Series 63 exam 8
Reports of cash transactions must be made to the Department of Treasury if the amount of cash received or paid exceeds:
$10,000
Under the Uniform Securities Act, in a civil suit brought by a purchaser against a seller that is alleged to have violated the Uniform Securities Act, the burden of proof rests with the:
A Buyer of the securities
Which of the following is considered to be non-public information about a customer?
A Customer medical information collected by a physician to be used by a life insurance company selling a variable annuity contract to that customer
Under the Uniform Securities Act, which of the following securities is (are) considered to have an issuer? I Collateral trust certificate II Equipment trust certificates III Fractional interests in oil and gas programs IV Certificates of interest in a gravel mining program
A I and II only
An Investment Adviser Representative (IAR) has been employed by a Registered Investment Adviser (RIA) for the past 12 years and has accumulated $18,000,000 of customer assets under management in accounts for 47 different customers. The IAR has experienced a personal economic decline and has been trading these customer accounts with ever-increasing frequency to generate the commissions necessary to meet his personal debt obligations. Which statements are TRUE? I The IAR has regulatory liability II The IAR has no regulatory liability III The RIA has regulatory liability IV The RIA has no regulatory liability
A I and III
The effectiveness of a registration may be summarily postponed or suspended as long as the Administrator: I upon entry of the order promptly notifies each person specified II files a copy of the order in each State where the security has been offered III gives the reasons for the postponement or suspension IV within 5 days after the receipt of a written request from a person that is the subject of the order, sets the matter down for a hearing
A I and III only
Which of the following are prohibited under the Uniform Securities Act? I Effecting a public offering of unregistered non-exempt securities II Failing to tell a customer all facts about a securities transaction III Failing to tell a customer that a transaction will incur larger than normal expenses IV Maintaining a discretionary account for a customer
A I and III only
Under the Uniform Securities Act, an agent may engage in which of the following transactions? I Performing investment advisory services for customers as long as they are solely incidental to his work as a broker and no fees are charged II Soliciting orders for non-exempt unregistered securities if he is registered in the State III Effecting transactions in a State where he is not registered, but where the broker-dealer is registered IV Effecting transactions in a State where the broker-dealer is not registered, but where he is registered
A I only
A Canadian broker-dealer has some clients who move to Florida for the winter. The agent who services their accounts wants to be able to contact them when they are in Florida. Which statement is TRUE?
A Neither the Canadian broker-dealer nor the agent are required to be registered in Florida
If an agent terminates his employment with a broker-dealer, when must the agent and the broker-dealer notify the State Administrator? Correct answer A. You chose this answer
A Promptly
A broker-dealer is registering a security in a State by coordination. In doing so, the broker-dealer files the necessary paperwork with the SEC and is compliant with the:
A Securities Act of 1933
Under the Uniform Securities Act, which of the following is NOT an issuer transaction? Trade of a NASDAQ listed security Redemption of a mutual fund share Purchase of a limited partnership interest from the sponsor Purchase of an initial public offering from an underwriter
A Trade of a NASDAQ listed security
An Investment Adviser Representative (IAR) is permitted to borrow money from:
A a close relative
All of the following are requirements for an internet communication (a website) posted by a broker-dealer, agent, investment adviser or investment adviser representative EXCEPT the communication must attempt to effect securities transactions or the rendering of personalized investment advice for compensation in the State include a firewall or other implemented procedure to ensure that prior to any subsequent communication with prospective clients in the State, that the broker-dealer, agent, investment adviser, or investment adviser representative are registered in the State, or are exempt or excluded from registration include a legend that states that: "The broker-dealer, agent, investment adviser or investment adviser representative may only transact business in the State if registered in the State or if exempted or excluded from registration" include a legend that states that: "Follow ups or individualized responses to persons in the State by the broker-dealer agent or investment adviser representative that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made absent compliance with State registration requirements or an applicable exemption or exclusion."
A attempt to effect securities transactions or the rendering of personalized investment advice for compensation in the State
A company offers a salary reduction defined contribution plan to its employees that adheres to ERISA Rule 404(c). It is administered by the firm's Human Resources (HR) department. The individual in HR who oversees enrollment of employees in the plan receives a bonus for any employees that purchase the company's stock in the plan. This employee is:
A defined as an agent who must register in the State
If a filing with the Administrator is found to have material misstatements or omissions, a correcting amendment must be filed:
A promptly
The policy of securities regulators regarding emails sent or received by agents maintains that:
A records must be kept of both personal and business emails
On Monday, an investment adviser notices that the firm's net capital has fallen below the minimum requirement set by the State. The investment adviser MUST:
A transmit notice to the Administrator on Tuesday and submit its financial statement on Wednesday
The statute of limitations for filing a claim alleging a criminal violation of the Uniform Securities Act is:
B 5 years
Under the Uniform Securities Act, "consent to service of process" means that the:
B Administrator is authorized to receive suits on behalf of an agent or broker-dealer
Obtaining the 4 critical pieces of information from a customer at account opening is part of the company's policies and procedures covering:
B Anti-Money Laundering
Under NASAA rules, a complaint is defined as one received: I in a written letter II by e-mail III verbally over the telephone
B I and II only
Information received by the Administrator in a private investigation may: I be shared among the officers and employees of the Administrator II not be shared among the officers and employees of the Administrator III be shared with any interested party that makes a written request IV not be shared with any interested party that makes a written request
B I and IV
Under NASAA record keeping rules for investment advisers, any advertisement, circular or other communication must be retained: I if it is circulated to 2 or more persons II if it is circulated to 10 or more persons III for a minimum of 3 years IV for a minimum of 5 years
B I and IV
Which of the following information MUST be included on a customer confirmation? I Whether the transaction was solicited or unsolicited II The exchange where the transaction was effected III The customer name and account number IV The price of execution
B III and IV
Which of the following is prohibited in a margin account?
B Selling short securities that cannot be borrowed by settlement
An investment adviser located in State A only deals with very large hedge fund investors that are located in State B. The adviser is not required to be registered with the SEC because it currently has $20,000,000 of assets under management. Which statement is TRUE regarding State registration requirements?
B The adviser must register in State A where it has its office, but it is exempt from registration in State B
Under the provisions of the Uniform Prudent Investor Act, a trust:
B can customize its investments based on suitability as determined by the needs of the beneficiaries
An Investment Adviser wants to change its approach and management style, focusing more on growth funds and emerging company stocks and less on strategies that provide stable income. In order for the Investment Adviser to do this:
B each customer must approve the change by signing a new advisory agreement
A customer may be charged a higher than normal commission in a transaction that is difficult for the broker to execute:
B if the additional charge is disclosed to the customer prior to the placement of the order
The gift of an assessable security is defined under the Uniform Securities Act as a(n):
B sale of a security
A password-protected website is defined as:
B sales literature
An agent overhears non-public sensational information of a negative nature while riding in an elevator. The agent is permitted to:
B tell the information to the broker-dealer's legal department
An applicant's registration can be denied by the Administrator if that individual was convicted of a misdemeanor in the securities business; or any felony; within the past:
C 10 years
Which of the following statements is TRUE regarding an investment adviser taking physical custody of a customer's monies or securities?
C An investment adviser is permitted to take physical custody of a customer's monies or securities if the Administrator does not prohibit this by rule; and if the adviser notifies the Administrator that he will take custody
Which of the following is NOT a federal covered security? An offering made over-the-counter of $250,000,000 of 10% convertible debentures of ACME Corporation, a company whose common stock is listed on the American Stock Exchange (NYSE American) A private placement of $250,000,000 of debt backed by automobile finance company receivables sold to investment managers that are qualified purchasers An offering of $250,000,000 of General Obligation bonds by the City of New Orleans to the residents of Louisiana An offering of $250,000,000 of common shares of a mutual fund that will be offered to the general public
C An offering of $250,000,000 of General Obligation bonds by the City of New Orleans to the residents of Louisiana
A person CANNOT transact business as an investment adviser in a State unless that person: I is registered in the State as an Investment Adviser II has no place of business in the State and only handles the accounts of insurance companies in that State III has a place of business in the State and only handles the accounts of insurance companies in that State IV registers in the State as a Broker-Dealer
C I and II only
Which of the following statements are TRUE about unsolicited customer transactions effected through a broker-dealer? I The Administrator may require that the customer acknowledge the transaction with a written statement II The transaction is exempt under State law III No commissions may be paid to the broker effecting the transaction IV The transaction is defined as a "non-issuer" transaction
C I, II and IV
Which of the following conditions must be met in order for an agent to share in the gains and losses of a customer's account? I The agent and customer must enter into a written agreement to share in the account II The agent can only share to the extent of capital contributed by the agent, and must share in both gain and loss III The agreement must be approved by the broker-dealer before it takes effect
C I, II, III
Under NASAA rules, the Form ADV filed with the State must be: I updated quarterly II updated annually III sent to customers if the update is material IV sent to other investment advisers if the update is material
C II and III
Which of the following securities issues MUST be registered in a State? I Common shares of a public utility II Subordinated debentures of a bank holding company listed in the Pink Sheets III Common shares of an industrial company listed in the OTCBB IV Investment company securities
C II and III only
Which of the following statements about penalties under the Uniform Securities Act are TRUE? I Criminal liability may be offset by rescission II Civil liability may be offset by rescission III The statute of limitations on criminal actions is 5 years IV The statute of limitations on civil actions is 3 years
C II, III, IV
When an investment adviser files a registration application in a State, which of the following is automatically registered at the same time?
C Individuals who are officers or partners of the investment adviser that will act as representatives
Under the Uniform Securities Act, which statement is TRUE regarding a broker-dealer that has its sole office in one State and wishes to conduct business in another State?
C No registration is necessary if the firm deals solely with insurance companies in the neighboring State
A Registered Investment Adviser has a client who is the chief executive of a publicly traded company. The client tells the adviser that the firm is going to have a "big" announcement about sales and that it is a secret. The RIA immediately buys 1,000 shares of the company's stock for his personal account. Which statement is TRUE?
C The RIA's action is unethical because the information is not publicly available
A person makes an initial application for State registration on April 30th. Which statement is TRUE regarding the filing fee?
C The annual fee is not pro-rated and the full year filing fee must be paid
A customer writes a complaint letter to an agent, stating that "your stock recommendations stink" and "while everyone else has made money in the market, I am breaking even, at best." Under the Uniform Securities Act, which statement is TRUE about how this must be handled?
C This communication must be forwarded to a supervisor for resolution
An Investment Adviser prepares a 4-color glossy brochure to be given to potential customers instead of the ADV Form Part 2A. The brochure includes all of the information found in the ADV Part 2A, but is much livelier in its presentation. An Investment Adviser Representative uses the brochure to solicit a new client, who signs a contract with the firm that includes a clause giving the customer 2 business days to back out of the contract without incurring any penalty. Which statement is TRUE?
C This procedure violates NASAA rules because the customer must be given 5 business days to back out of the contract without penalty
A hedge clause included in an advisory contract that permits the adviser to transfer the contract to another adviser without needing the customer's approval is:
C a prohibited practice under NASAA rules
The Administrator would revoke the license of an agent for all of the following reasons EXCEPT the Administrator: has attempted to locate the agent at his or her last known address and has determined that the agent is no longer at that location finds that the agent has willfully violated a provision of the Uniform Securities Act determines that the agent does not have the required experience to act as an agent in that State finds that the agent has unknowingly violated a provision of the Uniform Securities Act
C determines that the agent does not have the required experience to act as an agent in that State
An investment adviser has determined that it MUST register as a federal covered adviser. This means that the adviser:
C has at least $110,000,000 of assets under management
The amount of commission charged to a customer to effect a securities transaction:
C must be disclosed on the trade confirmation
A customer has placed an indication of interest to buy a non-exempt new issue security that is currently in the "quiet period." The customer has been delivered a preliminary prospectus. Once registration is effective, to be confirmed as purchasing the issue, the customer:
C must receive a copy of the final prospectus
Under NASAA rules for State-registered advisers, transactions must be recorded in customer account records no later than:
D 10 business days following the end of the quarter in which the transaction was effected
Text:If a registered investment adviser takes custody of client funds or securities and deposits them with a qualified custodian, which statement is NOT true? The customer must be notified promptly in writing of the qualified custodian's name, address and the manner in which the securities are held The customer must be sent, at least quarterly, an account statement identifying all positions held and all transactions in the account during that period All client funds and securities positions must be verified at least annually by a certified public accountant on a surprise basis A written annual statement must be sent to customers detailing where the client funds and securities are being kept
D A written annual statement must be sent to customers detailing where the client funds and securities are being kept
Surety bonds may be required by the State Administrator for the licensing of: I Agents II Broker-Dealers III Investment Advisers IV Investment Adviser Representatives
D I, II, III only
The Administrator can deny, suspend or revoke registration of an agent's license for which of the following reasons? I The registration application omits a material fact that would have a bearing on the registration II The agent has intentionally delayed delivery of fully paid customer securities, using the securities for his own purposes III The agent's registration has been suspended in another state IV The agent has not paid required registration fees
D I, II, III, IV
Which of the following information MUST be recorded on an executed order ticket? I Time of execution II Time of receipt III Account number IV Solicited or unsolicited
D I, II, III, IV
Which statements are TRUE? I Investment advisers with a place of business in the State that are not registered with the SEC must register in the State II Investment advisers with a place of business in the State that are registered with the SEC must file notice in the State III Investment adviser representatives with a place of business in the State that are affiliated with advisers that are not registered with the SEC must register in the State IV Investment adviser representatives with a place of business in the State that are affiliated with advisers registered with the SEC must register in the State
D I, II, III, IV
An issuer has filed a registration statement in a State for a new issue of securities that is effective and sale of the issue has started. The issuer finds that there is great demand for the offering and wishes to increase the number of shares being issued. In order to do this: I a new registration statement must be filed with the State, if it is within 6 months of the date of sale II an amendment must be filed, as long as it is within 6 months of the date of sale III an additional filing fee must be paid, but no late registration fee is required IV both an additional filing fee and a late registration fee must be paid
D II and IV
If a customer of a broker-dealer fails to pay for a securities purchase by the 4th business day from trade date, the customer's account must be: I restricted II frozen III for 30 days IV for 90 days
D II and IV
If an investment adviser buys out another investment advisory firm, which statement is TRUE about filing fees paid to the State?
D No additional filing fee is required
Transactions in which of the following securities are exempt from the anti-fraud provisions of the Uniform Securities Act? I U.S. Government bonds II U.S. Government agency bonds III Municipal bonds IV Corporate bonds
D None of the above
An investment adviser representative quits her employment with a State-registered adviser so that she can attend graduate school. After completing her MBA, she intends to reassociate with the same advisory firm in a management capacity. Which statement is TRUE about notifying the State Administrator of the IAR's termination?
D Only the Investment Adviser is required to notify the Administrator, but if the IAR learns that the adviser has not given notice, the representative must do so
Under the NASAA Statement of Policy on unethical practices, the release of customer information to which of the following would be "unethical"? A Securities and Exchange Commission Internal Revenue Service Self-Regulatory Organizations Registered broker-dealers
D Registered broker-dealers
An agent holding a State securities license may share commissions with a(n):
D State-licensed securities agent at the same firm
A broker that is located in State A mails an offer of securities to a customer in State B and the transaction is completed in State C. The broker must be registered in:
D States A, B and C
Sending out a blanket e-mail that makes recommendations of securities to a list of web addresses by a broker-dealer or agent is:
D a prohibited and unethical practice
All of the following are violations under the Uniform Securities Act EXCEPT: failure to make reasonable inquiry as to the financial objectives and needs of a customer recommending a security without having a reasonable basis for making the recommendation failure to sufficiently describe the material facts and risks about a transaction failure to sufficiently describe all facts and risks about a transaction
D failure to sufficiently describe all facts and risks about a transaction
A broker-dealer is offering an IPO to the public. The broker-dealer is:
D not permitted to withhold shares from sale to the general public
he Administrator, in regards to the registration of securities, may do all of the following EXCEPT: impound the proceeds from the sale of the securities until the issuer receives a specified dollar amount require the filing of original copies of confirmed subscription agreements require the delivery of a prospectus require that the state receive a portion of the offering proceeds as a condition of registration
D require that the state receive a portion of the offering proceeds as a condition of registration
Under the Uniform Securities Act, a customer can give an agent discretion to trade orally if the:
agent only decides the price and time of execution
Unintentional violations of the Uniform Securities Act that are considered to be a misdemeanor subject that person to:
civil liability only
All of the following statements are true about surety bond coverage required for a registration application EXCEPT: if there is a surety bond requirement, the Administrator is not permitted to accept cash or securities as a substitute in lieu of posting a surety bond, the Administrator must accept a deposit of cash in the appropriate amount in lieu of posting a surety bond, the Administrator must accept a deposit of securities in the appropriate amount the Administrator is permitted to waive the surety bond requirement for registrants whose net capital or net worth exceeds a stated dollar amount
if there is a surety bond requirement, theAdministratoris not permitted to accept cash or securities as a substitute
Under the NASAA Statement of Policy on Dishonest and Unethical Business Practices, all of the following are prohibited business practices EXCEPT: being deliberately selective in the information told to a customer giving inaccurate statements about an issuer's projected earnings telling a customer that a company is about to be listed on the New York Stock Exchange without knowing the truth of the statement telling a customer that a listed security being recommended is registered with theSecurities and Exchange Commission
telling a customer that a listed security being recommended is registered with theSecurities and Exchange Commission