63 Wrong Answers
Under the Dodd-Frank Act, the pension consultant must have ________ to be eligible for federal coveraged
$200 million under management
Which of the following would NASAA consider to be a substantial prepayment of fees?
$600 covering the entire contract year
The Uniform Securities Act invests the office of the Administrator with a number of powers. However, the act does not permit the Administrator to A) inspect offices of registered broker-dealers without prior notice B) insist that specific forms be used to register securities C) issue a cease and desist order without prior notice D) issue an injunction when there is evidence of wrongdoing
D) Issue and injunction when there is evidence of wrongdoing Injunctions may be issued by a court of competent jurisdiction only.
Who is required to pass a series 63?
Agent
A state securities Administrator does NOT require the filing of A) financial reports from broker-dealers and investment advisers B) advertising and sales literature relating to the sale of exempt securities C) pamphlets and marketing letters used by broker-dealers D) advertising and sales literature relating to the sale of nonexempt securities
B
Under the Uniform Securities Act, a non-exempt transaction may take place in the state only if A) the security is sold in an exempt transaction B) the security is registered, exempt, or federal covered C) it is between institutions D) an appeal is made to the Administrator
B
All of the following must be specified in a security's state registration statement EXCEPT A) the amount of securities to be offered in the state B) the total amount of the security that will be offered in other states C) a stop order from another state that affects the offering of the security within that state D) the expected use of the projected proceeds of the offering
B)
Under the Uniform Securities Act, which of the following is an offer or a sale? A) The use of securities as collateral for a car loan at a bank B) A gift of stock given as a bonus with a purchase of a parcel of real estate C) A 10-to-1 stock split paid to shareholders D) A gift of stock from a mother to a son
B)
Under the Uniform Securities Act, all of the following persons may provide investment advice incidental to their normal business without requiring registration as an investment adviser EXCEPT a(n) A) teacher B) economist C) engineer D) lawyer
B) Economist The Uniform Securities Act does not grant an economist exemption from registration, but it does offer an exemption to teachers, lawyers, and engineers if the investment advice is incidental to their business; thus the acronym LATE for lawyers, accountants, teachers, and engineers.
Under the Uniform Securities Act, an agent who offers a nonexempt, unregistered security for sale A) is not in violation of the act even if the transaction is not exempt, unless a sale is actually made B) may be subject to criminal prosecution even if the transaction is exempt C) may be civilly liable to the purchaser if the transaction is not exempt D) may do so legally in a nonexempt transaction as long as the purchaser is given all the material facts
C) may be civilly liable to the purchaser if the transaction is not exempt
Sarah has not yet passed the Series 63 exam. As Jack's assistant, Sarah has frequent telephone contact with Jack's customers to whom she provides account information and current stock quotes. In this situation Sarah is A) in violation of the Securities Act of 1933 B) in violation of the Securities Exchange Act of 1934 C) in violation of the Uniform Securities Act D) not in violation of any applicable statutes
D) Provided Sarah does not solicit business, offer advice to customers, or accept orders, she has not committed a violation of any act.
Is a gift of securities a sale?
No
When material information changes, the registrant must update information how soon?
Promptly amend or update the information regardless of the renewal date. The requirement to amend a registration applies to investment advisers, broker-dealers, and securities. However, the Uniform Securities Act does not define the term "promptly".
Which of the following types of compensation is an investment adviser prohibited from accepting?
Quarterly fee based on account performance (Unless $1 million under management or net worth of $2 million)
Testimonials with regards to investment advisers
Testimonials promoting investment advisers' services are prohibited under both state and federal law, regardless of whether a spokesperson receives compensation.
If an investment adviser representative of a federal covered adviser who is registered in a specific state terminates employment with that investment adviser, which of the following statements is TRUE?
The representative must notify the Administrator.
Is borrowing money from a colleague at a broker dealer permissible?
Yes
n the case of a state registered investment adviser who does business in multiple states, meeting the net worth (or net capital) requirements of the state in which
the primary office is located will satisfy the requirements of all states.
Under both state and federal law, investment advisers maintaining custody of customers' funds and securities must notify their clients how frequently with regards to what?
-Quarterly -Location of assets -Value of assets
Under the Uniform Securities Act, which of the following persons is responsible for proving that a securities issue is exempt from registration? A) The person claiming the exemption B) There is no need to prove eligibility for an exemption C) Underwriter D) State Administrator
A) The burden of proof for claiming eligibility for an exemption falls to the person claiming the exemption, most commonly the issuer. In the event the registration statement was filed by someone other than the issuer, such as selling stockholders or a broker-dealer, that person must prove the claim.
A federal covered investment adviser is a person
A) exempt from regulation under the Securities Exchange Act of 1934 B) registered under the Uniform Securities Act C) registered with North American Securities Administrators Association (NASAA) D) registered, or excluded from the definition of investment adviser, under the Investment Advisers Act of 1940 registered with North American Securities Administrators Association (NASAA), was incorrect. The correct answer was: registered, or excluded from the definition of investment adviser, under the Investment Advisers Act of 1940
Which of the following are required for an initial application for registration as an investment adviser? I. A consent to service of process II. A fee III. Disclosure as to whether the applicant will have discretionary powers over client funds and/or securities IV. Disclosure as to whether the applicant will have custody of client funds or securities
All
The term "sale" includes which of the following? I. A contract of sale II. A contract to sell III. The disposition for value of an interest in a security IV. A warrant (for common stock of the issuer) given with the purchase of a bond
All "Sale", used interchangeably with "sell", is defined in the Uniform Securities Act as any contract of sale, any contract to sell, and any disposition of a security or interest in a security. The sale of a corporate bond is a sale with or without a warrant attached and involves the disposition of an interest in a security of the issuer. Because the distribution of the warrant is conditional upon the purchase of the bond, the acquisition of the warrant is considered to be a sale.
Can agent keep personal possession of clients' cash and securities?
An agent may not take personal possession of clients' cash and securities. The broker-dealer, however, can provide safekeeping and custodial services.
An exempt security is
An exempt security is exempt from the registration requirements and the provisions that require the filing of advertising and sales literature
An elderly widow with no independent income wishes to invest the proceeds from her recently deceased husband's life insurance. Which of the following would be the most suitable recommendation? A) Municipal bonds B) Large-cap income stocks C) Oil and gas exploration program that you know is going to strike D) Call options
B) Large-cap income
Broker-dealers, investment advisers, and agents must renew their licenses with the state Administrator every
December 31
Foster Advisers operates as an investment adviser that is registered in a state where the Administrator, by rule, prohibits investment advisers from holding custody of client funds and securities. This means that Foster Advisers may not I. have physical custody over its clients' monies and certificates II. manage client accounts on a discretionary basis III. examine customers' stock certificates
I.
An Administrator may initiate a suspension or revocation proceeding against a broker-dealer registered in his state I. up to 2 years after a broker-dealer voluntarily withdraws its registration II. when an agent of the broker-dealer is convicted of a felony violation of the Securities Exchange Act of 1934 III. upon discovery that the broker-dealer's license had been suspended in another state IV. upon discovery of new facts unknown to the Administrator at the time of the broker-dealer's initial registration
III and IV NOTE: The Administrator maintains jurisdiction over a license that has been withdrawn for a period of 1 year after the effective date of the withdrawal
Are advisers allowed to be compensated solely on the basis of capital gains?
No
Is marking up prospectuses allowed by broker dealers and agents?
No
Does an investment adviser need to inform clients of departures of employees, senior or otherwise, from investment advisory firms that are incorporated
No Only partnerships
Under the Uniform Securities Act, state Administrators set minimum net worth requirements for investment advisers. What should an IA do if its net worth falls below the minimum rule of the state in which it is operating?
Notify the Administrator by the close of the next business day and file a report with the Administrator by the business day following the notice.
Under the Uniform Securities Act, all of the following must be disclosed in an investment advisory contract EXCEPT A) a provision prohibiting the adviser to assign the contract without client consent B) a provision prohibiting the adviser from being compensated based on a share of capital gains C) the manner in which the advisory fee will be computed D) other states in which the adviser is registered
Other states in which the adviser is registereed
Statue of limitations for civil liability
The statute of limitations for civil liability is the earlier of three years after the date of the sale or two years after discovery of the violation. In this case, the earliest date is three years after the sale on September 1, 2014.
Are registered investment company securities are also exempt from state registration?
Yes
Do broker-dealers and investment advisers have to meet net capital or net worth requirements.
Yes
May federally covered securities have to pay filing fees in states?
Yes
A broker-dealer operating on the premises of a bank would have to make certain disclosures in an advertisement unless it was A) published in a general circulation magazine B) only sent to existing customers of the bank C) a radio spot of 30 seconds or less D) a television spot of 30 seconds or less
a radio spot of 30 seconds or less
Revocation of the registration of that agent's broker-dealer will result in
cancellation of that agent's effective registration.
An applicant for registration as an investment adviser discloses on Form ADV that it plans to use palm readers to help determine which investments are most suitable for their clients. Under the Uniform Securities Act, the Administrator may...
deny applications on the basis or limitations of the law
An investment advisory contract may only be assigned to another adviser with
the client's consent
An IAR may not earn commissions on
the sale of securities unless also registered as an agent.
An agent solicits orders for a primary offering of a nonexempt security in his home state. Within days, he learns that the underwriting is not registered in that state. Relieved that no customer orders were placed, he ceases soliciting orders in this security. In this situation, the agent has acted
unlawfully, because soliciting orders in nonexempt, unregistered securities is prohibited
An agent has more than 200 customers and after extensive research on initial public offerings issued by solar energy companies, she recommends that each customer purchase shares in Solargen, Inc. If the agent discussed the risk of buying Solargen stock with each customer, the agent has acted A) lawfully, because the risk was presented to the customers B) lawfully, because the agent performed due diligence analysis on the recommended company C) unlawfully, because the recommendation does not consider the financial objectives of each customer D) unlawfully, because solar energy is an industry that is highly dependent on local weather conditions
unlawfully, because the recommendation does not consider the financial objectives of each customer
Which of the following statements regarding unsolicited orders is TRUE? A) The state Administrator may not prohibit the solicitation of specific securities in the state. B) The state Administrator may not require the client to sign an acknowledgment that the order was unsolicited. C) A client may purchase, at his own initiative, securities trading in the secondary market through an agent who otherwise is prohibited from soliciting the order. D) Unsolicited orders are nonexempt transactions under the USA
A client may purchase, at his own initiative, securities trading in the secondary market through an agent who otherwise is prohibited from soliciting the order.
Under the Uniform Securities Act, which of the following is NOT an exempt security? A) An equipment trust certificate issued by a railroad regulated by a federal regulatory body B) A U.S. government bond C) A security issued by an entity organized and operated for profit, but exclusively for charitable purposes D) A bond guaranteed by the Province of Alberta, Canada
A security issued by an entity organized and operated for profit, but exclusively for charitable purposes The question asks for a security that is not exempt. For a charitable organization to be exempt, it must be nonprofit. Securities issued or guaranteed by the U.S. government, a subdivision of the Canadian government, and a railroad are all exempt.
Under the Uniform Securities Act, which of the following concerning the withdrawal of an agent's registration is NOT true? A) Disciplinary proceedings may be taken against an agent after the agent's withdrawal is effective. B) At the Administrator's discretion, disciplinary proceedings may delay effectiveness of a withdrawal application indefinitely. C) Absent any disciplinary proceedings, withdrawal is effective 60 days after application. D) Absent any disciplinary proceedings, withdrawal is effective 30 days after application.
Absent any disciplinary proceedings, withdrawal is effective 60 days after application
Under the Uniform Securities Act, an individual representing an issuer in the sale of which of the following securities would NOT have to register as an agent? I. Short term highly rated commercial paper II. Municipal bond III. U.S. bank issue IV. Investment contract issued in connection with an employee's stock purchase, savings, pension, profit-sharing, or similar benefit plan
All
According to North American Securities Administrators Association's (NASAA) Statement of Policy on Dishonest or Unethical Business Practices of Broker/Dealers and Agents, which of the following practices is NOT unethical? A) Within the first ten days of a client's initial transaction, an agent accepted oral discretion and purchased securities on behalf of the client. B) An agent sold shares at a price less than authorized by a client. C) To protect the client in a declining market, an agent sold all shares in the client's account when the client had only authorized the sale of 30% of the shares. D) An agent of a broker/dealer exercised discretion in deciding the time that a sale took place during the trading day without expressed written discretionary authority.
An agent of a broker/dealer exercised discretion in deciding the time that a sale took place during the trading day without expressed written discretionary authority. An agent of a broker/dealer may exercise discretion in deciding the time or the price at which a sale takes place during the trading day without express written discretionary authority. Such action is not unethical because time and price are not considered true discretion. An agent may not exercise discretion over the number of shares to be sold without prior written discretionary authority. Oral discretion is only permitted for investment advisers and their representatives, (never broker/dealers or agents), during the first 10 business days after the initial discretionary transaction in the account.
An individual with a place of business in State A manages client assets on behalf of a covered investment adviser. This individual wishes to expand his client base by working one day per week out of the firm's office in State B. Which of the following actions must the person take to practice within that particular state? A) Become licensed as a broker-dealer B) Pay state registration fees if required by the Administrator C) Comply with the notice filing requirements of the state D) Pass an oral or written examination
B) Pay state registration fees Individuals with a place of business in a state, managing client assets while employed by federal covered investment advisers, must register as investment adviser representatives in that state (or any others in which they, the IAR, maintain a place of business). Registration will generally involve paying the registration fees. Because this individual is already registered in State A, it is not necessary to pass another exam to become registered in another state. It is the investment adviser who may be required to notice file with the Administrator.
All of the following information would be found on a trade ticket EXCEPT A) the time of order entry B) the price of the security at the time of the order C) was the order solicited or unsolicited D) the customer account number
B) Price of security at time of order
An agent's license could be revoked if he were any of these EXCEPT A) convicted of a nonsecurities-related felony B) under 21 years of age C) declared insolvent D) convicted of a securities-related misdemeanor
B) Under 21 (no age requirement, 18 is implied)
ABC Furniture 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 ABC be ordered to appear at a hearing, the burden of proving its issue is exempt is on A) the CEO B) the hearing panel C) the Administrator D) the company
D) The company In any case where there is a question as to the legality of a specific exemption, the burden of proof is always on the party requesting the exemption.
Under the Uniform Securities Act, which of the following would prevent an agent from claiming an exclusion to the definition of investment adviser? I. Receiving any compensation for investment advice other than commissions on securities transactions II.Providing investment advice beyond the scope of his employment with a broker-dealer
Either I or II
Under the Uniform Securities Act, which of the following would cause an agent's registration to be canceled by the Administrator? I.The agent has died. II.The agent is found by a court to be mentally incompetent. III.The agent cannot be located after reasonable search. IV. The agent is found by a court to have violated a securities statute.
I II III CANCELLED is different from REVOKED
Under the Uniform Securities Act, requirements for registration as an investment adviser may include which of the following? I. An announcement of the application for registration in one or more newspapers in the state II. Minimum financial requirements for advisers who do not have custody of client securities or funds III. A surety bond for advisers who do not exercise discretion and/or do not have custody of client funds or securitie
I and II
Under the Uniform Securities Act, the Administrator may deny or revoke a registration if an agent I. Submits an incomplete application II. Willfully violates a provision of the Act III. Has no prior sales experience IV. Was convicted of a non-securities related misdemeanor 4 years ago in another state. That crime, however, is a felony in this state
I and II
Under the Uniform Securities Act, which of the following are TRUE regarding the registration of a successor firm? 1) The successor firm need not be in existence when the application for registration is filed. 2) A filing fee is required with the application. 3) The successor firm's registration will be effective for the unexpired portion of the year.
I and III
Which of the following are prohibited practices? I. An investment advisory firm organized as a partnership failed to inform its clients of the departure of a partner with a very small interest in the partnership II. An investment advisory firm charges an annual fee equal to 2% of the first $250,000 in assets under management; 1% of the next $500,000; and .5% for everything in excess of $750,000 III. Without client consent, the majority stockholder of a registered investment adviser pledges his stock as collateral for a loan taken out by the firm to expand its services IV. Engaging in agency cross transactions
I and III
Which of the following statements are TRUE? I. It is unlawful for anyone to conduct business as a broker-dealer in a state unless also registered as an agent. II. A registration statement may be filed by an issuer itself, a broker-dealer, or any other person on whose behalf the offering is to be made. III. Registration of an agent is not effective when the agent is not associated with a broker-dealer registered under the act. IV. Registrations are automatically renewed 1 year after approval, provided no violations occurred during the year.
I and III
Under the Uniform Securities Act, an individual representing an issuer in the sale of its securities to the general public is not an agent if the issuer is a(n) I. government II. insurance company authorized to do business in the state III. bank
I and III Agents represent broker-dealers or issuers. However, an individual representing an issuer in the sale of certain exempt securities or in an exempt transaction is not an agent. Even when authorized to do business in the state, an insurance company is not one of the exempt issuers qualifying for the exemption from agent's registration for those who selling the company's securities while representing the company. Banks, yes, but not insurance companies. Please see the list in your LEM.
Which of the following statements concerning an agency cross transaction for an advisory client is (are) TRUE? I. It is a transaction in which a person acts as an investment adviser in relation to a transaction in which the adviser or related person acts as a broker-dealer for both the advisory client and another person on the other side of the transaction. II. An advisory client must provide prior written consent for the adviser to be able to engage in agency cross transactions. III. An adviser must make prior written disclosure to the advisory client that it will act as broker-dealer for, have a potential conflict of interest with, and may collect commissions from both parties. IV. An adviser may recommend the transaction to both parties to the transaction.
I, II, III
When it comes to borrowing and lending money, the NASAA Model Rules prohibit activity that would compromise the objectivity of securities professionals. Which of the following are NOT prohibited practices? I. A broker-dealer lending money to a client to purchase additional securities II. An agent taking out a car loan from a bank whose branch manager is a client of that agent III. An investment adviser borrowing money from an affiliated broker-dealer IV. An investment adviser lending money to a client to enable that client to maintain the minimum required asset level in the account
I, II, III Margin account would permit I
Under the provisions of the Uniform Securities Act, securities exempt from registration requirements include I. securities issued by the U.S. government II. securities issued by a building and loan association organized under the laws of any state and authorized to do business in this state III. bonds issued by an insurance company organized under the laws of any state and authorized to do business in this state
I, II, III Securities exempt from registration requirements include securities issued by the state or U.S. government; securities issued by foreign governments with whom the U.S. maintains diplomatic relations; and any securities issued by savings and loan or building and loan associations, insurance companies, and credit unions authorized to do business in this state.
Among the many exempt transactions under the Uniform Securities Act are the private placement and the preorganization certificate or subscription. While these two exemptions have several requirements in common, they have which of the following differences? I.The private placement exemption places a limit on the number of sales to retail investors while the preorganization certificate places a limit on the number of offers to all investors. II. Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. III. It is expected that noninstitutional buyers of the private placement are purchasing for investment only, while no such requirement exists for the investors in a preorganization certificate. IV. Commissions may be paid on the sale of a private placement to noninstitutional clients, while no remuneration is payable on the sale of a preorganization subscription.
II and III No money changes hands in the sale of a preorganization certificate or subscription, while the seller receives payment in the case of a private placement. The state will consider a private placement an exempt transaction if it is anticipated that individual (noninstitutional) investors are purchasing for investment only, not immediate resale. No holding period restrictions are placed on preorganization certificates. Only in the case of a sale of a private placement to an institutional client is it permissible to pay commissions. Finally, choice I has it backwards. When referring to retail (noninstitutional) investors, there is a limit to the number of offers (10), while in the preorganization certificate, the number of sales (subscribers) is limited to 10 regardless of whether they are retail or institutional
Which of the following statements regarding licensing and registration under the Uniform Securities Act are TRUE? I. When an agent's license is suspended, the broker-dealer's license is also suspended. II. When a broker-dealer's license is suspended, all of their agent's registrations are placed into suspense. III.When an investment adviser's license is suspended, all of their investment adviser representative's registrations are placed into suspense. IV. When a principal's license is suspended, the broker-dealer's license is also suspended.
II and III The suspension of a broker-dealer's or investment adviser's registration causes the registration of all agents and/or investment adviser representatives to be placed into suspense. It is rare that the suspension of a principal of a broker-dealer would lead to a suspension of the firm's license.
Which of the following statements referring to renewal of a broker-dealer's registration under the Uniform Securities Act are CORRECT? I. Annual renewal takes place on the anniversary of the registrant's initial registration. II. Each renewal application must be accompanied by the appropriate fee. III. Each renewal application must be accompanied by a consent to service of process signed by an authorized supervisory person of the firm. IV. Registrations expire December 31 unless renewed or canceled.
II and IV The consent to service of process is filed with the initial application for registration and becomes a permanent part of the registrant's file.
Under the Uniform Securities Act, which of the following statements is (are) TRUE regarding civil liability of advisers and broker-dealers? I. The statute of limitations for civil liability is 5 years. II. A lawsuit against a broker-dealer or adviser can be avoided if restitution, costs, and interest are paid to a client. III. If restitution is made to a client by a broker-dealer, the Administrator may not prosecute the securities violation.
II only Do not confuse the statute of limitations for criminal prosecution (5 years) with the statute of limitations for civil liability (3 years from the date of the event or 2 years from discovery, whichever occurs first). Since civil liability under the act is limited to restitution, costs, and reasonable interest, a lawsuit could be avoided by a return of the investor's funds plus interest. Payment of restitution to a client does not prevent the Administrator from prosecution for violating the provisions of the act.
To protect the public, the Administrator may I. deny the registration of an agent with insufficient net capital II. require an applicant for registration as both a broker-dealer and an investment adviser to limit activities to those of a broker-dealer due to lack of qualifications to render investment advice III. require an applicant for registration to submit to an oral examination
II. and III. Agents never have a net capital requirement, but broker-dealers do. It is not uncommon for an Administrator to deny an application for registration as an investment adviser to a firm that does not appear to have the necessary qualifications. The Administrator will permit the firm to function as a broker-dealer, and resubmit its request for adviser status at a later time. While it is rare, the USA does reserve the right to require a potential registrant to submit to an oral examination in addition to or instead of a written test.
Which of the following statements is (are) TRUE? I. A person with a place of business in the state who transacts business exclusively for the accounts of banks and savings institutions is not a broker-dealer under the Uniform Securities Act. II. A person excluded from the definition of investment adviser under the Investment Advisers Act of 1940 who offers investment advice to individual investors residing in this state, and has less than $100 million in assets under management, is subject to the jurisdiction of the state Administrator. III. A person required to register as an investment adviser under the Investment Advisers Act of 1940, who manages funds on a regular business headquartered in this state, may be subject to notice filing fees required by the state Administrator. IV. Broker-dealers who supply incidental investment advice and make securities recommendations to customers who pay commissions for the execution of their trades are not investment advisers subject to state or federal registration.
III and IV Under the NSMIA, any person excluded from the definition of investment adviser under the Investment Advisers Act of 1940 is considered a federal covered adviser. Therefore, regardless of the amount of money under management, the state has no jurisdiction. A federal covered adviser may be subject to payment of notice filing fees. Broker-dealers who supply investment advice incidental to their business and receive no special compensation for it are not investment advisers. A person who conducts business exclusively with banks and savings institutions is a broker-dealer under the USA if he has a place of business in the state. Had the person no place of business in the state and conducted business exclusively with banks and savings institutions, he would not be considered a broker-dealer subject to the regulatory control of the state Administrator.
Federal covered securities, as defined under the Uniform Securities Act I. must be registered with the SEC before they can be offered in the state II. must be registered in the state before they can be offered within the state III. include shares of an investment company registered with the SEC under the Investment Company Act of 1940
III only
Under the Uniform Securities Act, which of the following is (are) investment advisers? I. Jane advises customers regarding the value of gold and silver coins. II.The Trust Department of ABC Bank provides investment advice to its clients. III.Tom writes a newspaper column that analyzes and recommends securities. IV. Jill is an attorney specializing in estate planning who, as a side job, structures portfolios for the beneficiaries of her deceased clients at a reduced fee.
IV Jane's advice does not concern securities; banks are exempt from the definition; Tom's advice is not specific on the basis of the situation of each client (impersonal advice). While an attorney is generally excluded, Jill is giving investment advice for a fee in a manner that is not incidental to her legal practice.
An agent of a broker-dealer is currently doing business in one state and would like to conduct business in another state. When checking with the firm's compliance department, the agent would be told which of the following? A) If the agent is a partner, officer, or director and held that position at the time the broker-dealer was registered in that state, the individual need not register separately. B) No registration is necessary in the other state provided the agent's activities are limited exclusively to effecting transactions in certain exempted securities. C) Registration is required only if an offer is directed, accepted, and paid for in that state. D) No registration is necessary if no commission or other remuneration is paid or given directly or indirectly.
If the agent is a partner, officer, or director and held that position at the time the broker-dealer was registered in that state, the individual need not register separately.
An agent working for a brokerage firm and his client both live in Illinois, and the agent makes an offer to the client by phone while the client is vacationing in California, which he accepts. The client travels to Texas before returning home and sends payment for the security from there. He makes his payment by sending a check from a money-market fund based in Ohio. The Administrators of which of the following states have authority over the sale? Illinois California Texas Ohio
Illinois, Cali
Any individual selling securities (president of a bank) on behalf of an issuer of certain exempt securities is or isn't an agent?
Isn't Bank securities are exempt
Taking a while to cash a check in a customer's account is...
Keeping customer checks is never allowed. All funds must be promptly transmitted. This is a form of commingling.
Under the Uniform Securities Act, the registration requirements for agents would never include A) an examination B) surety bonding C) minimum capital D) a consent to service of process
Minimum capital
Under the Uniform Securities Act, the Administrator can require a federal covered investment adviser
To file a copy of all of the documents submitted to the SEC Federal covered investment advisers do not come under the jurisdiction of the state Administrator. The only requirement he may place on them is a Notice Filing which may include: Submitting copies of all documentation filed with the SEC; Paying a filing fee; and Providing a consent to service of process
Under the provisions of the USA, all of the following transactions are exempt EXCEPT A) transactions by executors B) a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made by the investors C) transactions in preorganization certificates if no commission is paid, no subscriber makes any payment, and the number of subscribers does not exceed 10 D) liquidation of a security pledged as collateral for a loan
a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made by the investors A transaction pursuant to an offer by an issuer to 10 persons in the state would qualify as a private placement and would be exempt. However, unlike a preorganization certificate, the subscribers do pay for their purchases. All of the other transactions are exempt.
A broker-dealer that has a pattern of delaying delivery of certificates or money to clients is...
displaying unethical business behavior
A client purchased a security per an agent's recommendation, and soon after, it declined by more than 50%. To compensate for the loss, the agent promised the client 1,000 shares in an oversubscribed IPO. In this situation, the agent has...
engaged in an unethical business practice as outlined in NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents First of all, NASAA's Statement of Policy prohibits the compensation of clients for losses on accounts.
An unregistered, nonexempt security may only be offered or sold in an
exempt transaction. If the transaction is exempt, however, no violation of the act has occurred, and therefore no civil liability or criminal penalties could be imposed.
Registration by coordination coordinates state registration of a security with
federal registration of that security. Securities are registered at the federal level under the Securities Act of 1933.
An individual who has applied for registration as an investment adviser representative has just passed the Series 66 exam. This individual may begin soliciting advisory clients A) when informed by the investment adviser that the representative's registration is effective B) when informed by the administrator that the representative's registration is effective C) immediately D) within 48 hours
hen informed by the investment adviser that the representative's registration is effective Passing the Series 66 exam is one of the ways to fulfill NASAA's testing requirement for IARs, but it does not automatically give one an effective investment adviser representative's license. Notice is received by the investment adviser from the appropriate state and/or federal authorities and then, in accordance with that firm's procedures, advisory activity may start. The Administrator does not have direct contact with the individual. The same applies to agents passing the Series 63 exam.
Trading in a customer's account must not be excessive in terms of size or frequency with respect to the customer's
investment objectives and financial ability
a person representing an issuer in securities transactions between an underwriter and an issuer is/is not deemed an agent
is not deemed an agent and is exempt from the agent registration requirements of the act.
Fraud under the USA is not limited to
judicial or case-law definitions of deceit but is subject to definition by legislation. The act itself contains the statement "fraud is not limited to common law deceit."
A stock listed on the Chicago Stock Exchange would most likely use the process known as
notice filing
Any change in the ownership of an investment advisory firm organized as a ________, no matter how small, requires notification to all clients within a reasonable amount of time.
partnership
Commingling
placing client securities and funds in an agent's account is prohibited; this is called commingling.
Any investment adviser under contract to manage a regulated investment company must...
register with the SEC and is, therefore, a federal covered adviser (regardless of where they have an office). So it would not be considered a USA investment adviser
An investment adviser hires two individuals to solicit new customers for the firm's wealth management service. Under the USA A) registration as investment adviser representatives is required B) soliciting is generally prohibited C) both of them would have to register as investment advisers D) they may begin soliciting as soon as they have passed their licensing examinations
registration as investment adviser representatives is required
In order to function as a broker-dealer on the premises of a financial institution
the broker-dealer must clearly distinguish between the operations of the broker-dealer and the retail banking operation
Performance-based compensation is not generally allowed unless
the client has a minimum under management (currently $1 million) or a substantial net worth (currently $2 million).
If the client cannot be reached, the only way to satisfy the margin call is through
the liquidation of shares in the account
The person illegally selling the securities is liable for
the purchase price of the securities plus interest from the date of purchase, court costs, and reasonable attorney's fees. Punitive damages will not be assessed.
Administrators have the authority to conduct an on-site examination of a registered investment adviser even if
there is no place of business maintained in the Administrator's stat
Shares issued as a result of a stock split should or should not be registered?
transactions between issuers and existing shareholders are exempt if no consideration is involved.
