Administrator stuff

Withdrawal effective date

30

What does dispositin mean

gift

The Administrator issues a final order revoking the registration of a broker-dealer. If desired, an appeal for review must be filed within how many days of the order? A)60. B)30. C)15. D)20.

A)60. Any final order of an Administrator may be appealed within 60 days from issuance.

Under the Uniform Securities Act, an offer to sell would NOT include: stock acquired through a merger. the issuance of warrants or convertible securities. the issuance of stock rights to existing shareholders. A)I only. B)II and III. C)I and III. D)I, II and III.

A)I only. An offer to sell is any activity in an effort to dispose of a security for value. The issuance of warrants or convertible securities to anyone or stock rights to existing shareholders is considered an offer to sell the underlying security because, unlike stock dividends, mergers, and bona fide loans, they involve the payment of money to acquire the stock, thereby making them an offer to sell.

Which of the following statements is (are) TRUE about the investigative power of the Administrator under the Uniform Securities Act? The Administrator may conduct public or private investigations to determine if violations are about to occur or have occurred. Persons could find themselves subject to contempt of court charges for failing to obey a subpoena issued by an Administrator. The Administrator may proceed against an entire firm for the actions of any principal of the firm. A)I, II and III. B)III only. C)II and III. D)I only.

A)I, II and III. The Administrator may conduct public or private investigations in pursuing suspected or actual violations and may do so within or outside the state. Administrators may issue subpoenas in conducting their investigations, and if persons fail to obey them, the Administrator may apply to the courts for a court order. If the persons then fail to obey the court order, they may be subject to contempt of court charges. The Administrator may take such action against an entire firm as a result of the actions of any principal of the firm.

As defined in the Uniform Securities Act, the term sale or sell would include: A)an investor using a cash dividend to automatically purchase additional shares of the issuer. B)the pledging of securities as collateral for a loan. C)a gift of nonassessable stock. D)the receipt of a stock dividend.

A)an investor using a cash dividend to automatically purchase additional shares of the issuer. Sale or sell includes every contract to sell or dispose of a security for value. When the cash from a dividend is used to purchase additional shares, value is being exchanged. This is unlike the pledge of stock, where ownership does not change hands, or the receipt of a stock dividend, where no consideration is exchanged.

Under the Uniform Securities Act, the Administrator has the power to deny, suspend, or revoke the registration of an issue if it is in the public interest and: -the issuer discloses in the prospectus that there is virtually no chance that the company's business model will be successful and investors should anticipate losing their entire investment. -the Administrator of another state has revoked the issue's registration. -an officer of the registrant has been convicted of a securities related crime. -the prospectus contains misstatements of nonmaterial information. A)II and III. B)II, III and IV. C)I and II. D)I and III.

A)II and III. If the Administrator of another state has revoked an issue's registration, the USA considers that just cause for denial in this state. Conviction of an officer of the issuer for a crime related to the securities industry will invariably lead to denial or revocation. Disclosure that the company is not expected to be successful is not a cause for denial; all that is required is full disclosure. Misstatements of material information would be cause for action by the Administrator, but nonmaterial, by definition, does not impact an investor's decision-making process.

Nobody Walks motor company, a licensed automobile dealer, is running a promotion offering anyone who purchases a car over the weekend with $1,000 corporate bond at no additional cost. Under the Uniform Securities Act, in order to make this offer: A)Nobody Walks motor company must be registered as a broker-dealer in the state. B)Nobody Walks motor company may not pay a commission on the sale of a car to any salesperson who is not registered with the Administrator as an agent. C)it must be made available to anyone who purchases a car during the specified period. D)there are no specific requirements as the company is a licensed automobile dealer and, due to the free offer, no sale of securities is involved.

A)Nobody Walks motor company must be registered as a broker-dealer in the state. The USA states that "any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value." Therefore, Nobody Walks motor company would have to be registered as a broker-dealer in this state.

According to the USA, under which of the following circumstances may an Administrator cancel an agent's registration? A)The agent is judged to be mentally incompetent. B)The agent is the subject of an insider trading lawsuit. C)The Administrator determines it would be in the public interest. D)The agent has admitted to selling unregistered exempt securities to individual clients.

A)The agent is judged to be mentally incompetent. Registration may be canceled by the Administrator if the registered individual has been judged mentally incompetent. Cancellation is a nonpunitive action of the Administrator.

Under the Uniform Securities Act, a sale includes all of the following EXCEPT a: A)disposition of a security for value. B)pledge of securities for the purpose of obtaining a margin loan. C)contract of sale. D)contract to sell.

B)pledge of securities for the purpose of obtaining a margin loan. Under the Uniform Securities Act, a sale includes every contract of sale, contract to sell, or disposition of a security for value. A pledge of securities is not a sale because the title to the shares is not transferred; it is merely assigned.

An application has been filed with the Administrator of State A for registration as a broker-dealer by Assured Success Investments (ASI), a broker-dealer registered in States B, C, and D. While the application is pending, a lawsuit against ASI is filed in civil court in State B. The effect of this would be A)ASI's application in State A would be put on hold B)ASI's application in State A would proceed as normal C)ASI's registration in State B would be suspended D)ASI's application in State A would be denied

B)ASI's application in State A would proceed as normal The filing of a lawsuit would have no immediate effect on a broker-dealer's application for registration. After all, one is innocent until proven guilty. Even a guilty verdict might not lead to any action, because we don't know whether the lawsuit is connected to the brokerage activities.

Which of the following statements is TRUE? A)An Administrator may not refuse a registrant's request to hold hearings in private. B)An Administrator may, at the request of a registrant, hold hearings in private. C)Hearings of an Administrator must be held in public. D)All administrative hearings under the USA must be held in a court of competent jurisdiction.

B)An Administrator may, at the request of a registrant, hold hearings in private. An Administrator has the discretion to hold hearings in private. A registrant cannot demand that a hearing be held in private. Hearings are administrative actions, and are therefore not held in courts.

Which of the following statements is TRUE? A)An individual may not buy or sell securities unless the transaction is made by a licensed broker-dealer or agents. B)An agent's registration may never be revoked without the opportunity for a hearing. C)In the sale of US government securities, a misrepresentation or other fraudulent practice by an agent would not fall under the jurisdiction of the state security Administrator because these securities are exempt. D)All securities must be registered with the appropriate state Administrator.

B)An agent's registration may never be revoked without the opportunity for a hearing. The agent always has an opportunity for a hearing even though the Administrator has broad powers to revoke and/or suspend an agent's registration. While individuals who transact in US government securities are not required to register, they are subject to the antifraud provisions of the Uniform Securities Act. US government and municipal securities need not be registered.

An agent in New Hampshire mails an offer to sell securities to clients in New York. Under the Uniform Securities Act, which of the following is (are) TRUE? An offer to sell has been made in New York if a client receives it in New York. An offer to sell has been made in Virginia if a client receives forwarded mail in Virginia. The agent is subject to the statutes of both New Hampshire and New York. A)I and II. B)I and III. C)I only. D)II only.

B)I and III. Offers directed to persons in other states by mail are considered to have been made in the other states if received where originally addressed. For clients receiving the offer in New York, an offer to sell has been made there because the mail was received where directed. When mail is forwarded to another state, an offer to sell is not considered to have been made in the state to which the mail was forwarded.

The Administrator has authority to: -issue a cease and desist order without a hearing. -issue a cease and desist order only after a hearing. -summarily suspend a currently effective securities registration upon discovering an officer of the issuer has been convicted of a securities-related crime. -sentence violators of the USA to three years in prison. A)II and III. B)I and III. C)II and IV. D)I and IV.

B)I and III. The Administrator may issue a cease and desist order without a hearing. Sentencing is only done by a court and suspension is a punitive action that may only take place after a hearing.

SYZ Corporation is having a rights offering that will enable existing shareholders to acquire 1 share of SYZ common stock for each 10 shares they currently own. Under the Uniform Securities Act, this would be considered: an offer of SYZ rights. a sale of SYZ rights. an offer of SYZ common stock. a sale of SYZ common stock. A)I and IV. C)II and III. D)II and IV.

B)I and III. This is obviously an "offer" of the rights (that's what the question says). In addition, the USA states than any offer of a right or warrant that gives the holder the ability to subscribe to another security is also an offer of that security.

There are several ways that a securities professional's registration can be terminated. Nonpunitive termination of a securities professional's registration could be done through: cancellation. suspension. revocation. withdrawal. A)II and IV. B)I and IV. C)II and III. D)I and III.

B)I and IV. Cancellation and withdrawal are nonpunitive methods of termination of a person's registration. Suspension, revocation, and denial are considered forms of punishment.

Under the Uniform Securities Act, the Administrator is required to provide which of the following in a disciplinary proceeding? Appropriate prior notice. Opportunity for a hearing. Written findings of fact and conclusions of law. A)III only. B)I, II and III. C)I and III. D)I and II.

B)I, II and III. In general, the Administrator must provide appropriate prior notice, opportunity for hearing, and written findings of fact and conclusions of law. Even if an order is issued summarily-that is, made effective upon issue without prior notice-the registrant must be notified upon issue of the order and given the opportunity to request a hearing.

Under the Uniform Securities Act, as a result of a hearing, the disciplinary actions that may be taken by the Administrator include which of the following? Permanent revocation of a registration. Bar from employment with any registrant. Restriction on a registrant's performance of any activity in the advisory or brokerage business. A)I and III. B)I, II and III. C)II and III. D)I and II.

B)I, II and III. Once the registrant is found guilty at a hearing, the Administrator is authorized to take any or all of these actions against a person's registration.

A registered investment adviser has been investigated by the Administrator for fraudulent misrepresentations purportedly made to several clients. If the IA is found to have been in violation of the Uniform Securities Act, this may result in: a $10,000 fine per violation. a receiver being appointed over the adviser's assets. a prison term of 5 years per violation. the requirement that the investment adviser make restitution to the victims. A)I and II. B)II and IV. C)III and IV. D)I and III.

B)II and IV. The Administrator may appoint a receiver over the investment adviser's assets and require the IA to make restitution to the victim. The maximum fine for a violation of the USA is $5,000 and the maximum prison term is three years.

The terms "offer", "offer to sell", "sale", and "sell" include which of the following? A)Any bona fide pledge or loan. B)Preemptive rights. C)A stock dividend for which the stockholders give nothing of value. D)An act incidental to a class vote by stockholders pursuant to the applicable corporate statute on a merger.

B)Preemptive rights. The preemptive right frequently given to common stockholders allowing them to purchase shares of a forthcoming issue is considered to be an offer of that upcoming issue. The terms "sale" or "sell" include every contract of sale, contract to sell, or any disposition of a security for value. A gift of a security is not considered a sale. The terms "offer" and "offer to sell" represent any effort to dispose of a security for value. This does not include bona fide loans, stock dividends, or dispositions pursuant to corporate statutes.

If a car dealer offers $1,000 bonds as a bonus for the purchase of cars, the car dealer is: A)engaging in an unlawful competitive marketing practice. B)engaging in the offering for sale of a security. C)committing fraud. D)offering a warrant to buy securities.

B)engaging in the offering for sale of a security. According to the Uniform Securities Act, offering securities as a bonus on the purchase of another thing for value, such as a car, constitutes an offer of securities. For the purposes of the Uniform Securities Act, the dealers are offering securities and are subject to the provisions of the act. The practice is not fraudulent, but registration as a broker-dealer may be required.

XYZ Securities, Inc. is a broker-dealer registered in the states of Alabama, Tennessee, Georgia, and Florida. The home office is in Birmingham with branches in Nashville and Atlanta. One of their clients living in Miami feels that his Nashville-based agent has been churning the account. If a complaint is filed, which Administrator would have jurisdiction? Alabama. Florida. Georgia. Tennessee. A)I and II. B)I and IV. C)II and IV. D)II and III.

C)II and IV. The Administrator in the state of residence of the client would certainly have jurisdiction. It is also likely that the Administrator in the state where the agent is located would also have jurisdiction because all offers were being made from Nashville. The fact that the home office is in Alabama does not enter into the discussion.

An agent's license could be revoked if he were: accused of murder in the first degree. convicted of a securities-related misdemeanor. declared insolvent. convicted of a nonsecurities-related felony. A)II and III B)I, II, III and IV C)II, III and IV D)III and IV

C)II, III and IV Once registered, an agent's license can be revoked if the agent is convicted of a securities-related misdemeanor or any felony. Insolvency is a cause for revocation of the registration of any securities professional. However, merely being accused of a crime, no matter how serious it is, does not lead to action until there is a conviction.

What is the term used to describe a common stock issued below its par value? A)Below book. B)Subpar. C)Assessable. D)Nonassessable.

C)Assessable. Assessable stock is a stock that is issued below its par or stated value. The issuer and/or creditors have the right to assess the shareholder for the deficiency. All stock issued today is nonassessable.

An Administrator could use which of the following as a reason for issuing an order denying the registration of a security? The issuer's enterprise or method of business includes or would include activities which, although legal in the state of incorporation, are illegal in the Administrator's state. The company has not been paying dividends. The offering would be made with unreasonable amounts of underwriters' and sellers' discounts. A)I, II, and III B)I only C)I and III D)III only

C)I and III An Administrator may deny the registration of a security when the activity to be conducted in the state is illegal. The underwriter's compensation may not be unreasonable. There is no requirement that dividends be paid in order to register a security.

Under the Uniform Securities Act, in order for the Administrator to suspend an agent's registration notice must be given of the proposed action and hearing notification must be given to the employing broker-dealer of the final order the agent must be presented with an opportunity for a hearing no notice or hearing is required to issue a suspension A)II, III and IV B)II and IV C)I, II and III D)I and III

C)I, II and III The Administrator may by order summarily postpone or suspend registration pending final determination of any proceeding under the USA. Upon the entry of the order, the Administrator shall promptly notify the applicant or registrant, as well as the employer or prospective employer if the applicant or registrant is an agent or investment adviser representative, that it has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request, the matter will be set down for hearing. Since the law states that the employer will be notified once the action commences, it should be obvious that once the suspension order becomes final, the employer will be notified.

Under the Uniform Securities Act, an Administrator who believes a violation has occurred or is about to occur may: issue a cease and desist order without a prior hearing. bring action to obtain an injunction and have a receiver appointed over the alleged violator's accounts. seek a court order requiring the alleged violator to make restitution to others. A)I and III. B)I and II. C)I, II and III. D)II and III.

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

An agent is registered in Montana and North Dakota. While working in his North Dakota office, he places a call to the cell phone of one of his clients who happens to be on vacation in Wyoming. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Idaho. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, jurisdiction resides with the Administrator of: North Dakota. Idaho. Wyoming. Illinois. A)I, II, III and IV. B)I and IV. C)I, II and III. D)II and III.

C)I, II and III. The Administrator has jurisdiction from the state in which the offer was made, (ND), received, (WY), and accepted, (ID). Mailing of the certificate is of no consequence.

Question #96 of 97QuestionId #634684 The Administrator may deny an application for registration as an agent if: the applicant has been convicted of a misdemeanor involving securities fraud within the past 120 months. the applicant is insolvent. the applicant has been convicted of a felony within ten years of the date of application. the applicant has filed an incomplete application. A)I and III. B)I and IV. C)I, II, III and IV. D)I, III and IV.

C)I, II, III and IV. A record of any felony conviction or misdemeanors involving securities fraud during the last 10 years is sufficient grounds for the Administrator to deny an application for registration in the securities industry. Insolvency and failure to file a complete application are also grounds for denial.

If the Administrator believes that a violation of the act has occurred or is about to occur, the Uniform Securities Act grants the office the power to: issue a cease and desist order. seek an injunction against the alleged violation. seek to have a receiver appointed over the violator's assets. seek to have the violator make restitution to investors. A)III and IV. B)I, II and III. C)I, II, III and IV. D)I and II.

C)I, II, III and IV. The Administrator has the power to issue cease and desist orders, apply to courts for temporary or permanent injunctions or restitution to investors, or have the court appoint receivers over a violator's assets.

The Uniform Securities Act grants state securities Administrators all of the following powers EXCEPT the power to: -conduct investigations involving dealers located in states other than the Administrator's state. -issue subpoenas to agents and brokers not residing in the Administrator's state. -revoke or suspend a registration without an opportunity for a hearing because of the confidential nature of the offense. -limit the length of an investigation to one year from the alleged offense, rather than place a registrant in continuous jeopardy. A)I, II and IV. B)II and III. C)III and IV. D)I and II.

C)III and IV. State securities Administrators may conduct investigations involving dealers in other states and issue subpoenas to agents and brokers not residing in the Administrator's state. Administrators may not revoke or suspend a registration without an opportunity for a hearing. Administrators have no limits on the amount of time they may devote to an investigation of a registrant.

Which of the following would NOT be cause for automatic rejection of an investment adviser's application? A)Lack of evidence of skills or training. B)Inability to meet financial obligations in a timely manner. C)Lack of experience. D)Evidence of fraud in the application.

C)Lack of experience. Lack of experience on its own is not sufficient cause for an application for registration as an investment adviser to be rejected. It is expected that the person will receive adequate training. Fraudulent information in an application and financial problems are obvious causes for rejection.

Which of the following would NOT be grounds for the state Administrator to exercise the authority to deny or revoke an investment adviser representative's registration? A)The registration application contained untrue statements. B)The applicant is currently under suspension by the NYSE. C)The FBI background check disclosed that a felony banking indictment was made against the representative 5 years ago. D)The applicant is subject to disciplinary order of another Administrator.

C)The FBI background check disclosed that a felony banking indictment was made against the representative 5 years ago. There are many reasons for an Administrator to deny or revoke an individual's registration, including filing a false application or if the individual is subject to disciplinary order of another regulator. A conviction of a felony, but not an indictment, would also be reasonable grounds for denial.

Under the USA, all of the following powers are vested in state securities Administrators EXCEPT: A)revoking licenses when it is in the public interest to do so and when there is cause. B)auditing the books of investment advisers on a random basis. C)limiting investigational activities to state boundaries. D)requiring certain parties to provide testimony under sworn oath.

C)limiting investigational activities to state boundaries. State securities Administrators may investigate outside the boundaries of their particular states when it is presumably fruitful to do so. In conjunction with hearings, the Administrator may require witnesses to swear oaths prior to testimony. The Administrator may audit books on a random basis and revoke licenses with cause.

Under the Uniform Securities Act, the Administrator may: A)relax the antifraud provisions for investment adviser representatives not residing in the state. B)waive any requirement of the act he deems inappropriate. C)make rules, orders, and forms the Administrator considers necessary to carry out the provisions of the act. D)waive only those requirements of the act that are nonbinding.

C)make rules, orders, and forms the Administrator considers necessary to carry out the provisions of the act. The Administrator has power to make, amend, and rescind such rules, forms, and orders it has issued as necessary to carry out the provisions of the act. The state Administrator may not waive provisions of the act.

The Uniform Securities Act provides that the state Administrator may deny the registration of a broker-dealer for all of the following reasons EXCEPT that: A)the applicant is enjoined temporarily from engaging in the securities business. B)a willful violation of the Uniform Securities Act has occurred. C)the applicant is not qualified due to a lack of experience. D)the applicant is financially insolvent.

C)the applicant is not qualified due to a lack of experience. If the broker-dealer qualifies by virtue of training or knowledge, registration cannot be denied for lack of experience only. Registration may be denied if the applicant willfully violates the Uniform Securities Act, is financially insolvent, or has been enjoined from engaging in the securities business.

Which of the following would NOT be defined as a sale or an offer to sell under the Uniform Securities Act? A)A bonus given as a direct result of the purchase of another security. B)ABC attaches warrants to buy common stock of XYZ corporation to a bond issue. C)ABC issues a rights offering. D)ABC issues $1.50 quarterly dividend to existing stockholders of record.

D)ABC issues $1.50 quarterly dividend to existing stockholders of record. ABC's issue of a $1.50 quarterly dividend to existing stockholders is not a sale as defined in the Uniform Securities Act. Bonuses are considered sales and rights and warrants, are considered offers of the underlying stock.

The definition of "offer" (offer to sell) includes which of the following? An attempt to dispose of a security for value. A solicitation of an offer to buy an interest in a security for value. The actual sale of a security for value. An offer to dispose of a security for value. A)I only. B)I, II, III and IV. C)I and IV. D)I, II and IV.

D)I, II and IV. The term" offer" (or offer to sell) is any activity in an effort to dispose of a security for value, such as the offer to sell or the solicitation of an offer to buy a security. The term" sale" or "sell" includes every contract of sale, contract to sell, or any disposition of a security for value.

Under the Uniform Securities Act, the Administrator has the power to: administer oaths. indict offenders. subpoena witnesses. take evidence. A)II, III and IV. B)I and III. C)I, II, III and IV. D)I, III and IV.

D)I, III and IV. The Administrator has the power to administer oaths, subpoena witnesses and take evidence. The Administrator also has the power to compel testimony and require the production of books and records. However, while the Administrator is authorized to refer violations for possible criminal prosecution, the actual powers of criminal prosecution belong to others. For example, indicting offenders is the function of a grand jury.

Under the USA, which of the following statements regarding the withdrawal of registration is TRUE? The withdrawal automatically becomes effective 90 days after filing. If disciplinary action is initiated within 30 days after filing, the automatic effective date may be delayed. The Administrator may institute disciplinary proceedings within one year after the effective date of the withdrawal. A)I and III. B)I and II. C)I, II and III. D)II and III.

D)II and III. A registered person may apply to withdraw the registration. The withdrawal is effective in 30 days, unless the person is under investigation in connection with pending disciplinary action or an investigation is instigated during the 30 days after filing the application to withdraw. If there is an investigation underway, the Administrator will determine when the withdrawal will become effective. The Administrator has one year from the effective date of withdrawal to begin disciplinary actions for violations of the act.

When an Administrator acts summarily to postpone or suspend a registration of a security, which of the following statements is (are) TRUE under the Uniform Securities Act? The suspension will not go into effect until after a hearing. The registrant must be promptly notified of the action and given an opportunity for a hearing. A hearing must be held within 15 days of written request of the registrant. A)I and III. B)I, II and III. C)I only. D)II and III.

D)II and III. Acting summarily means acting without prior notice. An Administrator who has grounds may postpone or suspend a registration by issuing a stop order. The registrant must be promptly notified of the action and of the opportunity for a hearing. The hearing must be held within 15 days of a written request, and the suspension will remain in effect until final disposition.

If the Administrator wishes to conduct an examination of an investment adviser's books and records, how much advance notice must be given? A)15 days. B)60 days. C)30 days. D)No advance notice.

D)No advance notice. No advance notice is necessary for the Administrator to conduct an examination of the books and records of an investment adviser or a broker-dealer. The USA only requires that the examination be held during normal business hours of the registrant.

You inform a customer that you are not allowed to solicit an order for a stock but will accept that customer's buy order if placed. This is: A)an unsolicited transaction. B)an offer to purchase. C)an offer to sell only if it is accepted. D)an offer to sell.

D)an offer to sell. Under the Uniform Securities Act, the term "offer" is the solicitation of an offer. In this example, the agent is soliciting an offer from the customer to buy a security. A solicitation is considered to have occurred even if the customer fails to act on the solicitation.

On the basis of information gathered from reliable sources, an Administrator has reason to believe that a broker-dealer located in the state is engaging in practices that might be a violation of the Uniform Securities Act. As a result, the Administrator assembles a task force to conduct a surprise audit of the firm's operations. In doing so, the Administrator's task force would be able to enter the broker-dealer's premises: A)upon 1 hour's notice. B)upon 15 days' notice. C)upon 1 day's notice. D)at any time during regular business hours without prior notice.

D)at any time during regular business hours without prior notice. The Administrator does not have to give notice before conducting an audit of a firm.

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

D)issue a cease and desist order. 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.

Under the USA, the Administrator may take all of the following actions EXCEPT: A)issue a cease and desist order against a broker-dealer. B)file a civil complaint against an agent. C)file a criminal complaint against an investment adviser. D)issue an arrest warrant for an investment adviser representative.

D)issue an arrest warrant for an investment adviser representative. An arrest warrant can only be issued by a court of law. Filing both civil and criminal complaints as well as issuing cease and desist orders are all within an Administrator's power.

Under the Uniform Securities Act, an Administrator investigating violations: A)may subpoena records but may not compel individuals to testify. B)may subpoena records only with court approval. C)must maintain the confidentiality of all records. D)may appoint an officer who has the power to subpoena records, administer oaths, or require production of documents and books.

D)may appoint an officer who has the power to subpoena records, administer oaths, or require production of documents and books. Public or private investigations may be conducted by the Administrator to determine whether violations of the act are about to take place or have already occurred. These investigations may take place inside or outside the state. In conducting the investigation, the Administrator, or any officer designated by him, may subpoena records or compel testimony from individuals.

Linda is applying with State A to become a registered investment adviser. She has never practiced as an investment adviser before, but she was a municipal bond broker for many years. Seventy-five months ago, Linda was barred from municipal bond activities by the MSRB. This would or could: A)have no impact on her registration because she had no investment adviser violations. B)make the SEC refuse to review her investment adviser application on Form ADV. C)have no impact on her investment adviser registration because municipal bonds are exempt securities. D)possibly cause her registration to be denied.

D)possibly cause her registration to be denied. Generally, disciplinary action in conjunction with any professional securities or commodities activity resulting in a revocation or bar within the 10-year period preceding application, will cause the application as an investment adviser to be refused under statutory denial. However, the Administrator will review the application and the circumstances surrounding the action.

Sale is not

- Attempt to transfer ownership solicitation of offer to buy offer of an equivalent contract (offer to sell)

Ability of Admin to make investigation in other states

- Only f its to see if violations happened in his state

Statute of lim

10 years

Under the Uniform Securities Act, an offer and sale does NOT exist if it is: the result of a class vote by stockholders regarding a merger or consolidation. a bona fide pledge or loan. an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares. a gift of nonassessable securities. A)I, II, III and IV. B)II and IV. C)I, II and III. D)I and II.

A)I, II, III and IV. The Uniform Securities Act specifically excludes all four choices from the definition of an offer and a sale.

Under the USA, the term "sale" means: A)a contract to dispose of a security for value. B)an attempt to dispose of a security for value. C)a solicitation of an offer to sell. D)an offer to sell.

A)a contract to dispose of a security for value. A sale is a contract, verbal or otherwise, to dispose of a security for value; all of the other choices describe an offer to sell.

An applicant for registration as an IAR in this state was convicted four years ago of a nonfinancially related crime in another state. Under that state's laws, the crime was a misdemeanor, but under this state's laws, it is a felony. When viewing this IAR's application, the Administrator will: A)treat the crime as any felony. B)treat the crime as a nonfinancial misdemeanor. C)treat the crime as a nonfinancial felony. D)censure the investment adviser for even thinking of employing this individual.

B)treat the crime as a nonfinancial misdemeanor. Even though the crime is a felony in the state where registration is being sought, the applicant's record shows a misdemeanor and, therefore, this individual would not be subject to statutory disqualification.

A registrant's registration may be canceled by the Administrator: A)as long as there is opportunity for a hearing. B)upon the order of a court of competent jurisdiction. C)if the Administrator is unable to locate the registrant. D)when the registrant has been found in violation of the Uniform Securities Act.

C)if the Administrator is unable to locate the registrant. Cancellation is non-punitive - nothing wrong was done. But, when the Administrator is unable to locate the registrant, or the registrant is declared mentally incompetent or is deceased, registration is canceled.

Define Sale

any contract of sale, any contract to sell, and any disposition of a security or interest in a security

Under the Uniform Securities Act, an agent's request for withdrawal of registration takes effect: A)30 days after receipt of an application to withdraw or within such a shorter period of time as the Administrator may determine. B)30 days after receipt of an application to withdraw. C)60 days after receipt of an application to withdraw. D)45 days after receipt of an application to withdraw.

A)30 days after receipt of an application to withdraw or within such a shorter period of time as the Administrator may determine. The Administrator has the power to shorten the time period for both withdrawal and initial registration. Always choose the answer that is the most correct.

Under the Uniform Securities Act, which of the following could be a cause for denial of a registration? A)A revocation order by another state's Administrator. B)Conviction of a securities-related violation 12 years ago for which the prison sentence ended last month. C)Lack of a degree from an accredited degree granting institution. D)Conviction of a misdemeanor 7 years ago.

A)A revocation order by another state's Administrator. When one's registration has been revoked by another state's Administrator, any other Administrator will deny registration in their state. The securities-related violation occurred more than 10 years ago, and the misdemeanor is only a problem if it is securities or money related.

The state securities Administrator may conduct an investigation: A)at any time if it appears that a violation has occurred or may be about to occur. B)only on receipt of a customer complaint. C)only if the person subject to the investigation is a state resident. D)if directed to do so by the SEC.

A)at any time if it appears that a violation has occurred or may be about to occur. The Uniform Securities Act permits the Administrator to conduct an investigation when a violation has occurred or seems likely to occur. The investigation can involve anyone within the state or anyone who has made an offer into the state from another state.

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)issue an injunction. B)subpoena witnesses. C)insist that specific forms be used to register securities. D)revoke the registration exemption granted to a nonprofit issuer.

A)issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.

Admin Jurisdiction

Activity that origniates in his state, is directed to his state, and activities accepted in his state

Under which of the following circumstances can an Administrator initiate a suspension or revocation proceeding against a broker-dealer registered in the state? On discovery that the broker-dealer's license had been suspended in another state. On the conviction of a violation of the Securities Exchange Act of 1934. 2 years after the withdrawal of registration by the broker-dealer. On the basis of facts known by the Administrator at the time of the broker-dealer's initial registration. A)II and III. B)I and II. C)II and IV. D)I and III.

B)I and II. An Administrator may initiate suspension proceedings against a broker-dealer on discovering that its registration has been suspended in another state and on conviction of a violation of the Securities Exchange Act of 1934. The Administrator may not initiate revocation proceedings against a broker-dealer later than 1 year after the broker-dealer has withdrawn its registration. The Administrator may not suspend or revoke a broker-dealer's registration at a subsequent time on the basis of facts known by the Administrator at the time of the initial application.

The Administrator may deny a person's registration as an investment adviser representative if the person meets which of the following criteria? Has a recent securities-related criminal record. Has recently been convicted of a felony not related to the securities industry. Has lost a civil lawsuit within the last year. Was convicted of any misdemeanor within the last year that did not involve securities or money. A)III and IV. B)I and II. C)I and IV. D)II and III

B)I and II. The Administrator may deny a license to individuals who have been convicted of any felony or a securities- or money-related misdemeanor within the last ten years. Civil lawsuits will rarely have an effect upon securities registration.

An agent is registered with a broker-dealer whose principal office is located in State X, but who also does business in State Y. However, the agent is only licensed in State Y and, confines her business to residents of that state. The Administrator of State X has what kind of authority over this agent? A)Can check the records of the agent in state Y with no prior notification. B)Can check the records of the agent in state Y only with proper prior notification. C)Cannot check the records of the agent in state Y, since it is not their jurisdiction. D)Can only take action against this agent when she is physically present in State X.

C)Cannot check the records of the agent in state Y, since it is not their jurisdiction. Even though the broker-dealer is registered in state X, the agent in question is not; she is only registered in state Y. Therefore, the Administrator has no jurisdiction over the activities of this agent in a state other than his own.

You are an agent registered in Georgia. While working in the state, you call one of your Atlanta-based clients who is traveling through Alabama. You make an offer of 100 shares of RUFF common stock. The client tells you that he wishes to think about it and asks you to call back in about an hour. You do as requested and reach him while he is refueling in Mississippi. The client accepts the offer and mails a check the next day from Louisiana. Jurisdiction for this sale rests with the Administrators of which states? Georgia. Alabama. Mississippi. Louisiana. A)I and II. B)II and III. C)I, II and III. D)I, II, III and IV.

C)I, II and III. Jurisdiction rests with the Administrator of the state from which the offer was made (Georgia), where the offer was directed (Alabama), and where the offer was accepted (Mississippi). Where the check is mailed from is of no consequence.

The Uniform Securities Act defined many terms. Among them is the term sale. Which of the following would be included in the definition of sale? An offer of common stock in a new issue properly registered or exempt from registration in the state A gift of assessable stock An investor exercising preemptive rights previously received directly from the issuer A corporation distributes 10 million new shares as part of a 2 for 1 stock split to all holders of its $1.00 par common stock A)I and IV B)I and II C)II and III D)III and IV

C)II and III A gift of assessable stock is always considered both an offer and a sale. Although the receipt of preemptive rights is not a sale, the exercise of them is. An offer does not become a sale until the exchange of consideration, and receiving additional shares as part of a stock split is not a sale because, unless stated otherwise, there is never any payment involved with a stock split.

A registration of an agent can be denied or revoked if it is in the public interest and: a registrant fails to include the fact that he had been convicted of a nonsecurities-related misdemeanor within the last 2 years. a registrant has willfully violated the securities laws of a foreign jurisdiction. a registrant is qualified on the basis of knowledge and training but lacks requisite experience. a registrant has engaged in dishonest or unethical practices in the securities business. A)III and IV. B)I and II. C)II and IV. D)II and III.

C)II and IV. Just cause for denial, suspension, or revocation of an agent's license includes engaging in dishonest or unethical practices in the securities business and willfully violating the securities laws of a foreign jurisdiction. Failure to include convictions for a securities-related misdemeanor (or any felony) constitutes filing an incomplete or misleading application, and that too would be just cause for taking action. Don't confuse this with the 10-year rule. These convictions must always be disclosed; 10 years is the time period during which it is almost a sure thing that the application will be denied. An Administrator may not deny a registration solely on the basis of lack of experience.

An Administrator may deny or suspend a registration in all of the following situations EXCEPT: A)if the applicant was convicted of a misdemeanor involving securities within the last ten years. B)if the registrant has failed to properly supervise agents and investment adviser representatives. C)if the applicant is not qualified on the basis of experience. D)if the applicant has been the subject of an adverse order entered by the Administrator of another state within the past ten years.

C)if the applicant is not qualified on the basis of experience. The Administrator may restrict a registration on the basis of lack of training and knowledge, but not for a lack of experience alone. The Administrator may deny a registration if the applicant was convicted of a misdemeanor involving securities within the last ten years. The Administrator may deny a registration if the applicant has been the subject of an adverse order entered by the Administrator of another state within the past ten years. Registrations may be suspended if agents or investment adviser representatives are not properly supervised.

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)issue a cease and desist order without prior notice. B)inspect offices of registered broker-dealers without prior notice. C)issue an injunction when there is evidence of wrongdoing. D)insist that specific forms be used to register securities.

C)issue an injunction when there is evidence of wrongdoing. Only a court of competent jurisdiction may issue injunctions

The Uniform Securities Act gives the Administrator the authority to do all of the following EXCEPT: A)issue cease and desist orders. B)conduct hearings. C)issue injunctions. D)examine the records of a broker-dealer, regardless of the state where those records are located.

C)issue injunctions. Only a court of competent jurisdiction has the power to issue an injunction. The Administrator may go to the court to request the injunction but cannot issue it himself. The Administrator may issue a cease and desist order with or without a prior hearing. Records, no matter where they are located, may be subpoenaed by the Administrator.

Under the Uniform Securities Act, all of the following statements regarding a broker-dealer withdrawing its registration are true EXCEPT: A)it is generally effective 30 days after written notification. B)it must be in writing. C)it prevents the broker-dealer from re-registration in the future. D)it cannot take effect if the Administrator is instituting a revocation proceeding.

C)it prevents the broker-dealer from re-registration in the future. If a broker-dealer withdraws its registration, it retains the right to re-register at some future date. The USA provides for a 30-day withdrawal period.

A customer living in one state receives a phone call from an agent in another state. A transaction between the two occurs in a third state. According to the Uniform Securities Act, under whose jurisdiction does the transaction fall? A)Administrator of the state in which the customer lives. B)Administrator of the state in which the transaction took place. C)Administrator of the state in which the agent is registered. D)Administrators of all three states involved.

D)Administrators of all three states involved. Under the scope of the Uniform Securities Act, if any part of a transaction occurs in a state, the transaction falls under the jurisdiction of the state Administrator. The transaction is under the control of the Administrator of the state in which the customer received the offer, the Administrator of the state from which the agent made the offer, and the Administrator of the state in which the transaction took place.

In conducting investigations, the Administrator may: require a person to file a statement in writing and under oath. publish information of any violation over the vigorous objections of a violator. make investigations both inside the state and in other states to determine whether violations of the USA have occurred in his state. make investigations outside the state to determine whether violations of the USA have occurred in that other state. A)I, II, III and IV. B)I and II. C)II and III. D)I, II and III.

D)I, II and III. The Administrator may require written statements under oath, publicize violations, and investigate anywhere necessary to determine whether or not a violation of the act took place in his state. However, he is not authorized to conduct investigations in other states to determine whether a violation of the USA has occurred in those states.

Under the Uniform Securities Act, the Administrator may deny an application for registration as an investment adviser: because of a lack of experience. because the applicant was suspended from membership on a Canadian stock exchange. if the applicant is also registered as a broker-dealer. when the applicant files an incomplete application. A)I and III. B)III and IV. C)I and II. D)II and IV.

D)II and IV. Among the reasons that give the Administrator cause to deny an applicant's registration are suspension from any securities regulatory agency, both in the United States and Canada, and the filing of an incomplete application.

An Administrator may initiate a suspension or revocation proceeding against a broker-dealer registered in his state: up to two years after a broker-dealer voluntarily withdraws its registration. when an agent of the broker-dealer is convicted of a felony violation of the Securities Exchange Act of 1934. upon discovery that the broker-dealer's license had been suspended in another state. upon discovery of new facts unknown to the Administrator at the time of the broker-dealer's initial registration. A)I and II. B)II, III and IV. C)I, II, III and IV. D)III and IV.

D)III and IV. The Administrator maintains jurisdiction over a license that has been withdrawn for a period of one year after the effective date of the withdrawal. An action against an agent of the broker-dealer does not allow the regulatory authority to also go after the broker-dealer unless that agent is a principal of the broker-dealer or part of the ruling indicated that there was a failure to supervise. The broker-dealer must disclose all suspensions by other regulatory agencies, including other states, to the state Administrator of its own state. A broker-dealer must also provide full disclosure of all relevant facts to the state Administrator concerning its registration.

Jack, who is proficient in both fundamental and technical analysis, would like to become an investment adviser. Although Jack is fairly new to the securities business, he worked in the commodities business for many years. Five years ago, Jack's Commodity Pool Operator's license was suspended by the Commodity Futures Trading Commission for having willfully violated or willfully failing to comply with any provision of the Commodity Exchange Act. Which of the following best describes how Jack's application to open an investment advisory business will be handled under the Investment Advisers Act of 1940? A)Jack's application will likely be accepted because he has not violated any securities law. B)Jack's application will likely be denied because he has little experience in the securities industry. C)Jack's application will likely be accepted because his violation of investment-oriented regulations occurred 5 years prior to his application. D)Jack's application will likely be denied because he violated the Commodity Exchange Act within the 10-year period prior to his application.

D)Jack's application will likely be denied because he violated the Commodity Exchange Act within the 10-year period prior to his application. Jack's application will probably be denied because he was found guilty of violating the Commodity Exchange Act within the 10-year period prior to his application. Registration as an investment adviser will be denied to any party that has been convicted, within the 10-year period prior to application, of a violation of federal securities acts or the Commodity Exchange Act. Such statutory denial will also impact those enjoined under domestic or foreign court orders from engaging in the business of investing, presuming such orders were made in the 10-year period prior to the application date.

An Administrator may issue a stop order if it is in the public interest and the: A)registrant is not registered in all states in which the security is proposed to be registered. B)Administrator disapproves of the quality of the products manufactured by the registrant. C)registrant refuses to pay the Administrator a personal fee in addition to filing fees. D)registrant is subject to an administrative stop order of a neighboring state.

D)registrant is subject to an administrative stop order of a neighboring state. An Administrator has the authority under the USA to issue a stop order if a registrant is subject to a stop order in another state. The Administrator does not have the authority to approve or disapprove of the quality of products manufactured by a registrant. The Administrator may not use the office for personal gain and therefore may not request personal fees. The Administrator may not deny a registration on the basis of its lack of registration in other states.

A broker-dealer is registered in state A and state B. A client in state B files a complaint with the Administrator and, upon further investigation, the Administrator decides to take action against the broker-dealer. In order to complete the case, the Administrator feels that certain information must be subpoenaed from persons in state A and asks that state's Administrator for assistance. Under the Uniform Securities Act, state A's Administrator is required to cooperate only if: A)state A's Administrator is also pursuing action against the broker-dealer. B)state A's Administrator has taken action against this broker-dealer prior to state B's getting involved. C)the broker-dealer had filed a consent to service of process in state A. D)the activities constituting an alleged violation for which the information is sought would be a violation if the activities had occurred in state A.

D)the activities constituting an alleged violation for which the information is sought would be a violation if the activities had occurred in state A. Although state Administrators tend to cooperate well with each other, the USA only requires it when the action that is the subject of the complaint would also be a violation of the law in this state.

Under the USA, a sales agent's registration may be suspended by the Administrator for all of the following reasons EXCEPT: A)the agent is convicted of willful violations of the USA. B)the agent is enjoined by a court of law from engaging in the securities business. C)it has been discovered that the agent is not properly supervised. D)the agent is accused of violations of the antifraud provisions of the USA.

D)the agent is accused of violations of the antifraud provisions of the USA. An accusation is not grounds for suspension, unlike convictions, court injunctions, and lack of supervision.

One of the actions available to the Administrator is the issuance of a cease and desist order. When the Administrator issues a cease and desist order: A)the subject of the order may appeal to the proper court. B)the right of rescission is automatically invoked. C)the subject of the order may no longer function as a registered person until the final order is issued. D)the subject of the order must promptly put a halt to the specified activity.

D)the subject of the order must promptly put a halt to the specified activity. A cease and desist order is issued with the intent of putting a halt to a specified activity that, in the eyes of the Administrator, has the potential to damage the investing public. If the offender does not cease the activity, the Administrator may go to court to have an injunction issued. Only final orders may be appealed. In general, a cease and desist order only applies to a specific activity and does not require the subject to cease all functioning.

The Administrator has a number of punitive powers. If you did something improper, the worst thing that the Administrator could do to you is: A)suspend your registration. B)cancel your registration. C)revoke your registration. D)deny your registration.

C)revoke your registration.

Under what circumstances may an Administrator cancel the registration of an agent? Inability to get in contact with the agent for a reasonable amount of time. Death of the agent. The agent is deemed mentally incompetent. Failure to follow provisions of the act. A)II, III and IV. B)I and II. C)II and III. D)I, II and III.

D)I, II and III. Cancellation is a form of non-punitive termination. If an agent dies, is declared mentally incompetent, or mail is returned with no forwarding address, registration will be canceled.

Under the Uniform Securities Act, which of the following concerning the withdrawal of an agent's registration is NOT true? A)Absent any disciplinary proceedings, withdrawal is effective 60 days after application. B)Disciplinary proceedings may be taken against an agent after the agent's withdrawal is effective. C)At the Administrator's discretion, disciplinary proceedings may delay effectiveness of a withdrawal application indefinitely. D)Absent any disciplinary proceedings, withdrawal is effective 30 days after application.

A)Absent any disciplinary proceedings, withdrawal is effective 60 days after application. Under the USA, withdrawals of registration are generally effective on the 30th day after filing, unless a disciplinary action is instituted. The Administrator may institute a revocation or suspension proceeding within 1 year after an agent's withdrawal has become effective.

Under the USA, which of the following fits the definition of a sale? A)Contract to dispose of a security. B)Issuing a prospectus. C)Solicitation of an offer to buy a security for value. D)Attempt to dispose of a security for value. Explanation Sales involve any contract or disposition for value; solicitations and attempts to dispose are offers. Reference: 2.12.1.1 in the License Exam Manual

A)Contract to dispose of a security. Sales involve any contract or disposition for value; solicitations and attempts to dispose are offers.

Under the Uniform Securities Act, which of the following statements are TRUE about the authority of an Administrator? A cease and desist order may be issued prior to a hearing. A cease and desist order may be issued after a hearing. A cease and desist order is valid for a maximum of 30 days. A)I and II. B)I, II and III. C)II and III. D)I only.

A)I and II. In issuing a cease and desist order, the Administrator may provide prior notice and hearing or may issue the order without prior notice or hearing (summarily). There is no time period associated with the order.

The Administrator in Texas has jurisdiction over an offer made: on a radio program originating in Texas. on a radio program originating in Oklahoma. in a newspaper circulated in Texas but published in Oklahoma. A)I only. B)I, II and III. C)I and II. D)III only.

A)I only. The Administrator does not have jurisdiction over an offer made in a TV or radio broadcast that originated outside of the state. The same is true for a newspaper published outside the state.

Under the Uniform Securities Act, which of the following disciplinary actions is (are) authorized as part of the Administrator's authority? The Administrator may suspend or revoke a current registration. The Administrator may censure or bar an applicant from future registration. The Administrator may restrict the securities-related business of a broker-dealer, adviser, or registered agent. A)I, II and III. B)I only. C)I and III. D)II and III.

A)I, II and III. An Administrator may deny an application for registration, suspend or revoke a current registration, or censure or bar from future registration. The Administrator may also restrict or limit the securities-related business activity of a broker-dealer, adviser, or their registered agents or representatives.

Disciplinary proceedings under the Uniform Securities Act require the Administrator to provide which of the following? An opportunity for a hearing. Written findings of facts and conclusions of law. Appropriate prior notice. A)I, II and III. B)I and III. C)I and II. D)II and III.

A)I, II and III. In the event of a disciplinary action, an Administrator must provide appropriate prior notice, an opportunity for a hearing, and written findings of facts and conclusions of law. Even if an order is issued summarily (made effective upon issue without prior notice), a registrant must be notified upon issue of the order and must be given the opportunity to request a hearing.

With regard to the powers of the Administrator, which of the following statements are NOT correct? The Administrator must seek an injunction to issue a cease and desist order. The USA requires an Administrator conduct a full hearing, public or private, prior to issuing a cease and desist order. The USA grants the Administrator the power to issue injunctions to force compliance with the provisions of the act. A)I, II and III. B)II and III. C)I and III. D)I and II.

A)I, II and III. The Administrator need not seek an injunction to issue a cease and desist order. The Administrator can seek an injunction from a court. The USA does not require that an Administrator conduct a public or private hearing prior to issuing a cease and desist order. When time does not permit, the Administrator may issue a cease and desist prior to a hearing to prevent a pending violation. The USA does not grant the Administrator the power to issue injunctions to force compliance with the act. The act permits the Administrator to issue cease and desist orders and, if they do not work, to seek an injunction from a court of competent jurisdiction. A cease and desist order is an administrative order whereas an injunction is a judicial order.

Under the Uniform Securities Act, which of the following would cause an agent's registration to be canceled by the Administrator? The agent has died. The agent is found by a court to be mentally incompetent. The agent cannot be located after reasonable search. The agent is found by a court to have violated a securities statute. A)I, II and III. B)I and II. C)I, II, III and IV. D)I only.

A)I, II and III. The key word is canceled. The Administrator would cancel an agent's registration in the event of death or mental incompetence of the registrant. Failure to locate an agent, such as mail being returned without a forwarding address, is also a cause for cancellation. Cancellation carries no connotation of wrongdoing; the Administrator may revoke a registration for violations.

Under the Uniform Securities Act, which of the following are cause for disciplinary review action by the state securities Administrator? Joe files an application for registration as an investment adviser and omits the fact that he was convicted of fraud 12 years ago. Tom, a registered investment adviser, fails to disclose that he recently filed for bankruptcy protection. The ABC Advisory Group, a registered investment adviser, employs several investment adviser representatives as independent contractors. Ed is suspended from conducting business in the securities industry for a period of 6 months by FINRA (NASD). A)I, II and IV. B)III and IV. C)II and IV. D)I and II.

A)I, II and IV. Even though the Administrator's power to deny a registration is limited to convictions within the past ten years, any conviction of a felony or securities-related misdemeanor must be disclosed. Failure to disclose a suspension by FINRA (NASD) or a bankruptcy filing is cause for disciplinary action on the part of the Administrator. Investment advisers may employ investment adviser representatives as independent contractors.

Under the USA, which of the following are grounds for suspension, denial, or revocation of an issuer's registration statement? Information in the registration statement is incomplete. Unreasonable compensation to the underwriters. Failure to pay filing fees. The security is subject to an administrative stop order in a federal court. A)I, II, III and IV. B)II and IV. C)I and II. D)I and III.

A)I, II, III and IV. Incomplete information on the registration statement, unreasonable underwriting compensation, failure to pay filing fees, and a security subject to an administrative stop order in federal court are all grounds for suspension, denial, or revocation of an issuer's registration statement.

The Administrator may: -deny a registration if the registrant does not have sufficient experience to function as an agent. -limit a registrant's functions to that of a broker-dealer if, in the initial application for registration as an investment adviser, the registrant is not qualified to act as an adviser. -take into consideration that the registrant will work under the supervision of a registered investment adviser or broker-dealer in approving a registration. -deny a registration, if it is prudent in view of a change in the state's political composition. A)II and III. B)I and IV. C)I and II. D)III and IV.

A)II and III. The Administrator may deny, suspend, or revoke a registration for many reasons, but they must be in the interest of the public. The Administrator may determine that an applicant, in his initial application for registration for an investment adviser, is not qualified to act as an adviser and thus limit the registration to that of a broker-dealer. The Administrator can also take into consideration whether the registrant will work under the supervision of a registered investment adviser or broker-dealer when approving an application. Lack of experience is insufficient reason for denial.

Which of the following powers are under the jurisdiction of the Administrator? A)Issuing a cease and desist order to an agent without any prior notice. B)Performing an annual audit of broker-dealers registered in the state. C)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. D)Performing an annual audit of investment advisers registered in the state.

A)Issuing a cease and desist order to an agent without any prior notice. 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.

Which of the following is TRUE regarding a state Administrator's authority? A)The Administrator has authority over any transaction made in the state where officiating. B)None of the Administrator's authority may be delegated to another person. C)The Administrator's subpoena power covers that state only where officiating. D)The Administrator may suspend an agent's license based solely on the public good doctrine.

A)The Administrator has authority over any transaction made in the state where officiating. A state Administrator has jurisdiction over securities transactions conducted in the officiating state. The Administrator may issue subpoenas or otherwise conduct inspections of records in states other than where officiating if circumstances warrant. Such inspections may be made if the Administrator deems doing so to be in the public's interest. A person's license can only be suspended when it is in the public interest AND a specific provision of the act or rules has been violated. Within limits, delegation of power is authorized.

Under the Uniform Securities Act, which of the following constitutes an offer of a security? A)The delivery of a prospectus to a prospective purchaser. B)Tombstone advertisement. C)Stock dividend distributed to current shareholders. D)Agreement between an issuer and an underwriter.

A)The delivery of a prospectus to a prospective purchaser. A prospectus is the document that offers a security for sale. A tombstone advertisement always states that in and of itself, it is not an offer to sell, that such an offer may only be made by prospectus, and where a prospectus may be obtained.

The Administrator of a state securities department conducted a hearing regarding misconduct by an investment adviser registered at the state level. The Administrator required the adviser, as well as several clients who had lodged complaints against the adviser, to take a sworn oath that their testimony was true. Does the Administrator have the power to require sworn oaths? A)Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction. B)Yes, the Administrator has the power to require witness oaths because an Administrative hearing is functionally a legal proceeding. C)No, the Administrator was merely attempting to emphasize the seriousness of the hearing, but he holds no such power. D)Yes, the Administrator may require witness oaths because the Administrator is appointed as a judge.

A)Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction. The USA empowers Administrators to administer oaths, Sworn oaths typically occur in conjunction with hearings.

Greater Wealth Managers (GWM) is a federal covered investment adviser that has no place of business in the state of Wisconsin although they serve several institutional clients located in the state. The Wisconsin Administrator: A)cannot audit nor request any other Administrator to audit GWM's records. B)is vested with the authority to audit GWM's records without prior notice. C)is vested with the authority to audit GWM's records, but must give prior notice. D)is vested with the authority to request the Administrator of the state where GWM has its principal office to audit GWM's records.

A)cannot audit nor request any other Administrator to audit GWM's records. The practical effect of the NSMIA was to bifurcate regulation of investment advisers. Those who are federal covered only answer to the SEC, not to any state (other than perhaps the requirement to file notice and pay fees). Therefore, the Administrator has no power to view the books and records of a federal covered adviser.

An Administrator may restrict the activities of a registered agent who is: A)determined to have become insolvent. B)found to split commissions with another agent in his office. C)found to be a citizen of another country. D)found to have inadequate experience.

A)determined to have become insolvent. An Administrator may, by order, restrict the activities or revoke the registration of a registered agent who is determined to have become insolvent. Lack of experience by itself is not a sufficient reason to restrict an agent's activities. Citizenship is not a requirement for registration under the Uniform Securities Act.

usion Financial is a broker-dealer registered in States A, B and C with its home office in State B. A complaint is filed against the firm by a client who resides in State A. Under the powers granted under the Uniform Securities Act, the Administrator of State B could do all of the following EXCEPT A)issue an injunction against Fusion Financial B)gather evidence from State B C)gather evidence from State A D)subpoena witnesses from State C

A)issue an injunction against Fusion Financial ​​An Administrator has the power to gather evidence both within and outside of the home state as well as subpoena evidence and witnesses in any state.​ Only the courts can issue an injunction.​

the state securities Administrator has the authority to: A)make, amend, or rescind rules,forms, and orders necessary to administer the USA. B)issue a ruling under its authority with no requirement to publish that ruling. C)issue and enforce an injunction against a registered party. D)amend or alter the Uniform Securities Act.

A)make, amend, or rescind rules,forms, and orders necessary to administer the USA. A state securities Administrator may issue a ruling or order to comply with the blue-sky laws of the state and designate the use of certain forms, but does not have authority to amend or alter the Uniform Securities Act itself. All rules and forms of the Administrator must be published. Only the courts can issue injunctions.

Due to health reasons, Danny has decided to withdraw his registration as an agent. The withdrawal will take effect: A)on the 30th day after filing of the Form U-5 unless the Administrator determines an earlier date. B)on the 30th day after filing of the Form U-5. C)immediately. D)when authorized by his employing broker-dealer.

A)on the 30th day after filing of the Form U-5 unless the Administrator determines an earlier date. Although the normal time for withdrawal of a registration is the 30th day after filing the Form U-5, the Administrator has the jurisdiction to shorten that period if circumstances warrant it.

Superb Wealth Opportunities (SWO) is a broker-dealer registered with the SEC and 10 states. Recently, the SEC has completed an investigation of SWO's recordkeeping practices and has determined that they are not in accordance with SEC Rule 17a-4. If, as a result of a hearing, SWO is fined, A)the Administrator of the state where SWO maintains its principal office could investigate SWO to determine if their recordkeeping requirements were violated B)it is likely that at least one of the states would revoke SWO's registration C)no state could take action, because only the SEC would have jurisdiction D)no state could take action under the "double jeopardy" provisions of the law

A)the Administrator of the state where SWO maintains its principal office could investigate SWO to determine if their recordkeeping requirements were violated Even though no state can enforce more stringent recordkeeping rules than those of the SEC, a broker-dealer can still be subject to state action if the rules of the state in which the broker-dealer maintains its principal office are broken. It is the usual case that when the SEC suspends or revokes the registration of a BD, the states in which that BD are registered follow suit, but it would be highly unlikely to revoke the registration when the SEC only levied a fine.

The issuance of a stop order by a state securities Administrator requires: A)the subject of the stop order be given an opportunity for a hearing. B)an issuance of an injunction by a court with jurisdiction over such issues. C)an issuance of criminal charges. D)the subject to stop the activity without the opportunity for hearing.

A)the subject of the stop order be given an opportunity for a hearing. The subject of a stop order must be given the opportunity for hearing. As long as the stop order is in effect, the security subject to the order may not be sold to the public or the proscribed activity may not continue. Stop orders do not require an injunction by a court and the Administrator does not have authority to issue criminal charges.

Under the Uniform Securities Act, which of the following is NOT an offer or a sale? A)The sale of a warrant. B)100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger. C)A broker-dealer offering 10 shares of XYZ common stock as a free gift to any client who invests at least $10,000 in mutual funds. D)A gift of assessable stock.

B)100 shares of ABC stock received in exchange for 200 shares of XYZ stock as a result of a corporate merger. In order for a sale to occur, there must be some financial consideration. In the case of the merger, shares are exchanged without any payment of funds. Any bonus offered in connection with a sale of another security is a sale. A gift of assessable stock is always considered a sale; gifts of nonassessable stock are not sales.

Which of the following accurately describes a cease and desist order as authorized by the USA? A)An order issued by a court of competent jurisdiction in the state requiring a business to stop an unfair practice. B)An order by the Administrator to refrain from a practice of business believed by that Administrator to be unfair. C)An order issued by a federal agency to a brokerage firm to stop an advertising campaign. D)An order from one brokerage firm to another brokerage firm to refrain from unfair business practices.

B)An order by the Administrator to refrain from a practice of business believed by that Administrator to be unfair. A cease and desist order is a directive from an administrative agency to immediately stop a particular action. The order can come from a federal, state, or judicial body; it is not exclusive to any single body. However, because this question is referring to the Uniform Securities Act, we focus on the actions of the Administrator, not a federal agency. Administrators may issue cease and desist orders with or without a hearing. Courts issue injunctions, usually when the cease and desist order is ignored. Brokerage houses cannot issue cease and desist orders to each other.

Under the Uniform Securities Act, an Administrator may deny, suspend, or revoke the registration of a security if: it is in the public interest. there is cause for action as stipulated in the Uniform Securities Act. the issuer reports an operating loss for more than four quarters. it is a preferred stock and defaults on its dividend. A)III and IV. B)I and II. C)I and IV. D)II and III.

B)I and II. If the Administrator finds any of the following grounds, the Administrator may issue a stop order denying the effectiveness of a registration or may suspend or revoke the effectiveness of a registration if it is in the public interest. To do so, the Administrator must have grounds for action, and it must be in the public interest. Grounds for action include (1) willful violations of the act; (2) illegal business activity by the issuer; (3) an offering that has defrauded or would defraud purchasers; (4) unreasonable compensation by promoters, underwriters, or sellers; (5) registration requirements not being met; and (6) nonpayment of filing fees.

Under the Uniform Securities Act, an Administrator has which of the following powers? The power to seek court orders for the payment of restitution against any violators of the act. The power to issue a cease and desist order with or without prior hearings. The power to impose fines for violations of the act up to $5,000. A)I only. B)I and II. C)I, II and III. D)II only.

B)I and II. The Administrator may issue cease and desist orders to stop persons from violating the act, with or without a prior hearing, as long as notice is given that a hearing will be granted upon written request. The Administrator may apply to a court for a temporary or permanent injunction, restitution to investors, or to have the court appoint a receiver for a violator's assets; or refer charges to the state attorney general or district attorney for prosecution. The Administrator does not have the power to invoke criminal penalties (three years in jail and/or a $5,000 fine under the Uniform Securities Act); that power is reserved for the courts.

Under the Uniform Securities Act, in which of the following circumstances may the Administrator take action against an advisory firm? Nine years ago, the Administrator of another state found that the president of the firm violated the securities laws of that other state. The firm has liabilities that exceed its assets. A minority shareholder with no management role in an investment adviser organized as a corporation cannot meet his financial obligations as they come due. A)I only. B)I and II. C)II and III. D)I, II and III.

B)I and II. Violation of another state's securities laws within the past 10 years by the president of the firm might be cause for action against an investment adviser. So is insolvency, defined as having liabilities in excess of one's assets or the inability to meet financial obligations as they come due. However, the personal financial situation of a minority, nonmanaging shareholder does not have a bearing on the financial situation of a corporate firm.

Under the Uniform Securities Act, which of the following are defined as sales? A gift of an assessable stock. A gift of a nonassessable stock. A security given as a bonus for purchasing a bond. An offer of securities. A)II and IV. B)I and III. C)III and IV. D)I and II.

B)I and III. A sale is a contract or transaction for value. Therefore, when a security is given as a bonus in connection with the sale of another security, it is also considered a sale. Because an assessable stock may require a payment made by the recipient, the gift is considered a sale. The gift of a non-assessable stock is not a sale as it is not a contract for value. An offering of securities is not a transaction or sale of securities until the offer is accepted.

Which of the following is considered a sale of securities under the Uniform Securities Act? Redemption of mutual funds shares worth $10,000. Dividends of common stock for which no consideration was given for the dividends. With the approval of the board of directors, an exchange of common stock for the stock in another company under a merger. Disposition of stock for which cash consideration is received. A)II and III. B)I and IV. C)II and IV. D)I, II and III.

B)I and IV. Redemption of mutual fund shares is always treated as a sale by the redeeming shareholder. The exchange of securities in a merger is not considered a sale under the act. Any disposition (liquidation) of securities that involves cash consideration, or in which the shareholder has a choice of cash or securities, is a sale.

Under the Uniform Securities Act, as a result of a hearing, the disciplinary actions that may be taken by the Administrator include which of the following? Revocation of a registration . Bar from employment with any registrant. Restriction on a registrant's performance of any activity in the advisory or brokerage business. A)II and III. B)I, II and III. C)I and II. D)I and III.

B)I, II and III. Among the actions the Administrator is authorized to take against a person's registration are revocation, bar or restriction of activity.

The Administrator may impose disciplinary action against a registrant when the registrant has: violated the provisions of federal securities law. engaged in unethical practices, even if no law was broken. failed to properly supervise an employee who committed prohibited practices as defined by the act. failed to lend money to a very good client. A)II, III and IV. B)I, II and III. C)II and IV. D)I and III.

B)I, II and III. Disciplinary action may be imposed by a state Administrator for violations of federal securities regulations, improper supervision, and unethical practices committed, whether or not a law was broken. Even in those few cases where a broker-dealer or investment adviser is permitted to lend money to a client, there is never a case where they are obligated to do so.

An Administrator may summarily suspend a registration pending final determination of proceedings under the USA. However, the Administrator may NOT enter an order without: appropriate prior notice to the registrant. an opportunity for a hearing. findings of fact and conclusions of law. prior written acknowledgment of the registrant. A)I and II. B)I, II and III. C)I only. D)II, III and IV.

B)I, II and III. Prior to the entry of a final order, the Administrator must provide appropriate prior notice to the registrant, provide the opportunity for a hearing, and present findings of fact and conclusions of law. A registrant is not required to provide written acknowledgement before an order is issued.

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

B)I, II and III. 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.

To protect the public, the Administrator may: deny the registration of an agent with insufficient net capital. 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. require an applicant for registration to submit to an oral examination. A)I and III. B)II and III. C)I, II and III. D)I and II.

B)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.

An individual has filed an application for registration as an agent with a broker-dealer in this state. Which of the following would be ample cause for the Administrator to deny the registration? Bankruptcy filing by the individual 5 years and 4 months ago. Conviction for a felony committed less than 10 years ago. Conviction for a misdemeanor involving the securities industry less than 8 years ago. The applicant is not a legal resident of this state. A)II and IV. B)II and III. C)I and II. D)I and IV.

B)II and III. The Administrator will deny an application for registration if the applicant has been convicted of a securities-related misdemeanor or any felony within the past 10 years. Bankruptcy is not a cause for denial, and one does not have to be a resident of a state in order to become licensed in that state.

An investment adviser representative who works in First Security's Illinois office occasionally calls clients who reside in Indiana. The representative recommends buying the securities of a manufacturing firm located in Illinois. Which of the following statements is TRUE? A)Because the manufacturing firm is located in Illinois, the investment adviser representative need not be registered in Indiana. B)The Administrators of both Illinois and Indiana have jurisdiction over the transaction. C)The U.S. Department of Commerce has jurisdiction because the transaction involves interstate commerce. D)Because the manufacturing firm is located in the same state as the client, this is considered an intrastate securities transaction exempt from registration.

B)The Administrators of both Illinois and Indiana have jurisdiction over the transaction. The Administrators of both Illinois and Indiana have jurisdiction over the transaction. Administrators have authority over any offer to buy or sell that is originated in, accepted in, or directed to their state.

Which of the following constitutes either an offer or a sale? A)Mrs. Smith pledges her portfolio to secure a loan for her son who plans to use the proceeds of the loan to buy a major interest in a publicly traded company. B)Thomas is offered warrants by his registered agent as the best way to take a position in the XYZ Corporation. C)Marge, a wealthy client, receives saleable stock in lieu of a cash dividend as a result of her large holdings in ABC. D)Peggy receives a gift of nonassessable securities.

B)Thomas is offered warrants by his registered agent as the best way to take a position in the XYZ Corporation. The agent who offered Thomas warrants has made an offer of securities under the USA. Mrs. Smith's pledge of securities to her son does not constitute a sale or offer to sell. Marge's receipt of a stock dividend is not a sale or an offer to sell because she did not get anything of value in return for the shares. A gift of non-assessable stock is not a sale, it is a gift.

as defined in the Uniform Securities Act, the term "offer" or "offer to sell" includes all of the following EXCEPT A)an offer of a special stock dividend in return for additional payments B)a loan with a stated interest rate payable upon demand C)a purported gift of assessable stock D)an offer of convertible securities and warrants

B)a loan with a stated interest rate payable upon demand A loan is not a sale of a security for value and is explicitly excluded from the definition of "offer" or "offer to sell." Although a stock dividend is normally excluded from the terms "offer" and "sale," when additional payment is required, we now have an offer that must be accepted before there is a sale. An offer of a convertible bond or warrant is an offer of both the bond or warrant and the underlying stock. It is only a sale when the offer is accepted. The USA defines a purported gift of assessable stock as both an offer and a sale.

A sale or offer to sell would NOT include: A)a sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer. B)a purported gift of nonassessable stock. C)a stock dividend that requires only a nominal payment by the shareholder. D)any security given or delivered with, or as a bonus on account of, any purchase of securities.

B)a purported gift of nonassessable stock. A gift of assessable stock would be an offer or a sale, but a gift of nonassessable stock is just a gift.

According to the Uniform Securities Act, a sale is a(n): A)offer of an equivalent contract. B)contract to transfer ownership of a security for value. C)attempt to transfer ownership of a security. D)solicitation of an offer to buy.

B)contract to transfer ownership of a security for value. A sale is defined as every contract to sell a security or an interest in a security, including a security given as a bonus with the purchase of another security, or a gift of assessable stock when something of value is given. A sale is not an attempt to transfer ownership of a security, a solicitation of an offer to buy, or an offer of an equivalent contract (i.e., an offer or offer to sell).

The Uniform Securities Act grants the Administrator the power to deny or revoke a registration of a securities professional. However, the Administrator generally would not deny or revoke a registration: A)if a registrant is temporarily enjoined by any court of competent jurisdiction from engaging in the securities business. B)if a person associated with a registered investment adviser has been convicted of any misdemeanor within the last 10 years. C)of securities professional in the case of insolvency. D)if a registrant has engaged in dishonest or unethical (but not illegal) practices in the securities business

B)if a person associated with a registered investment adviser has been convicted of any misdemeanor within the last 10 years. In most cases, conviction for a nonsecurities-related misdemeanor is not sufficient cause for revocation. An Administrator may revoke a registration if a person associated with an investment adviser has been convicted of any felony or any securities-related misdemeanor within the last 10 years. Insolvency of a securities professional is cause for termination of the registration.

If a client owns 1,000 shares in a growth company and receives a 25% stock dividend, according to the Uniform Securities Act, this would be considered a(n): A)sale. B)neither a sale, nor an offer. C)offer. D)secondary transaction.

B)neither a sale, nor an offer. With the typical stock dividend, the stockholder receives additional shares of stock without furnishing money or other valuable consideration in exchange for the stock. A sale must entail exchange of consideration. A stock dividend is not an offer; the stockholder did not choose whether to acquire the additional shares acquired through the stock dividend.

Included among the powers of the Administrator is the ability to: A)sentence an investment adviser representative who has been convicted of fraud to a prison sentence, not to exceed 3 years. B)request the court to appoint a receiver to freeze the bank accounts of a broker-dealer who is the subject of an injunction. C)arrest an agent who violates the USA. D)deny the registration of a securities professional if doing so is in the public interest.

B)request the court to appoint a receiver to freeze the bank accounts of a broker-dealer who is the subject of an injunction. If a temporary or permanent injunction is issued against any securities professional, upon request of the Administrator, a receiver or conservator may be appointed over the defendant's assets. The Administrator cannot arrest, but can seek a warrant. In order to deny a registration, not only must it be in the public interest, but there must be some other issue, such as insolvency, incomplete application, etc. Although the maximum prison sentence under the USA is three years, it is the courts that do the sentencing, not the Administrator.

Under the USA, an Administrator may: A)revoke the registration of an agent and thereby place into suspense the registration of the agent's broker-dealer. B)revoke the registration of a broker-dealer and thereby place into suspense the registration of all the agents employed at the broker-dealer. C)require that registrants post a surety bond prior to hearing to ensure payment of money fines. D)require broker-dealers to retain books and records for the life of the firm plus two years.

B)revoke the registration of a broker-dealer and thereby place into suspense the registration of all the agents employed at the broker-dealer. Under the USA, if the sentence fits the crime, an Administrator may revoke the registration of a broker-dealer. When a broker-dealer's registration is revoked, all its agents' registrations are placed into a suspended status because agents must be associated with a registered broker-dealer for their registration to be valid. While revocation of the broker-dealer's registration affects each of the agents, the reverse is not true when an agent's registration is revoked. The USA does not provide for posting of bonds on the part of registrants subject to an Administrator's investigation.

If the Administrator has summarily suspended an investment adviser representative's registration, the registrant may request a hearing by written request and the hearing will be granted within: A)45 days. B)60 days. C)15 days. D)30 days.

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

Under the USA, if an agent in New York calls a prospective client in Ohio recommending the purchase of a listed security, the Administrators of which state(s) has(have) jurisdiction? A)Neither state until a transaction takes place. B)New York. C)Both New York and Ohio. D)Ohio.

C)Both New York and Ohio. Administrators have jurisdiction over offers made in the originating state (New York), the state to which the offer is directed (Ohio), and the state in which the offer is accepted.

An Administrator may take disciplinary action against a broker-dealer or its agents when the Administrator: determines that the action is in the public interest. suspects that the registrant's action violated a rule, order, or the USA. issues an injunction which carries the force of law. provides for a public hearing which must precede issuing a cease and desist order. A)III and IV. B)I and III. C)I and II. D)II and III.

C)I and II. An Administrator may take disciplinary action against a broker-dealer or its agents when the Administrator determines that the action is in the public interest and suspects that the action violated a rule, order, or the Uniform Securities Act. An Administrator may act upon suspicion that a violation of a rule, order, or provision of the Uniform Securities Act is about to occur. Administrators cannot issue injunctions; they must seek injunctions from a court of competent jurisdiction. Administrators need not conduct public hearings before issuing a cease and desist order.

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. A)II and III. B)II, III and IV. C)I and II. D)I, II, III and IV.

C)I and II. Because the offer was made from Illinois to a person in California, the state Administrators of both states have jurisdiction. The state from which payment was mailed and the state in which the checking account or money-market fund is based are irrelevant for the purpose of determining an Administrator's jurisdiction.

In which of the following circumstances has John, employed at AAA Securities Corporation, made an offer as defined in the USA? John calls a long-standing client, Brenda, to indicate that a security on his firm's restricted list is suitable for her portfolio. John indicates that he cannot sell the securities unless Brenda requests them on an unsolicited basis. Brenda considers making the purchase but ultimately declines. John discovers that Brenda has inherited shares in a manufacturing firm trading on the New York Stock Exchange, and suggests that she sell them to him in a private transaction in which no commission would be charged. John owned XYZ securities for several years and decided to transfer them to his college's endowment fund in lieu of giving a cash gift. He then took a tax deduction for the value of the securities transferred. Mr. Baxter, as a reward for the years of John's service as his agent, transferred $5,000 worth of XYZ Corporation securities to John, claiming the transfer as a business expense on his tax form. A)I only. B)I, II, III and IV. C)I and II. D)I, II and III.

C)I and II. Under the USA, the term "offer" includes an attempt to dispose of securities for value, or a solicitation of an offer to buy a security. Gifts, whether legal or not, are not considered an offer.

Under the USA, which of the following are considered a sale or offer to sell? The gift of assessable common stock. The gift of nonassessable stock. The sale of a warrant to purchase stock. A)I and II. B)III only. C)I and III. D)I, II and III.

C)I and III. The gift of assessable stock (a rarity) is considered both an offer and a sale under the USA because the recipient could be assessed in the event of company bankruptcy. The sale of a warrant is legally no different from the sale of the stock.

An Administrator does not have jurisdiction over an offer to sell that is made in a: TV broadcast originating outside the state. newspaper published outside the state. newspaper published inside the state where more than two-thirds of its circulation is outside the state. A)I only. B)II only. C)I, II and III. D)II and III.

C)I, II and III. Under the broadcast and publishing exceptions, the Administrator does not have jurisdiction if the offer is made in a TV or radio broadcast originating outside the state or in a newspaper published outside the state. Furthermore, if a newspaper is published inside a state but more than two-thirds of its circulation is outside the state, the Administrator does not have jurisdiction.

The term "sale" includes which of the following? A contract of sale. A contract to sell. The disposition for value of an interest in a security. A warrant (for common stock of the issuer) given with the purchase of a bond. A)II and III. B)I and III. C)I, II, III and IV. D)I, III and IV.

C)I, II, III and IV. "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.

An Administrator has specific authority under the USA to: -suspend the registration of a security if the suspension is in the public interest and the offering has excessive commissions. -issue emergency injunctions to prevent a violation of the act. -enforce subpoenas in the state at request of an Administrator of another state for alleged violations that occurred in another state. -require that the proceeds from an offering be held in escrow until issuer receives a certain percentage of the sale of the securities offered. A)II and III. B)I only. C)I, III and IV. D)I, II and IV.

C)I, III and IV. The Administrator may impound the proceeds of an offering in an escrow account until the issuer receives a specified amount. The Administrator may also suspend a security's registration if excessive commissions are charged as part of the offering. State Administrators have the authority to cooperate with each other in enforcing the provisions of USA by ensuring that the subpoenas from other states are enforced. Injunctions are judicial orders that can only be issued by a court of law, not by an administrative agency such as a state securities Administrator.

Under normal circumstances, the Administrator will do all of the following before revoking a registration EXCEPT: A)give the applicant or registrant an opportunity for a hearing. B)give the agent's employing broker-dealer prior notice. C)act as the attorney for the applicant or registrant to ensure a fair hearing. D)give the applicant or registrant appropriate prior notice and written evidence of alleged violations.

C)act as the attorney for the applicant or registrant to ensure a fair hearing. The Administrator will not act as the applicant's or registrant's attorney. The Uniform Security Act does, however, require registrants to provide the Administrator with a consent to service of process. This consent grants the Administrator a limited power of attorney to receive service of process in actions that arise under the act. The Administrator does not act as the registrant's attorney in proceedings that result.

The Administrator of a state's securities department strongly believes that the registration statement for a security contains a substantial amount of misleading information and that investing in the security is likely to cause immediate and egregious harm to its investors. Under the following circumstances, the Administrator may: A)revoke or deny the registration statement and must schedule a hearing within 30 days of issuing the summary process order. B)revoke the registration statement, denying the applicant a hearing for an unlimited amount of time. C)deny or revoke the registration statement, but must provide the applicant with the opportunity for a hearing within 15 days of the written request for such hearing. D)not summarily revoke or deny the registration statement until a hearing takes place.

C)deny or revoke the registration statement, but must provide the applicant with the opportunity for a hearing within 15 days of the written request for such hearing. The Administrator may deny or revoke the registration statement but must provide the applicant with an opportunity for a hearing within 15 days of a written request for such hearing.

An applicant for registration as an investment adviser discloses on Form ADV that it plans to use palm readers to help determine investments most suitable for their clients. Under the Uniform Securities Act, the Administrator: A)will probably turn to the SEC for guidance. B)is empowered to deny this application. C)may deny applications only on the basis of the limitations of the law. D)will request that the applicant furnish past performance records to determine whether this method of investment analysis has merit

C)may deny applications only on the basis of the limitations of the law. A denial of registration must be based on the concept of law. There are stated reasons, such as felony convictions, outstanding injunctions, and insolvency. Although it is required to disclose methods of analysis used, the Administrator is not empowered to pass judgment on them.

An Administrator may deny or revoke a security's exemption: A)if the Administrator determines that an exemption applicable to federal covered securities is inconsistent with state securities law. B)for a federal covered security if its issuer is in violation of state law. C)without a hearing if the issuer is given an opportunity for a hearing after the revocation. D)if the Administrator, in a court of competent jurisdiction, proves that a security does not qualify for an exemption.

C)without a hearing if the issuer is given an opportunity for a hearing after the revocation. An Administrator may deny or revoke a security's exemption without a hearing if the issuer is given an opportunity for a hearing after the revocation. The issuer requesting an exemption must prove the exemption; this is not the responsibility of the Administrator. The Administrator may not revoke exemptions of federal covered securities.

What is the difference between an offer and a sale? A)An offer can be made only by a customer and a sale can be made only by a broker-dealer. B)An offer is a binding proposal to sell and a sale is a nonbinding proposal to sell. C)An offer must be approved by a branch manager and a sale needs no approval. D)An offer is the attempt to sell and a sale is a binding contract to transfer a security for value.

D)An offer is the attempt to sell and a sale is a binding contract to transfer a security for value An offer is made in an attempt to sell; a sale is the binding contract to sell a security for value. An offer will not require a principal's approval, but a designated supervisory individual must approve all sales on the date the order is executed.

While the Administrator has great power, the USA does place some limitations on the office. Which of the following statements regarding those powers are TRUE? In conducting an investigation, an Administrator can compel the testimony of witnesses. Investigations of serious violations must be open to the public. An Administrator in Illinois may only enforce subpoenas from South Carolina if the violation originally occurred in Illinois. An Administrator may deny the registration of a securities professional who has been convicted of any felony within the past 10 years, but must provide a hearing within 15 days if requested in writing. A)I and III. B)II and III. C)III and IV. D)I and IV.

D)I and IV. An Administrator can compel the testimony of witnesses when conducting an investigation. Investigation of serious violations need not be held in public. An Administrator in Illinois may enforce subpoenas from South Carolina whether the violation occurred in Illinois or not. Conviction for any felony within the past 10 years is one of a number of reasons that the Administrator may have for denying a license. However, on notice of the denial, a written request may be made for a hearing and that request must be honored within 15 days.

After conducting an investigation, if the Administrator believes that a violation of a rule issued under the Uniform Securities Act is about to occur, he may: issue a cease and desist order without prior hearing. issue a court order requiring the alleged violator to make restitution to the victim. levy a fine against an alleged violator prior to any conviction on criminal charges. issue a court order to have a receiver appointed over someone's assets. A)I, II and IV. B)II, III and IV. C)III and IV. D)I only.

D)I only. If the Administrator believes that a violation of the act or any rule or order under the act is about to occur, the Administrator may issue a cease and desist order without prior hearing. The Administrator cannot issue injunctions or levy a fine, as those are under the jurisdiction of the courts. Only courts can issue court orders.

According to the Uniform Securities Act, an offer or a sale does not exist if it is a(n): reclassification of the issuer's securities. bona fide pledge or loan. act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares. stock dividend of stock other than the issuer's for which nothing of value was given. A)II and IV. B)II and III. C)I and II. D)I, II, III and IV.

D)I, II, III and IV. The Uniform Securities Act specifically excludes these four choices from the definition of offer and sale.

Which of the following constitutes a sale of stock? Solicitation of a tender offer by a corporation. Gift of assessable stock. Purchase of shares through the exercise of a warrant. Exchange of shares in a corporate reorganization, such as a merger. A)III and IV. B)I and II. C)I, II and IV. D)II and III.

D)II and III. A gift of assessable stock constitutes a sale under the USA because the corporation that issues assessable stock can bill shareholders for cash representing the par value shortfall at a future date. Upon the exercise of a warrant, the holder of the warrant purchases stock and the issuing corporation sells the stock. Under the Uniform Securities Act, the solicitation of tender offers by corporations and exchange of shares in corporate reorganizations are not sales.

Which of the following statements regarding withdrawals of registration under the Uniform Securities Act are TRUE? In the absence of any action by the Administrator, the effective date of a withdrawal is 60 days after filing. The Administrator may initiate a disciplinary action within 1 year of the effective termination date. An agent may withdraw his registration by failing to pay the license renewal fee. If, before the effective date of the withdrawal, the Administrator commences an action against the agent, the withdrawal will be delayed until completion of the action. A)I and III. B)II and III. C)I, II, III, and IV. D)II and IV.

D)II and IV. The effective date of a withdrawal of registration is 30 days after filing. If, within that time, an action is brought against the agent, withdrawal would be delayed until the action is resolved. In addition, an Administrator may initiate an action against an agent for 1 year following the effective date of the registration's withdrawal.

Which of the following offenses would NOT result in the revocation of a registration? A)The registration statement was found to be both incomplete and misleading. B)The registrant engaged in illegal business operations. C)The provisions of the USA were violated by persons filing the registration statement. D)The registrant's underwriters earned underwriting fees that were considered reasonable by the Administrator.

D)The registrant's underwriters earned underwriting fees that were considered reasonable by the Administrator. Underwriters may, and often do, earn lucrative underwriting fees; only fees considered excessive and unreasonable are prohibited.

Under the Uniform Securities Act, each of the following statements regarding a sale, an offer, or an offer and sale is true EXCEPT: A)any security given or delivered, with or as a bonus for any purchase of securities, is considered to have been offered and sold for value. B)a purported gift of assessable stock is considered to involve an offer and sale. C)every sale or offer of a warrant or stock right to purchase or subscribe to another security, is considered to include an offer of the other security. D)a bona fide pledge is considered an offer and sale.

D)a bona fide pledge is considered an offer and sale. The term "sale" does not include a bona fide pledge. It does, however, include securities given as a bonus with a purchase and gifts of assessable stock because the owner of the stock may be called on to produce additional money. Sales of rights or warrants are considered sales of the underlying security.

Using the powers granted under the Uniform Securities Act, the Administrator would have the right to deny the registration of a broker-dealer: A)if the broker-dealer's net capital only met SEC requirements, but not those of the state. B)if the broker-dealer's membership in the NASD was revoked because of a violation of NASD rules, but only if the activity involved was a violation of the Uniform Securities Act. C)if the broker-dealer had agents registered in the state. D)if the broker-dealer's membership in the NASD was revoked because of a violation of NASD rules.

D)if the broker-dealer's membership in the NASD was revoked because of a violation of NASD rules. This is tricky because the USA only permits an Administrator to take action against a person convicted of a securities violation in another state if that action would be a violation in his state. However, when the license is revoked on a federal basis, whether through the actions of the SEC or a national SRO like NASD (now FINRA but the exam may still use NASD), it would be cause for denial by the Administrator even when the action involved is not a violation in his state. As long as BD meets the SEC's net capital requirements, the state cannot impose a higher one.

Under the Uniform Securities Act, a state securities Administrator who believes that a registered investment adviser representative is about to violate a provision of the act would initially: A)seek a court injunction to prevent the pending violation. B)issue an order that permanently bars the investment adviser representative from conducting business in the state. C)withdraw the investment adviser representative's license. D)issue a cease and desist order.

D)issue a cease and desist order. The Administrator would initiate action by issuing a cease and desist order. If the registered investment adviser representative continues to pursue activities that result in a violation of the USA, the Administrator may seek a court injunction to prevent the abuse.

A state securities Administrator may do all of the following EXCEPT: A)issue subpoena to registrants who are out of state. B)levy fines as determined by the Uniform Securities Act. C)issue interpretive opinions. D)issue an injunction after a hearing.

D)issue an injunction after a hearing. A state securities Administrator may not issue injunctions, which are issued by courts, not administrative agencies. Administrators may issue cease and desist orders to prevent potential violations of the Uniform Securities Act, levy fines as determined by the Uniform Securities Act, issue subpoenas to registrants who are out of state, and issue interpretive opinions.

In conducting investigations, the Administrator does NOT have the power to: A)apply to a state court to compel a witness to comply with a subpoena. B)make cease and desist orders without a prior hearing. C)publish information about an investment adviser's violation of the USA. D)sentence violators to imprisonment within prescribed limits.

D)sentence violators to imprisonment within prescribed limits The Administrator does not have the legal authority to sentence a violator to prison; only a court with proper jurisdiction. The Administrator does have the authority to apply to a court to sentence a violator and can publish information concerning violations.

the Administrator may not deny a person's application for registration if: A)the applicant has a misleading statement on the application form. B)the applicant has been convicted of a securities-related crime. C)the applicant files an incomplete application. D)the applicant has no prior experience in the securities industry.

D)the applicant has no prior experience in the securities industry. The registrant must be qualified on the basis of training, experience, or knowledge, but the Administrator may not disqualify a person on lack of experience alone.

Which of the following is NOT considered a valid receipt of an offer to buy or sell securities in this state under the Uniform Securities Act? A television broadcast transmitted from a neighboring state. A radio broadcast transmitted from a neighboring state. A newspaper advertisement in a paper published in the state, but which has over 2/3 circulation outside the state. A)I, II and III. B)I and III. C)I only. D)II and III.

A)I, II and III. Offers are not considered to have been made by a radio or television program originating outside the state; bona fide newspapers or magazines published outside the state; bona fide newspapers or magazines published within the state if more than 2/3 of its circulation is outside the state.

Which of the following would be included in the Uniform Securities Act's definition of a "sale"? A)Transfers, for value, of unit trusts to a nontaxable organization. B)Conveying, for value, precious metals to a jewelry distributor. C)Sale of a large fixed annuity contract to a taxable institution. D)Donation of interests in rights, warrants, or options on a nonexempt security.

A)Transfers, for value, of unit trusts to a nontaxable organization. For a security to be sold, it must be exchanged for value. Fixed annuities and precious metals are not securities, so no security sale took place. Donating a security does not qualify as a sale.

MF broker-dealer is advertising securities through direct mail. Which of the following is considered an offer to sell securities in this state? A)A prospective client located in a neighboring state receives, at his home address, a direct letter offering securities for sale. B)A prospective client located in the state receives, at his home address, a direct letter offering securities for sale. C)A client inquires about purchasing securities from a broker-dealer. D)An offer sent to the client in the state of residence is forwarded to a vacation address in this state.

B)A prospective client located in the state receives, at his home address, a direct letter offering securities for sale. Anyone who offers to sell or buy a security in the state is subject to the statutes of the state to which the offer is directed, even if the sale is not completed. Offers by mail directed to persons in other states are considered to have been made in the other state, if received where originally addressed.

While a student at college 9 years ago, Joe was convicted of possession of marijuana (a misdemeanor in that state) and received a suspended sentence. Joe now resides in a different state where the same offense is a felony. If Joe disclosed the matter on his application to ABC Securities, Joe's registration may: A)be denied based on this conviction because it was less than 10 years ago. B)not be denied based on this conviction because it was 9 years ago. C)not be denied based on this conviction because it was a misdemeanor in the state where he went to college. D)be denied based on this conviction because the crime is a felony in the state where he seeks registration.

C)not be denied based on this conviction because it was a misdemeanor in the state where he went to college. In this context, only a conviction for a felony within the past 10 years may be grounds for denying a registration. Since the conviction does not show up on Joe's records as a felony, the fact that this state has different penalties for the same offence is irrelevant.

An offer to sell describes: A)the exercise of warrants. B)the purchase of a new issue. C)the attempt to dispose of a security for value. D)the receipt of a stock dividend.

C)the attempt to dispose of a security for value. An offer to sell includes any attempt to dispose of a security for value. A stock dividend is not an offer or sale, whereas the exercise of a warrant is a sale, not an offer.

An IAR is registered in New York and Vermont. While working in his New York office, he places a call to the cell phone of one of his clients who happens to be on vacation in Ohio. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Indiana. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, jurisdiction resides with the Administrator of: New York. Ohio. Indiana. Illinois. A)I, II, III and IV. B)II and III. C)I and IV. D)I, II and III.

D)I, II and III. The Administrator has jurisdiction from the state in which the offer was made (NY), received (OH), and accepted (IN). Mailing of the certificate is of no consequence.

If a nonexempt company has authorized a stock split that will give each shareholder two shares for every one share owned without charge, this action A)need not be registered because it is neither an offer to sell nor a sale B)must be registered because it is the issuance of new nonexempt securities C)must have the prior written approval of each state Administrator in which the shares trade D)need not be registered because the shares of the corporation have already been registered

A)need not be registered because it is neither an offer to sell nor a sale Shares issued as a result of a stock split need not be registered because the distribution of additional shares through a stock split or stock dividend is not within the definition of an offer to sell or a sale as long as no consideration (payment) is involved.

Under the Uniform Securities Act, the Administrator may designate another officer to: A)serve subpoenas. B)set recordkeeping requirements. C)issue a cease and desist order. D)grant registration exemptions

A)serve subpoenas. An official designated by the Administrator may serve subpoenas since that is basically an administrative function: however, an Administrator may not designate another official to grant registration exemptions or issue cease and desist orders. The recordkeeping requirements are set by law and cannot be altered by the Administrator.

A fraudulent transaction was initiated by an agent in Indiana by contacting a client residing in Iowa. After evaluating the offer, the client agreed to purchase the recommended security while vacationing in Florida. Which Administrator(s) has (have) jurisdiction? The Indiana Administrator. The Iowa Administrator. The Florida Administrator. A)II only. B)I only. C)I, II and III. D)I and II.

C)I, II and III. Activities that originate in a state, are directed into a state, or are accepted in a state fall under the jurisdiction of the Administrator of each of those states.

Which of the following involves an offer or sale? A)A gift of an assessable security. B)An exchange of securities due to a reorganization. C)A stock dividend. D)A pledge of stock.

A)A gift of an assessable security. The gift of an assessable security, where the recipient may be required (assessed) to put up money, involves both an offer and a sale.

The Administrator may deny registration of an agent because the agent: A)is being investigated by the SEC for possible insider trading violations. B)was convicted of a drug-related misdemeanor. C)was convicted of a felony within the past ten years. D)is under investigation by the Administrator of another state.

C)was convicted of a felony within the past ten years. The Administrator may deny a registration for any felony conviction, not just those involving securities. If the misdemeanor conviction were securities related, that would be sufficient grounds for denial. However, denial would not be appropriate when a case is only in the investigation stage.

An agent is registered in Montana and North Dakota. While working in his North Dakota office, he places a call to the cell phone of one of his clients who happens to be on vacation in Wyoming. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Idaho. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, jurisdiction resides with the Administrator of: North Dakota. Idaho. Wyoming. Illinois. A)II and III. B)II, III and IV. C)I and IV. D)I, II and III.

D)I, II and III. The Administrator has jurisdiction from the state in which the offer was made (ND), received (WY), and accepted (ID). Mailing of the certificate is of no consequence.