Unit 8
The Uniform Securities Act contains a number of exemptions from registration of securities. Which of the following do not qualify for any of those exemptions? A bond issued by a corporation A bond issued by the City of Athens, Greece A bond issued by the Province of Manitoba A security issued by a credit union authorized to do business in the state
1 and 2
Under the Uniform Securities Act, which of the following are exempt transactions? A transaction between an issuer and an underwriter An unsolicited customer order to buy an exempt security U.S. Treasury bonds Municipal securities
1 and 2
Which of the following statements regarding the private placement exemption under the USA are TRUE? There may be no more than ten offers to noninstitutional purchasers during any consecutive 12-month period. The seller reasonably believes that the retail buyer is purchasing for investment only. No investors may resell stock acquired in a private placement without a prescribed holding period. Commissions may be paid on sales to noninstitutional purchasers.
1 and 2
Life insurance companies offer many different products. Which of the following would not be considered a security? Index annuity Modified endowment Variable annuity Variable life
1 and 2 -- variable = always security
Under the Uniform Securities Act, the sale of stock of a state bank is exempt from which of the following? Prospectus requirements Antifraud provisions Registration requirements
1 and 3
According to the Uniform Securities Act, which of the following would be considered exempt transactions? The sale of an unlisted corporate bond by an executor of an estate The gift of 100 shares of a NYSE-listed stock from a father to his minor child Preorganization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made An unsolicited order from an individual client to purchase a nonexempt, unregistered security
1 and 4
As referred to in the NSMIA, the term "federal covered security" would apply to: preferred stock in the XYZ Corporation whose common stock is listed on the NYSE. common stock in ABCD, Inc., a stock traded on the OTC Link. Springfield, Illinois, municipal bonds sold to a resident of Springfield, Illinois. Springfield, Illinois, municipal bonds sold to a resident of Springfield, Missouri.
1 and 4 munis are federally covered except in own state
Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security for sale to the public. According to the Uniform Securities Act, which of the following are not issuers? The City of Chicago, which is involved in a distribution of tax-exempt highway improvement bonds AAA Partnership, which issues certificates of interest or participation in its oil, gas, and mining titles AAA Manufacturing Company, which proposes to offer shares to the public but has not completed the offering The United States government, which proposes to offer Treasury bonds
2
Under the Securities Act of 1933, a registration statement for a security generally becomes effective how many days after it is filed?
20
In order to be exempt, promissory notes cannot have a maturity beyond
270 days
Which of these may not be required of a federal covered security? Paying a filing fee Providing a consent to service of process Submitting copies of any information filed with the SEC Using a state-sanctioned legend on the offering documents
4
Which of the following would be considered an issuer transaction as defined in the Uniform Securities Act? A) GEMCO, traded on the Nasdaq Stock Market, sells 5,000 shares of its stock to LMN Securities Co., a registered market maker in GEMCO stock. The stock was donated to GEMCO by a former officer of the firm. B) In its capacity as a market maker, LMN Securities Co. sells 200 shares of GEMCO common stock to the corporate treasurer of GEMCO, buying for the company's investment account. C) Ken, the largest shareholder in ABC Corporation, sells 100,000 shares in a registered secondary transaction. D) Barb, the largest shareholder in XYZ Corporation, purchases an additional 50,000 shares on the NYSE.
A
According to the Uniform Securities Act, which of the following is not an exempt transaction? A) A broker-dealer makes an offer of private placement securities to 15 individual investors within a 30-day period. B) Bonds with a rating below investment grade are sold to the ABC High Yield Bond Fund. C) A broker-dealer sells an entire new issue to five bank clients. D) The executor of an individual's estate liquidates individual stocks and invests the proceeds in a money market account at a bank.
A - if 10 or less would have been exempt
All of the following must be specified in the state registration statement of the security except A) the total amount of the security that will be offered in this state B) the total amount of the security that will be offered in each state C) all other states where the security is currently registered or will be registered D) a stop order from any other state that affects the offering of the security within that state
B
Which of the following practices is considered unlawful under the Securities Act of 1933? A) Accepting indications of interest in securities that are in the process of registering with the SEC B) Soliciting orders for unregistered, nonexempt securities from retail investors C) Accepting unsolicited orders for unregistered, nonexempt securities from retail investors D) Claiming an agent is registered and authorized to conduct business in the state in which he practices
B
Which of the following statements relating to the general securities registration provisions of the Uniform Securities Act is most accurate? A) The registration is valid until the next December 31. B) The registration is valid for one year from the effective date, unless the underwriter or issuer still has some unsold shares. C) The registration is valid for one year from the effective date. D) The registration statement may be amended to increase the number of shares in the offering, as long as the share price is not raised by more than 10%.
B
When a security is being registered under coordination, all of the following are required except A) prompt filing with the Administrator of any amendments filed with the SEC. B) filing with the Administrator of a statement of the maximum and minimum proposed offering prices and maximum underwriting discounts or commissions concurrently with the filing of the registration statement with the SEC. C) a description of the proposed use of the proceeds of the underwriting. D) payment of the appropriate fee.
B - must be filed at least 2 days before effective date
As used in the Uniform Securities Act, which of the following entities would not be included in the term institutional investor? A) Insurance companies B) Closed-end investment companies traded on the NYSE C) Any accredited investor D) Open-end investment companies
C
Federal covered securities, as defined under the Uniform Securities Act, A) must be registered in the state before they can be offered within the state B) must be registered with the SEC before they can be offered in the state C) include shares of an investment company registered with the SEC under the Investment Company Act of 1940 D) would not include securities senior to a common stock listed on the NYSE
C
As defined in the Uniform Securities Act, each of the following would be considered an exempt transaction except A) a trustee of a corporation in bankruptcy liquidates securities to satisfy debt holders. B) an agent solicits insurance companies to purchase shares of nonexempt securities. C) preorganization certificates are subscribed to by nine investors in the state, earning the agent a modest commission. D) an offer of a securities investment is directed to 10 individuals in the state during a period of 12 consecutive months.
C - because of the commissions
Under the Securities Act of 1933, all of the following must sign a registration statement for a new issue of nonexempt securities except A) the chief executive officer of the issuer. B) a majority of the members of the board of directors. C) the chief financial officer of the issuer. D) the managing underwriter of the issuer.
D
Under the Uniform Securities Act, which of the following is not a requirement for a preorganization subscription to be an exempt transaction? A) No commission may be paid to anyone for soliciting potential subscribers. B) No payment may be made by any subscriber. C) There may be no more than 10 subscribers. D) The offer of the security may not be advertised.
D
Which of the following is not an accredited investor? A) An individual whose income was greater than $200,000 in each of the 2 most recent years with a reasonable expectation of reaching that level again this year. B) A registered open-end investment company with net assets of $600,000. C) Any organization not formed for the purpose of purchasing securities with a net worth in excess of $5 million. D) An individual with a net worth, including the value of her primary residence, that is greater than $1 million.
D
The U.S. Supreme Court case resulting in the decision that an investment contract is a security is the
Howey case
Under the Uniform Securities Act, which of the following would not be considered an exempt transaction? A) An agent selling U.S. Treasury notes to an individual client B) The purchase of an unregistered nonexempt security by an individual client at that client's request C) An executor liquidating the estate's portfolio D) The sale of ABCD common stock, listed on the Nasdaq Stock Market, to a trust company
a - sale to individual client is not exempt
Which of the following securities are exempt from registration at the state level? 1. Issue of a savings and loan association authorized to do business in this state 2. General obligation municipal bond 3. Bond issued by a company that has common stock listed on the NYSE American LLC (formerly known as the American Stock Exchange [AMEX])
all 3
fiduciary transactions and unsolicited orders are
always exempt
In the Howey decision, the U.S. Supreme Court held that in order for an investment contract to be considered a security, it must represent
an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others
XYZ Brick Company wishes to raise capital by issuing some securities in its home state. The CEO of the company feels that registration with the Administrator is unnecessary because the issue is exempt. Should XYZ be served with a court order, the burden of proving its issue is exempt is on the:
company
Which of the following securities is not exempt from the registration and advertising requirements of the Uniform Securities Act? a. Shares of Commonwealth Edisin, a regulated public utility holding company b. Securities issued by the nonprofit Carnegee Endowment for Peace c. Securities issued by a bank that is a member of the Federal Reserve System d. Variable annuity contracts issued by Metrodential Insurance Company, licensed to do business in the state
d
Which of the following transactions is exempt under provisions incorporated into the Uniform Securities Act? A) Transactions that do not result in a capital gain B) Transactions between an agent and an individual who meets the requirements under Rule 501 of the Securities Act of 1933 C) Transactions involving investment clubs D) Transactions between the issuer and the underwriter
d
Under the Uniform Securities Act, the requirements for filing of advertising and sales literature dealing with an exempt security with the Administrator
do not apply
Under the NSMIA, state securities Administrators retain authority to
enforce antifraud provisios
blue sky
in state
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
What is the procedure by which federal covered securities, registered under the Investment Company Act of 1940, file their offerings with state securities Administrators?
notice filing
A notice filing would be most appropriate for which of the following new issues?
open end IC
intrastate issues would have to register using
qualification
Four months ago, one of your clients purchased 100 shares of stock that was sold under a Rule 147 exemption. He has just called to inform you that he has sold those shares to his neighbor at a nice profit. Under the provisions of the Rule 147 resale restrictions,
resale restrictions only apply to residents of another state
When making a sales presentation to a prospective client, an agent of a broker-dealer would not be exempt from the anti-fraud provisions of the Uniform Securities Act if the product being offered was a
security of any kind
A registration statement for an offering to be made in a state could be filed by all of the following except
the state admin
