registered investment adviser is exempt from registration at the state level and therefore has very little contact with the state. If you go to work for a federal registered investment adviser, it becomes your duty to notify the state securities Administrator that you are working there, as well as when you terminate.

How quickly must a broker-dealer notify the Administrator if material information relating to that broker-dealer's registration should change?

Promptly

When must the Administrator be notified if an agent's employment is terminated by his broker-dealer?

Promptly

If an IA has custody of a clients funds, how often must they send account statements?

Quarterly that indicates the amount of funds, a list of each security, a record of all transactions, and any fees deducted by the adviser

What are the record keeping requirements of a broker dealer?

Recordkeeping requirements for broker-dealers are three years, and partnership articles and any amendments, articles of incorporation, charters, minute books, and stock certificate books of an investment adviser and of any predecessor shall be maintained in the principal office of the investment adviser and preserved until at least three years after termination of the enterprise. There are no recordkeeping requirements for agents or IARs.

When can a security be registered by qualification?

Registration by qualification is used when either a security's federal registration has already become effective or when no federal registration will be filed—as is the case for intrastate offerings. Registration becomes effective only when determined by the Administrator

How long can a rescission occur and what are the specifics?

Rescission must occur by the earlier of two years after the discovery of the facts or three years after the occurrence. The offer of rescission is based on the price originally paid for the security plus interest at a rate determined by the Administrator (less any income received from that 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. Criminal penalties for violations of the USA are punishable by fines of up to $5,000, imprisonment for up to three years, or both.

To be exempt under Rule 506(b) of Regulation D of the Securities Act of 1933, the sale of securities must be..

Rule 506(b) of Regulation D provides a private placement exemption for securities that are sold to no more than 35 nonaccredited investors. There is a limit to neither the number of shares that can be issued nor the number of accredited investors who may purchase the shares. It is Rule 506(c) of Regulation D that permits advertising as long as the issue is sold exclusively to accredited investors.

Who must file a Form PF?

SEC-registered advisers with at least $150 million in private fund assets under management. Form PF is the form used by those private fund managers who are registered with the SEC and whose private fund AUM reaches or exceeds the $150 million threshold. Exempt reporting advisers are, as the term implies, exempt from reporting. State-registered advisers don't report on the form because, among other things, if they reached the $150 million mark, they'd have to register with the SEC.

When a person acquires ownership of more than 5% of a voting class of a company's equity securities registered under the Securities Exchange Act of 1934, he is required to file a:

Schedule 13D, commonly referred to as a beneficial ownership report.

How often do investment companies have to send financial reports to shareholders?

Semiannually. Investment company financial reports must be sent twice a year and must include a portfolio list, an income statement, a statement of compensation paid to the board of directors and the advisory board, and a statement of the total dollar amount of securities bought and sold during the period. One of these reports must be the audited annual report.

When an IAR's association with a federal covered adviser begins or ends, who notifies the Administrator?

The IAR

When must a federal covered adviser file its annual updating amendment to its Form ADV?

The annual updating amendment to Form ADV must be filed within 90 days of the adviser's fiscal year-end.

Prosperity Financial Investments (PFI), a broker-dealer with its principal office in State A, just applied for registration in State C. Which of the following individuals registered as agents in State A will be automatically registered as agents in State C?

The automatic registration provision of the USA applies to those officers, directors, or partners functioning as agents for the BD (or IARs if the question is about an investment adviser). The provision does not apply to any agent, just those who are officers, directors, or partners. The provision does not apply to any officer, etc., only to those who function as agents (or IARs if appropriate to the question).

What is a benefit of a Transfer on Death (TOD) account designation?

The beneficiary avoids probate. A transfer on death (TOD) account will pass to the beneficiary (or beneficiaries) upon the death of the account owner. The benefit of a TOD designation is that the transfer of ownership of the account's assets avoids probate. However, assets in a TOD account are still subject to the estate tax. This form of account is not considered a joint account since the beneficiary only receives control of the account after the death of the original owner.

When sharing in the profits of a customer's account, whose approval is required?

The client and the broker-dealer carrying the account are required to approve any account in which both the agent and the customer share in the profits and losses. The sharing must be proportionate to the capital at risk.

What is the document that provides the Administrator with limited power of attorney to accept documents issued in investigation of registrants in the Administrator's state?

The consent to service of process conveys to the state Administrator the authority to accept a subpoena that has been filed against an agent.

What must be included in the description of charts, tables, formulas, investment systems or other devices to clients?

The difficulties and limitations of using the system must be included

Those persons meeting the Uniform Securities Act's definition of a broker-dealer in a state must, unless otherwise exempted, register in that state. When is the initial registration and expiration of the registration of a broker-dealer?

The effective date of an initial registration is at noon on the 30th day after receipt of a completed application; expiration, unless renewed, is each December 31st.

When is the effective date when registering an issue under qualification?

The effective date of registration is set by the Administrator

For a qualified dividend, what's the minimum and maximum tax rate?

The minimum rate is 0% and the maximum rate is 20%. For U.S. taxpayers in the lowest tax bracket, qualified dividends are not taxed. Only taxpayers in the highest brackets are taxed at the maximum rate of 20% on their qualified dividends. Some investors in the middle tax brackets are taxed at 15%. Bond interest payments, not dividends, are taxed at a person's ordinary income rate.

If an Administrative action is taken to suspend or postpone a security registration, what can the registrant do?

The registrant must be given prior written notification and be allowed to submit a written request for a hearing, which must be held within 15 days of the request.

What is the difference between Rule 506(c) and Rule 506(b) of Reg D?

Two key differences between 506(c) and 506(b) are that 506(b) offerings do not allow for general advertising/solicitation and the issuer may sell to an unlimited number of accredited investors, but no more than 35 non-accredited (yet still sophisticated) investors.

Exempt securities under the USA (state)

U.S and CAD government and muni securities Foreign govt securities Depository institutions Insurance company securities Public utility and common carrier securities Securities issued by nonprofit organizations Securities of employee benefit plans Certain money market instruments (CP & bankers acceptance)

Under the USA, private placements can be offered to how many noninstitutional investors in how many months?

Under state law, a private placement can be offered to no more than 10 noninstitutional investors in 12 consecutive months.

What transactions can the Administrator revoke under the USA?

Under the USA, the Administrator can revoke any transaction exemption, except those involving federal covered securities. When it comes to revoking a security's exemption, the only two where the Administrator has the power to do so are those issued by nonprofit organizations and in connection with an employee benefit plan.

State record keeping requirements are...?

Unless otherwise directed by the administrator, 5 years w/ first 2 years at principal office

What is the difference between viaticals and life settlement alternatives investments?

Viaticals apply to those with a terminal illness and a life expectancy of 24 months or less regardless of thier age. Life settlemtns apply to those who, although generally at least 65 yrs old, are in decent health with a life expectancy of at least 2 years

If the Administrator has summarily suspended an investment adviser representative's registration, the registrant may request a hearing by written request and the hearing will be granted within...?

When an Administrator summarily suspends a registration, the registrant has a right to a hearing if the request is made in writing. The hearing must be granted within 15 days of receipt of the request. Registration of professionals takes place at noon of the 30th day, and an appeal for review of an Administrator's order must be filed within 60 days.

When does an out-of-state adviser with no office in state not need to register under the USA?

When their only clients are insurance companies, registered investment companies, banks or other institutional investors, broker-dealers, and other investment advisers.

If an investment adviser makes material changes to its brochure, when does the adviser need to provide a summary of the changes to its clients?

Within 120 days of the year-end. This is completed as a part of the adviser's registration renewal.

Are affiliated persons eligible to be on the Board of Directors?

Yes. As many as 60% of the board members may be affiliated persons (the law states that at least 40% must be noninterested parties). Affiliated persons may not have any dealings with the investment company (outside of contractual obligations and the purchase or redemption of shares of the investment company), such as buying securities, furniture, real estate, or other property from the company or selling such property to the company.

Would a broker-dealer registered with the SEC have to register in a state w/ no office if they have only 4 retail clients in that state?

Yes. Excluded from the definition of broker-dealer under the Uniform Securities Act is a broker-dealer with no place of business in a given state, whose clientele consists exclusively of other broker-dealers, financial institutions (banks, investment companies), or existing customers who are temporarily in the state. However, once the BD has even one retail (noninstitutional) client who resides in the state, registration is required. There is no de minimis exemption for broker-dealers (unlike investment advisers).

For those who violate the federal securities act, what is the time that a complaint can be actioned?

action must be brought one year from the discovery of the false statement or omission, or from the time such discovery should have been made through the use of reasonable diligence, but not more than three years after the occurrence. criminal liabilities are subject to a fine up to $10,000 and imprisonment for up to 5 years or both

Under the Uniform Securities Act, the Administrator may require a broker-dealer to post a surety bond of...?

an amount not in excess of that set by the SEC. Unlike investment advisers where the USA specifies posting a surety bond in the amount of $35,000, the Uniform Securities Act does not specify an amount for broker-dealers. However, the NSMIA states that the Administrator may not require a broker-dealer to be bonded in an amount above that set by the SEC. Furthermore, bonds will not be required of broker-dealers that maintain a specified net capital.

The Investment Company Act of 1940 allows a majority vote of the outstanding shares of a registered investment company to authorize the fund to do what?

approve changing from an open-end to a closed-end company changing the investment objectives of the fund deciding to cease to be an investment company.

What are the three primary expenses involved with brokerage accounts that are not included in the fee disclosure template?

commissions; markups and markdowns; and advisory fees for those firms that are also registered as investment advisers.

How are dividends and capital gains charged for REITs?

dividends at ordinary income rates. capital gains distributions are treated as long-term capital gain like mutual funds

An investment adviser to a private fund wishes to qualify for the exemption offered under the Uniform Securities Act when the fund has no more than 100 investors. In order to qualify...

every investor must have either at least $1.1 million in assets managed by the investment adviser or a net worth, excluding the value of the primary residence, in excess of $2.2 million. The 100 or less investors is technically known as advising a 3(c)(1) issuer. In that case, all the investors must be qualified by meeting the net worth or assets managed by the adviser as stated. The $5 million is the requirement under federal law for an adviser seeking the federal exemption for a 3(c)(7) fund, which is not limited to 100 investors. Conviction of a felony within the past 10 years, not 12, will generally make one a "bad actor" and cause the exemption to be forfeited. Private fund advisers must keep the AUM under $150 million, not $110 million.

What are the three requirements from The Investment Company Act of 1940 for a mutual fund?

have a minimum of $100,000 in net assets prior to commencing a public offering. Reports must be sent to shareholders on a semiannual basis. No fund is permitted to own more than 3% of the outstanding shares of another registered investment company.

When can a security be registered by coordination?

if the same offering is being registered under the Securities Act of 1933. While the state registration statement is coordinated with the federal registration, it doesn't need to be filed at the same time. Becomes effective at the same time as federal registration, provided no stop order. Must be on file w/ Admin for at least 10 days, along w a statement of min&max offering px's, max underwriting discounts, and commissions for at least two days.

When can an adviser use the term investment counsel?

if two conditions are met: rendering investment advice must be their principal business, and a substantial part of that business must be providing investment supervisory services—that is, continuous advice based on the individual needs of each client.

What are the securities that if an individual representing an issuer in the sale of that issuer's security would not defined as an agent?

issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state; issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency of the foregoing; any security issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor; a promissory note, draft, bill of exchange, or banker's acceptance that evidences an obligation to pay cash within nine months after the date of issuance, is issued in denominations of at least $50,000, and receives a rating in one of the three highest rating categories from a nationally recognized statistical rating organization; or any investment contract issued in connection with an employee's stock purchase, savings, pension, profit-sharing, or similar benefit plan if the Administrator is notified in writing 30 days before the inception of the plan.

What are the specifications of Rule 506(c) of Regulation D?

issuers may raise an unlimited amount of capital and they may solicit all types of investors; however, the issuer can only accept accredited investors. general advertising/solicitation is allowed, but only accredited investors may purchase the securities.

How does a Federal Covered Adviser register, and how long does it take?

n FCA begins its registration process by filing Form ADV with the SEC. An adviser does this electronically through the Investment Adviser Registration Depository (IARD). Within 45 days of the filing, the SEC will either grant registration or institute proceedings to determine whether registration should be denied. If it's denied, the applicant must be notified of the grounds for denial and be provided with an opportunity for a hearing.

When can an agent of a broker-dealer and a client share in an account?

n order to share in a client's account, an agent needs to obtain approval from the client and a supervisor of the broker-dealer. In addition, the agent can only take profits in proportion to his investment in the account. (15411)

When must an access person of an investment adviser report his holdings, and how up to date must the holdings report be?

no later than 10 days after becoming an access person and at least every 12 months thereafter. When the holdings report is filed, the information must be current as of a date that's no more than 45 days before the report is filed. Access persons must also file transaction reports to disclose their purchases and/or sales. Transactions reports must be filed within 30 days after the end of each calendar quarter.

An issuer wishing to comply with Regulation D of the Securities Act of 1933 must file Form D with the SEC...

no later than 15 days after the first sale.

e revocation or suspension of a federal covered investment adviser's registration under the Investment Advisers Act of 1940 may be appealed to who and how long?

o the U.S. Court of Appeals serving the district where the order was issued within 60 days of its issuance.

Registration statements for securities under the Uniform Securities Act are effective for...

one year from the effective date.

What are the exclusions to the definition of investment adviser under Investment Advisers Act of 1940?

publishers of bona fide publications, such as financial newsletters, on a paid-subscription basis with regular circulation are excluded as long as the publication does not contain recommendations of specific securities (Non-market driven advice) persons whose advice relates solely to issues distributed or guaranteed by the U.S. government lawyers, accountants, teachers, and engineers are excluded, but that is only the case when the advice is given as an incidental part of their professional practice. A lawyer charging a separate fee for advice cannot claim that it is incidental.

How often are investment companies required to file financial reports?

semiannually additionally, they must file annual reports with the SEC

A state-registered investment adviser with discretionary authority over client accounts discovered on Monday that the firm's net worth is below the required amount. He must notify the administrator and then file a report no later than...?

the close of business Tuesday and close of business Wednesday. Unless otherwise exempted, every investment adviser registered or required to be registered under the act shall, by the close of business on the next business day, notify the Administrator if such investment adviser's net worth is less than the minimum required. After transmitting such notice, each investment adviser shall file by the close of business on the next business day a report with the Administrator of its financial condition.

Exemptions from registration under the Securities Act of 1933 (federal)

transactions by any person other than an issuer, underwriter, or dealer (basically private transactions b/w individuals) transactions by an issuer that do not involve a public offering (private placement under reg D)

An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients...?

when informed by the investment adviser that the representative's registration is effective.