Unit 9.1 Definitions Under The uniform Securities Act (Series 65)

If, in the opinion of the Administrator, an agent is about to engage in a prohibited activity, the Administrator may: A) issue a cease and desist order. B) arrest the agent. C) issue an injunction. D) suspend the agent's registration pending the outcome of a hearing.

Answer: A If the Administrator suspects a prohibited action is about to take place, a cease and desist order will be issued in an attempt to prevent that activity. Should the agent refuse to halt, then the Administrator will apply to the courts for an injunction. Suspension of registration takes place after a hearing, and the Administrator does not have the power to arrest anyone. Reference: 9.1.3.1 in the License Exam Manual.

As defined in the Uniform Securities Act, the term person would include: I. a limited partnership. II. a political subdivision. III. an unincorporated association. IV. the executor of an estate for a deceased individual. A) I, II, III and IV. B) I, II and III. C) I and IV. D) II and III.

Answer: A All of these would be included in the USA's definition of person. Not included are a minor, a deceased person, or someone judged mentally incompetent. Reference: 9.1.4 in the License Exam Manual.

Blue-sky laws pertain to all of the following EXCEPT the: A) regulation of securities trading in other countries. B) registration of securities within a state. C) regulation of securities transactions in a state. D) registration of securities salespeople in a state.

Answer: A Blue-sky (Uniform Securities Act) laws refer to state securities regulation in the state. Blue-sky laws require new securities to be registered with the state and regulate trading of securities in a state. Reference: 9.1.1 in the License Exam Manual.

What is the official designation of the person or agency that enforces the USA in each state? A) Administrator. B) Transfer agent. C) Registrar. D) Issuer.

Answer: A The USA specifies that a state's securities Administrator has the authority to enforce the act in that state. A transfer agent is the person or corporation responsible for recording the names and holdings of registered security owners. Reference: 9.1.3 in the License Exam Manual.

A discussion referring to blue-sky laws would include all of the following EXCEPT: A) the Securities Act of 1933 and Securities Exchange Act of 1934. B) state laws that are designed to protect the public against fraud in securities sales within a state. C) forms requiring issuers selling securities in the state to comply with state securities laws. D) a state securities law that grants state securities administrators the power to deny or revoke a broker/dealer's or an agent's registration within its state.

Answer: B Blue-sky laws are state securities laws. The Securities Act of 1933 and the Securities Exchange Act of 1934 are federal securities laws. Reference: 9.1.1 in the License Exam Manual.

Which of the following is responsible for the administration of the USA in a state? A) Securities and Exchange Commission. B) The Administrator. C) State judiciary system. D) Executive department.

Answer: B On this exam, the chief state regulator is the Administrator. The Securities and Exchange Commission is the federal agency, not state agency, that oversees and regulates securities on a national level. Reference: 9.1.3 in the License Exam Manual.

Which of the following statements regarding a cease and desist order are TRUE? I. It is an order to stop a specified activity immediately. II. If the registered agent continues to violate the statute, the registered agent may become the subject of a court issued injunction. III. It may be issued by the state Administrator. A) I and II. B) I and III. C) I, II and III. D) I only.

Answer: C The Administrator is empowered to issue cease and desist orders that require the immediate halt of a specific activity. If the agent fails to stop engaging in the activity, the Administrator may seek an injunction from a court of competent jurisdiction. Reference: 9.1.3.1 in the License Exam Manual.

The Securities Act of 1933 covers all of the following EXCEPT: A) prospectus requirements. B) full and fair disclosure. C) blue-sky laws. D) liabilities for misleading filings.

Answer: C The purpose of the Securities Act of 1933 is to provide investors with full disclosure about a new securities issue. The act is federal in scope, whereas blue-sky laws refer to state securities regulations. Reference: 9.1.3 in the License Exam Manual.

Which of the following powers are under the jurisdiction of the Administrator? A) Issuing a final order suspending the registration of a person as long as, upon written request, a hearing will be granted in no more than 15 days. B) Issuing a cease and desist order to an agent without any prior notice. C) Performing an annual audit of broker/dealers registered in the state. D) Performing an annual audit of investment advisers registered in the state.

Answer: C Whenever it appears to the Administrator that any person has engaged, or is about to engage, in any act or practice constituting a violation of any provision of the USA or any rule or order hereunder, he may in his discretion issue a cease and desist order, with or without a prior hearing against the person or persons engaged in the prohibited activities, directing them to cease and desist from further illegal activity. Any person aggrieved by a final order of the Administrator (that means after the hearing has taken place), may obtain a review of the order in the appropriate court by filing a written petition in court, within sixty days, not fifteen, after the entry of the order. Broker/dealers and some IAs have to file annual audited financials with the Administrator, but the audit is conducted by an independent accountant, not the Administrator. Reference: 9.1.3.1 in the License Exam Manual.

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

Answer: D The Uniform Securities Act is not the actual law of any state or territory. Rather, it is model legislation that states use as a guide in drafting their own securities laws. Those laws give the responsibility to the state Administrator for enforcement and administration of those laws. The NSMIA's purpose is to eliminate dual registration, not to require identical laws. Reference: 9.1.2 in the License Exam Manual.