Uniform Securities Act-
Michael Michaelson has an MBA in finance and has taught classes at a local college for the past 15 years. He has decided to use his knowledge and acumen in the private sector and registers in the State as an investment adviser. His business will be creating financial plans and implementing them for clients. Michael requests a waiver from the State Administrator from having to pass the Series 65/66 exam based on his educational and teaching background and receives it. He registers as an IA in the State. He wishes to publish an advertisement for his new business. Michael can state which of the following in the advertisement? A "Because of my extensive finance background, I have been approved by the State to sell financial plans without having to take the examination required of other advisers" B "My fee schedule, which is non-negotiable, is comparable to that charged by other advisers that do not have my extensive finance background" C "As a registered investment adviser in the State, I have been certified to create financial plans" D "I have 15 years of experience as an investment adviser in the State"
"My fee schedule, which is non-negotiable, is comparable to that charged by other advisers that do not have my extensive finance background"
Which of the following are defined as "issuers" under the Uniform Securities Act? I For corporate securities, the corporation itself is the issuer II For collateral trust certificates, the person performing the functions of depositor under the Trust agreement is the issuer III For equipment trust certificates, the corporation is the issuer IV For oil and gas program fractional interests, the owner of the minerals is the issuer
1 II III
In most States, an agent may be associated at one time with no more than: A 1 broker-dealer B 2 broker-dealers C 3 broker-dealers D 4 broker-dealers
1 broker dealer
Under NASAA rules for State-registered advisers, transactions must be recorded in customer account records no later than: Incorrect answer A. You did not choose this answer. A trade date B settlement date C 10 business days following the end of the month in which the transaction was effected D 10 business days following the end of the quarter in which the transaction was effected
10 business days following the end of the quarter in which the transaction was effected
A block trade is a trade of at least: A 1,000 shares B 10,000 shares C 100,000 shares D 1,000,000 shares
10,000
if a registered investment adviser takes custody of client funds or securities and deposits them with a qualified custodian, which statement is NOT true? A The customer must be notified promptly in writing of the qualified custodian's name, address and the manner in which the securities are held B The customer must be sent, at least quarterly, an account statement identifying all positions held and all transactions in the account during that period C All client funds and securities positions must be verified at least annually by a certified public accountant on a surprise basis D A written annual statement must be sent to customers detailing where the client funds and securities are being kept
A written annual statement must be sent to customers detailing where the client funds and securities are being kept
Which of the following statements is (are) TRUE regarding the conduct of customer accounts? I An agent may not personally guarantee a customer's account against loss II An agent may not recommend the use of options to hedge a customer's account against loss III Agents may not share in the gain or loss in a customer's account
An agent may not personally guarantee a customer's account against loss III Agents may not share in the gain or loss in a customer's account
Which of the following is NOT defined as a "broker-dealer" under the Uniform Securities Act? A An agent of a broker-dealer who effects securities transactions B A person who effects securities transactions for its own account C A person who effects securities transactions for the account(s) of others D An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer
An agent of a broker-dealer who effects securities transactions Under the Uniform Securities Act, an "agent" of a broker-dealer is an individual associated with a broker-dealer, who represents the broker-dealer in effecting securities transactions. An agent is not a broker-dealer. A "broker-dealer" is defined as a person that engages in the business of effecting securities transactions for the account of others; or a person that engages in the trading of securities for its own account. If an agent of a broker-dealer engages in so-called "private securities transactions," a prohibited practice has occurred. All securities transactions effected by agents must be known to the broker-dealer; must be recorded on the books of the broker-dealer; and must be supervised by the broker-dealer. If the agent performs a "private securities transaction" that is not known to the broker-dealer, then that agent has, himself, become a broker-dealer under this definition (a so-called "statutory" broker-dealer). As such, he or she would have to register in the State as a broker-dealer before effecting such a transaction.
An agent of a broker-dealer is registered in State A. The agent has a customer who lives in State A who will be going to college in State B. The agent is not registered in State B. Which statement is TRUE about the agent doing business with the student while he or she is in State B? A The agent cannot do business with the student in State B unless the agent registers in that State B The agent can do business with the student in State B without having to register in State B C The agent can only accept unsolicited transactions from the student in State B if the agent is not registered in State B D The agent can only perform up to 5 transactions a year for the student without having to register in State B
B The agent can do business with the student in State B without having to register in State B
A federally registered investment adviser makes a subsequent material change to its manner of business operations. This event: A is not required to be reported to the Administrator of each State where the adviser does business B must be reported promptly to the Administrator of each State where the adviser does business C must be reported within 30 days to the Administrator each State in which the adviser does business D must be reported to the Administrator when the adviser files its annual ADV Part 2 update with the State
B must be reported promptly to the Administrator of each State where the adviser does business
An Investment Adviser has developed a proprietary investment selection program that is based on a statistically validated and proven algorithm. The algorithm minimizes buy and hold investment strategies, and uses multiple data points to determine when to buy and sell the same security position intraday. The program has been tested and shown to produce consistent 20% returns. The Investment Adviser has a client base of around 100 individuals, with an average account size of $1,000,000. The clients range in age from 35 to 75. The Investment Adviser has discretion over these accounts and puts all of its clients into the automated trading program that it has developed. Why is this a violation of NASAA rules? Because the use of automated trading programs is a violation of NASAA rules B Because automated intraday trading of securities will result in excessive trading and is a churning violation C Because the automated trading strategy has not been shown to be suitable for each of the Investment Adviser's clients D Because the Investment Adviser must register as a Broker-Dealer in order to implement an automated trading program
Because the automated trading strategy has not been shown to be suitable for each of the Investment Adviser's clients
State registration of non-exempt securities is a requirement of the: A Securities Act of 1933 B Securities Exchange Act of 1934 C Blue Sky Laws D Uniform Transfer of Securities Act
Blue Sky Laws
An investment adviser has been formed and the firm and its representatives file their first registration with the State on April 30th. On May 1st of the following year, the firm files renewal registrations for itself and its representatives. Which statement is TRUE under the Uniform Securities Act? A Both the investment adviser's registration and the investment adviser representatives' registrations are out of compliance B Both the investment adviser's registration and the investment adviser representatives' registrations are in compliance C The investment adviser's registration is in compliance but the investment adviser representatives' registrations are out of compliance D The investment adviser's registration is out of compliance but the investment adviser representatives' registrations are in compliance
Both the investment adviser's registration and the investment adviser representatives' registrations are out of compliance
Which of the following would be defined as a broker-dealer in State A? A The municipal bond department of a bank located in State A B A person who gives advice about investing in securities in State A C A broker-dealer located in State B who has an existing active customer who moves to State A D An agent of a broker-dealer who effects trades in securities in State A
C A broker-dealer located in State B who has an existing active customer who moves to State A
What constitutes "taking custody" under the NASAA rule for investment advisers? A An employee of an advisory firm who is given discretionary authority to trade the account by a client B A client who signs a power of attorney, giving the adviser the right to trade on the client's behalf C An employee of an advisory firm acting as a trustee for a firm D An introducing broker-dealer receiving checks made out to the carrying broker-dealer that are to be deposited at a broker-dealer
C An employee of an advisory firm acting as a trustee for a firm
Who must register in a State as an investment adviser? A A person selling a subscription to a service that gives timing of buy and sell orders for specific investment company securities that are exchange traded B An investment adviser representative who has been registered with an investment adviser for more than 5 years C An on-line broker-dealer who offers a "no maximum number of trades" program for a 90-day period for a set dollar amount D A bank that is offering "Raise-Your-Rate" Certificates of Deposit for a set promotional period
C An on-line broker-dealer who offers a "no maximum number of trades" program for a 90-day period for a set dollar amount
An institutional buyer is defined under the Uniform Securities Act as: A an institution with at least $100 million of assets available for investment B an accredited investor as defined under Rule 506 of Regulation D of the Securities Act of 1933 C any person defined by the Administrator by rule or order D any institution that is regulated by the Federal Reserve, SEC, or State Insurance or Banking Commissioners
C any person defined by the Administrator by rule or order
A customer account that has a high level of trading activity, accompanied by high commission costs and inferior investment performance is permitted under the Uniform Securities Act: A if the trades were unsolicited B if the customer authorizes each trade in writing prior to execution C if the trades are consistent with the customer's investment objectives and needs D under no circumstances
C if the trades are consistent with the customer's investment objectives and needs
Under the NASAA Statement of Policy on unethical practices, third party research reports may: A not be given to customers B only be used internally by the investment adviser C be given to customers if the adviser discloses that the report was not prepared by the advisory firm D only be given to institutional customers
C givn if disclosed
Which of the following would MOST likely be an investment adviser that is State registered? A Certified Financial Planner B Adviser with assets under management of $100 million C Investment Company D Trust Company
CFP
An individual who represents an issuer in the sale of that issuer's securities and who earns a commission on each transaction would be defined as an "agent" under the Uniform Securities Act if that individual represents the issuer: A in sales of specified exempt securities B effecting exempt transactions C in sales of covered securities D effecting sales of securities to employees of the issuer
D effecting sales of securities to employees of the issuer
If an agent does not obey a subpoena to testify in court, as required by the Administrator, the court may do all of the following EXCEPT: A hold the agent in contempt of court B order the agent to appear before the Administrator C grant injunctive relief restricting the sale or offer of securities D incarcerate the agent for up to 60 days to compel attendance
D incarcerate the agent for up to 60 days to compel attendance
All of the following are defined as securities under the Uniform Securities Act EXCEPT: A Fixed Annuity Contracts B Multilevel Distributorship Arrangements C Fractional interests in Oil and Gas Programs D Variable Annuity Contracts
FIXED ANNUITY CONTRacts
Which of the following is (are) defined as a "broker-dealer" under the Uniform Securities Act? I A person who effects securities transactions for its own account II A person who effects securities transactions for the account(s) of others III An agent of a broker-dealer who effects securities transactions IV An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer
I II IV
Which of the following are defined as an "agent" under the Uniform Securities Act? An individual who represents: I ACME Broker-Dealer effecting trades in preferred stocks II the City of New York selling the City's general obligation bonds to New York residents III ACCO Broker-Dealer effecting trades in private placements exempted under Regulation D IV the Federal Reserve effecting trades of U.S. Government securities in its open market operations
I ACME Broker-Dealer effecting trades in preferred stocks III ACCO Broker-Dealer effecting trades in private placements exempted under Regulation D
Under the Uniform Securities Act, an investment adviser is prohibited from taking custody of a client's funds if the: I Administrator prohibits this by rule II firm fails to notify the Administrator that it has custody or may take custody III firm is registered as a broker-dealer as well as an investment adviser
I Administrator prohibits this by rule II firm fails to notify the Administrator that it has custody or may take custody
The provisions of the Uniform Securities Act include: I Anti-fraud II Common law deceit III Registration of securities IV Registration of broker-dealers, investment advisers, and their agents
I Anti-fraud II Common law deceit III Registration of securities IV Registration of broker-dealers, investment advisers, and their agents
Under the Uniform Securities Act, which of the following securities is (are) considered to have an issuer? I Collateral trust certificate II Equipment trust certificates III Fractional interests in oil and gas programs IV Certificates of interest in a gravel mining program
I Collateral trust certificate II Equipment trust certificates
Which terms are defined under the Uniform Securities Act? I Investment Adviser II Investment Adviser Representative III Broker-Dealer IV Broker-Dealer Representative
I Investment Adviser II Investment Adviser Representative III Broker-Dealer
State "blue sky" laws provide for: I Registration of broker-dealers II Registration of agents III Registration of investment advisers IV Registration of issuers
I Registration of broker-dealers II Registration of agents III Registration of investment advisers
Federal securities laws supersede the provisions of the Uniform Securities Act in which of the following? I Registration requirements applicable to securities offerings II Registration requirements applicable to investment advisers III Broker-dealer capital, custody, financial responsibility and recordkeeping requirements IV Investigation and bringing enforcement action against broker-dealers for unlawful conduct
I Registration requirements applicable to securities offerings II Registration requirements applicable to investment advisers III Broker-dealer capital, custody, financial responsibility and recordkeeping requirements
Which statements are TRUE about the Administrator's investigation powers? I The Administrator can conduct public investigations II The Administrator can conduct private investigations III The Administrator can conduct in-State investigations IV The Administrator can conduct out-of-State investigations
I The Administrator can conduct public investigations II The Administrator can conduct private investigations III The Administrator can conduct in-State investigations IV The Administrator can conduct out-of-State investigations
A clause in an advisory agreement that limits an investment adviser's liability for the adviser's gross negligence or willful malfeasance is: I a hedge clause II a hold harmless clause III enforceable under State law IV unenforceable under State law
I a hedge clause IV unenforceable under State law
Under the Uniform Securities Act, registration as an investment adviser is required for a(n): I broker-dealer who renders advice on securities for a fee II broker-dealer who makes recommendations of securities to customers III investment newsletter of a general circulation IV financial planner who creates an investment plan for a fee
I broker-dealer who renders advice on securities for a fee IV financial planner who creates an investment plan for a fee
Which of the following persons would be defined as "sales representatives"? I A clerical employee of a broker-dealer who does not effect securities trades and does not receive commissions II A clerical employee of a broker-dealer who effects securities trades and receives commissions III A partner of a broker-dealer who does not effect securities trades and who receives commissions IV A partner of a broker-dealer who effects securities trades and who does not receive commissions
II A clerical employee of a broker-dealer who effects securities trades and receives commissions IV A partner of a broker-dealer who effects securities trades and who does not receive commissions salesman - broker - agent dealer - principal
Under the Uniform Securities Act, which of the following persons must register as a broker-dealer in a state? I A firm with no place of business in the state that has no clients in the state II A firm with no place of business in the state that has 25 clients in the state over the preceding 12 months III A firm with a place of business in the state that deals exclusively with issuers IV A firm with a place of business in the state that deals exclusively with financial institutions
II A firm with no place of business in the state that has 25 clients in the state over the preceding 12 months III A firm with a place of business in the state that deals exclusively with issuers IV A firm with a place of business in the state that deals exclusively with financial institutions
Which of the following are unethical practices by an investment adviser under the NASAA Statement of Policy? I An adviser exercising discretion under verbal authority from a customer given 5 business days ago II An adviser placing an order to sell a position that is dropping rapidly in price without discretionary authority III An adviser selling all of a security position when the customer authorized the sale of only part of the position IV An adviser selecting the best time to sell a position when the customer authorized the sale
II An adviser placing an order to sell a position that is dropping rapidly in price without discretionary authority III An adviser selling all of a security position when the customer authorized the sale of only part of the position
Which of the following individuals is EXCLUDED from the definition of an "agent" under the Uniform Securities Act? I An individual who represents an issuer in the sale of 1 year commercial paper II An individual who represents an issuer in the sale of Canadian Government Debt III An individual who represents an issuer in a transaction with an underwriter IV An individual who represents a "secondary" government broker-dealer in the sale of U.S. Government bonds
II An individual who represents an issuer in the sale of Canadian Government Debt III An individual who represents an issuer in a transaction with an underwriter
A broker-dealer's agent that is registered in State A, wishes to sell a security in State B. Which of the following may be sold in State B without the agent being registered in State B? I U.S. Government Agency Issues II Commodity Futures III Fixed Annuities IV Limited Partnership interests investing solely in securities of U.S. Government Agencies
II Commodity Futures III Fixed Annuities
An investment adviser has determined that it can register as a federal covered adviser. This means that the adviser: I solicits clients on behalf of other investment advisers II currently operates in at least 15 States III has at least $25,000,000 of assets under management IV provides financial planning to customers for compensation as a regular business
II currently operates in at least 15 States III has at least $25,000,000 of assets under management
An investment adviser would be considered to have custody of client funds if it: I received a check from a customer made payable to the custodian that was sent inadvertently and the adviser immediately forwards it to the custodian II received a check from a customer made payable to the adviser, who deposits it and opens an account for the client III received a power of attorney from a customer authorizing it to buy and sell securities on the customer's behalf IV received a power of attorney from a customer authorizing it to withdraw client funds or securities maintained with the custodian
II received a check from a customer made payable to the adviser, who deposits it and opens an account for the client IV received a power of attorney from a customer authorizing it to withdraw client funds or securities maintained with the custodian
Which of the following individuals are defined as an agent under the Uniform Securities Act? I An individual who represents an issuer in selling exempt securities II An individual who represents an issuer in selling non-exempt securities III An individual who represents a broker-dealer in selling exempt securities IV An individual who represents a broker-dealer in selling non-exempt securities
IIAn individual who represents an issuer in selling non-exempt securities III An individual who represents a broker-dealer in selling exempt securities IV An individual who represents a broker-dealer in selling non-exempt securities
Under the Uniform Securities Act, an unregistered agent would be permitted to sell: I ownership interests in real estate limited partnerships II fractional ownership interests in a mining company III certificates of deposit issued by a federally chartered bank IV shares of a federally chartered credit union
III certificates of deposit issued by a federally chartered bank
Which of the following statements are TRUE regarding the suspension of a broker-dealer's registration and an agent's registration through that broker-dealer? I If a broker-dealer's registration is suspended, the agent's registration through that broker-dealer ceases to be effective II If an agent's registration is suspended, the broker-dealer's registration ceases to be effective III The Administrator may revoke a registration solely if it is in the public good IV The Administrator may revoke a registration if it is in the public good and the person has violated the Uniform Securities Act
If a broker-dealer's registration is suspended, the agent's registration through that broker-dealer ceases to be effective The Administrator may revoke a registration if it is in the public good and the person has violated the Uniform Securities Act
An order ticket for the purchase of stock does NOT contain: Quantity B Time that the order is placed C Fill price D Market price at the time that the order is placed
Market price at the time that the order is placed
Filing of advertising with the Administrator is required for which one of the following? A U.S. Government securities B Municipal securities C Investment company securities D Options Clearing Corporation securities
Options Clearing Corporation securities
Which term is NOT defined under the Uniform Securities Act? Broker-dealer B Registered representative C Investment Adviser D Investment Adviser Representative
Registered representative
Under the provisions of the Uniform Securities Act, an unregistered agent is permitted to do which of the following in the State? A Effect transactions in exempt securities with customers B Effect transactions in non-exempt securities with customers C Trade securities for the broker-dealer's own account D Report completed trades of securities to customers
Report completed trades of securities to customers
A Registered Investment Adviser is one that is registered with (the): A FINRA B NASAA C SEC D MSRB
SEC
Excluded from the definition of an agent are individuals who represent issuers (not broker-dealers) in:
Sales of specified exempt securities such as Treasury, Agency and Municipal debt (but not all exempt securities); Exempt transactions, such as the sale of securities only to institutions or underwriters or private placements as defined under State law; Sales of specified covered securities (basically private placement issues and sales to persons with investment assets of at least $5,000,000 and investment managers handling assets of at least $25,000,000) - however if the individual is selling federally covered "nationally traded" securities or investment company securities, he or she must register as an agent; and Sales of securities to employees of that issuer if no remuneration is paid - (the example here is a corporate employee who places company stock into employee 401(k) accounts).
The State Administrator is supervised by: Secretary of State B Governor of the State C NSMIA D NASAA
Secretary of State
NASAA Model Rule 502 (c) applies to: A State registered advisers Incorrect answer B. You did not choose this answer. B Federal Covered advisers C Both State and Federal Covered advisers D State registered advisers and Federal Covered advisers only to the extent that the conduct is fraudulent or deceptive
State registered advisers and Federal Covered advisers only to the extent that the conduct is fraudulent or deceptive
The State Administrator receives a complaint about a Federal Covered adviser which has made a notice filing in the State, alleging that the adviser stole from him. Which statement is TRUE about this? A The Administrator cannot take action because the adviser is Federal Covered B The Administrator can investigate the complaint C The Administrator must refer the complaint to the SEC and tell the client that it is doing so D The Administrator can rescind the registration of the adviser
The Administrator can investigate the complaint
A Registered Investment Adviser (RIA) headquartered and registered in State X gives advice only to insurance companies, pension plans and investment companies. The RIA has no office in any other State. The adviser does business in State Y and receives a letter from the Securities Commissioner of State Y which explains that State Y believes that the adviser is required to be registered there, along with a questionnaire to be completed and returned to State Y. Which statement is TRUE? Incorrect answer A. You did not choose this answer. The RIA will be required to be registered in State Y because it is doing investment advisory business there B The RIA will be required to be registered in State Y because it is not a Federal Covered Adviser C The RIA will not be required to be registered in State Y because it has no office there and it only deals with professional investors D The RIA will not be required to be registered in State Y because it can only be required to be registered in one State and it is already registered in State X
The RIA will not be required to be registered in State Y because it has no office there and it only deals with professional investors
A Registered Investment Adviser charges a fee to customers based on a percentage of assets under management. The adviser invests customer funds solely in mutual funds that have a sales charge. Which statement is TRUE? The only disclosure that the adviser must make to the customer is the asset management fee B The only disclosure that the adviser must make to the customer is the sales charge C The adviser must disclose to the customer both the management fee and sales charge to the customer D The adviser is not required to disclose to the customer neither the management fee nor the sales charge
The adviser must disclose to the customer both the management fee and sales charge to the customer
An agent of a broker-dealer is told by a wealthy, well-connected client that "I just talked to the president of ABCD Corp. (an NYSE listed company) and was told that this quarter's results are going to be lousy." Which statement is TRUE? Correct answer A. You did not choose this answer. A The agent can discuss this phone conversation with his branch manager . B The agent can discuss the phone conversation with his spouse C The agent can discuss the phone conversation with anyone who is registered as an agent in that State D The agent cannot discuss this phone conversation with anyone
The agent can discuss this phone conversation with his branch manager
An agent of a Canadian broker-dealer has a personal relationship with an individual who the agent has been soliciting to buy securities. The individual has just moved to Minnesota and the agent wishes to continue soliciting this person. Which statement is TRUE about this situation? Incorrect answer A. You did not choose this answer. A The agent can solicit the individual in Minnesota without needing to take any further action because there was pre-existing personal relationship B The agent cannot solicit the individual in Minnesota unless the agent is registered in the State C The agent cannot solicit the individual in Minnesota unless the broker-dealer is registered in the State D The agent cannot solicit the individual in Minnesota unless both the broker-dealer and agent are registered in the State
The agent cannot solicit the individual in Minnesota unless both the broker-dealer and agent are registered in the State
An individual represents a broker-dealer in a State selling fee-based brokerage accounts as an independent contractor. This individual is not an employee of the broker-dealer. Which statement is TRUE regarding registration of the independent contractor and the broker-dealer in the State? A The broker-dealer must register in the State but the independent contractor is excluded from registration because he is not an employee of the broker-dealer B The broker-dealer must register in the State and the independent contractor must register in the State as an agent of the broker-dealer C The independent contractor must register as an agent of the broker-dealer in the State but the broker-dealer is excluded from registration in the State D Neither the broker-dealer nor the independent contractor are required to register in the State because the account is fee-based and not commission based
The broker-dealer must register in the State and the independent contractor must register in the State as an agent of the broker-dealer
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?
The broker-dealer must register in the State of North Dakota The best answer is 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.
A broker-dealer receives critical information about a corporation in which one of his customers has invested. The customer is vacationing in a State in which the broker-dealer is not licensed. Which statement is TRUE? A The broker-dealer must be registered in a state to contact anyone in that state B The customer may be contacted only if the information received is going to affect the corporation's securities negatively C The customer may be contacted only if the information received is going to affect the corporation's securities positively D The customer may be contacted while on vacation in the other State regardless of the broker-dealer not being registered in that State
The customer may be contacted while on vacation in the other State regardless of the broker-dealer not being registered in that State
A registered broker-dealer has an employee who is not registered as an agent in that State. The employee wishes to sell U.S. Government bonds in that State. Which statement is TRUE? A The employee is prohibited from selling the U.S. Government bonds unless he is registered as an agent in that State B The employee is permitted to sell U.S. Government bonds because the securities are exempt C The employee is permitted to sell U.S. Government bonds because the transaction is exempt D The employee is permitted to sell U.S. Government bonds only if no commissions or other "transaction based" compensation is paid
The employee is prohibited from selling the U.S. Government bonds unless he is registered as an agent in that State
A registered representative with a broker-dealer sets up a financial planning practice at home to create financial plans for a fee for individuals who are not customers at the broker-dealer. Which statement is TRUE? A The registered representative has become a "statutory" investment adviser and must register with the State as such B The registered representative has violated the Investment Advisers Act of 1940, since registered representatives cannot give separate investment advice C The registered representative must give prior notice to his customers at the broker-dealer of his outside investment advisory practice D The registered representative may do so without restriction
The registered representative has become a "statutory" investment adviser and must register with the State as such
ACME Securities is a registered broker-dealer in State A. ACME is soliciting individuals to work for the firm in their spare time, from a home office. For selling ACME's products to customers, these individuals will be paid 25% of commissions generated. Since these individuals are not working in ACME's office, ACME has classified them as independent contractors. Which statement is TRUE? A These individuals are not required to be registered as representatives in State A because they are not ACME employees B These individuals must register themselves as representatives in State A because they are not ACME employees C These individuals must be registered as representatives in State A by ACME Securities D These individuals only need to be registered in State A by ACME if they become full-time representatives
These individuals must be registered as representatives in State A by ACME Securities
An Investment Adviser Representative has started a blog on the Internet to promote her services to interested parties. The blog discloses that the IAR is associated by DEF Advisers, an RIA registered in the State where the IAR is also registered and conducts business. Which statement is TRUE about this? Incorrect answer A. You did not choose this answer. A This action is prohibited under NASAA rules because blogs can only be sponsored by RIAs, not IARs B This action is prohibited because the RIA must approve the content of the blog and authorize its distribution C This action is prohibited because FINRA has jurisdiction over Internet communications and FINRA approval is required D This action is permitted because both the RIA and IAR are State-registered
This action is prohibited because the RIA must approve the content of the blog and authorize its distribution
A broker-dealer is attempting to increase its commission brokerage business by offering "free office space" in its Park Avenue office building to hedge funds in return for the hedge fund sending its trades through that broker-dealer. Which statement is TRUE? Incorrect answer A. You did not choose this answer. A This is an unethical practice because broker-dealers cannot offer "free services" B This is an unethical practice because investment advisers are not permitted to accept "free" services C This is a legal usage of soft dollar compensation D This is an unethical practice unless it is disclosed on the Form ADV filing with the Administrator
This is an unethical practice unless it is disclosed on the Form ADV filing with the Administrator
A broker-dealer wishes to charge its customers that engage in options trading a separate account service charge in addition to a commission on each trade. The new service charge will be based on the volume of options trading in the account, with the fee set at 10% of the value of monthly options trades, but no less than $25 per month. The arrangement is disclosed to all of the broker-dealer's options customers. Which statement is TRUE? Broker-dealers are not permitted to charge accounts service fees, so this arrangement is unethical B This represents an excessive account fee and is a prohibited practice C The service fee can be charged because the firm's customers were notified of the new fee D This service fee can be charged because it is fair and reasonable
This represents an excessive account fee and is a prohibited practice
All of the following actions are violations of the Uniform Securities Act EXCEPT: A deliberately failing to follow a customer's instructions B actively soliciting orders for unregisteredexempt securities C making an untrue statement of material fact D omitting a material fact because there was not enough time to cover all items in a presentation
actively soliciting orders for unregisteredexempt securities
Under the Uniform Securities Act, which of the following would be required to register as an investment adviser representative? A person who: A acts as a solicitor for the adviser B performs ministerial functions for the adviser C handles the books and records of the adviser D registers investment adviser representatives
acts as a solicitor for the adviser
A non-password protected website is defined as: A advertising B sales literature C correspondence D public forum
advertising
commission
agent broker salesman
"Persons," as defined under the Uniform Securities Act, include which of the following? I Joint Ventures II Individuals III Unincorporated businesses IV Municipalities
all
A broker-dealer is required to register with: the SEC FINRA the state where it is located or does business with the public and the SEC all of the above
all
An individual wishes to form a broker-dealer as a sole proprietorship. Which of the following can the State require? I Filing of a Form BD II Consent To Service of Process II Surety Bond IV Posting of Minimum Net Capital
all
In order for a promissory note to be an exempt security under the Uniform Securities Act: A it must mature within 9 months B it must be issued in minimum denominations of $50,000 C it must be rated in one of the 3 highest categories by Moody's D all of the above
all of the above
Under the Uniform Securities Act, the registration of an agent may be denied, suspended or revoked if the: I application contains false statements; or omits required information II applicant has been arrested for a securities related matter III applicant has been charged by the Securities and Exchange Commission with a securities felony
application contains false statements; or omits required information
Under the Uniform Securities Act, an investment adviser may be formed as any of the following EXCEPT a(n): A corporation B partnership C association D broker-dealer
broker dealer
An officer of an issuer is engaged in the sale of that issuer's securities to the public. The issuer's securities are federal covered. The officer is: A excluded from the definition of an agent because the securities involved are federal covered B not defined as an agent because officers of issuers are excluded C defined as an agent who must register in the State D defined as an issuer and is not required to register in the State
defined as an agent who must register in the State
Which of the following is NOT EXCLUDED from the definition of an "investment adviser"? A Broker-dealer B Trust company C Savings and loan D Investment company
investment company
All of the following statements are TRUE about broker-dealers under the Uniform Securities Act EXCEPT a broker-dealer: A that is registered in the State may also register as an investment adviser in the State B is defined as a person who engages in securities transactions for customers or for its own account C can be legally structured as a sole proprietorship, a partnership or a corporation D is not required to register in a State unless it has an office in that State
is not required to register in a State unless it has an office in that State
State "blue sky" laws provide for registration of all of the following EXCEPT: A broker-dealers B agents C investment advisers D issuers
issuers
Under Uniform State Law, advisory contracts: must be oral B must be in writing C may be either oral or in writing D may be oral if documented in writing within 10 days of entering into the oral contract
must be in writing
An individual who represents an issuer selling federally covered investment company securities: A is not required to register as an agent in the State B must register as an agent in the State if compensation is being paid for this activity C must register as an agent in the State if the individual is not federally registered D must register as an agent in the State
must register as an agent in the State if compensation is being paid for this activity
The term "issuer" applies to a: A person who proposes to sell a security B director of a company that is selling new shares to the public C trader executing trades off an exchange floor D market maker in a security traded over-the-counter
person who proposes to sell a security
The State Administrator would NOT deny the registration application of an Investment Adviser because the IA was the subject of a(n): A adjudication 4 years ago by the Securities and Exchange Commission that the adviser willfully violated the Investment Company Act of 1940 B conviction in a court of law for a misdemeanor involving the securities business 4 years ago C determination by the Commodities Futures Trading Commission 4 years ago that the IA willfully violated CFTC rules under the Commodities Exchange Act D personal bankruptcy proceeding 4 years ago that relieved the individual from the claims of all unsecured creditors as of the date of the bankruptcy filing
personal bankruptcy proceeding 4 years ago that relieved the individual from the claims of all unsecured creditors as of the date of the bankruptcy filing
A written customer complaint is received by mail about an error made by the firm that the firm resolves to the customer's satisfaction. The customer asks the member firm for a copy of the complaint letter along with a written apology letter. The member firm should: I retain the original complaint along with its resolution in the agent's file and send the customer a photocopy of the complaint II retain a photocopy of the original complaint along with its resolution in the agent's file and send the customer the original complaint copy III send the customer a written apology letter and retain a copy in the agent's file IV not send the customer a written apology letter and retain a note to this effect in the agent's account file
retain the original complaint along with its resolution in the agent's file and send the customer a photocopy of the complaint send the customer a written apology letter and retain a copy in the agent's file
All of the following are EXCLUDED from the definition of an agent EXCEPT an individual who represents the issuer in the: A sale of municipal securities to the public B private placement of common stock C sale of common stock to the issuer's employees D sale of federal covered common stock to the public
sale of federal covered common stock to the public
An investment adviser has its principal office in State A. It also has offices in States B, C, and D. The recordkeeping requirements of States C and D are more stringent than that required by State A and the recordkeeping rules of State B are the most stringent of all. The investment adviser is required to maintain its records in accordance with the rules of:
state A principal office
An agent of a broker-dealer effects a securities trade for a customer privately, where the transaction is neither known to the broker-dealer nor is it recorded on the books of the broker-dealer. This individual is defined as a: statutory
statutory broker dealer
Under the Uniform Securities Act, the registration application of an investment adviser must include: A a listing of the adviser's customers and their financial holdings B a copy of the adviser's policies and procedures manual C the adviser's financial condition and business history D a copy of the adviser's Code of Ethics
the adviser's financial condition and business history
An issuer that wishes to sell a new issue offering across the United States has decided to register an issue by coordination under the provisions of the Uniform Securities Act. Once registration is effective, this means that the issue will be registered: A with the SEC only B with NASAA only C in any of the 50 States where registration documents were filed D with both the SEC and in any of the 50 States where registration documents were filed
with both the SEC and in any of the 50 States where registration documents were filed
