Series 63 Missed Questions
The sale of securities to a financial institution is an
"exempt transaction" under the Uniform Securities because the general public is not involved. As an exempt transaction the securities involved are not required to be registered in the state (however the person selling them must still be registered in the state).
Under the Uniform Securities Act, which of the following individuals must file a registration application as an agent of a broker-dealer?
1. A person who only accepts orders from customers 2. A person who only trades securities for the firm's trading account.
Which statements are TRUE about the "burden of proof" needed to vacate a stop order entered by the Administrator in a securities registration?
1. If the issue is being registered by coordination, the burden of proof is on the Administrator to show that registration should be allowed to proceed 2. If the issue is being registered by qualification, the burden of proof is on the applicant to show that registration should be allowed to proceed
To qualify for a private placement exemption within a State, offers can be made to no more than
10 persons in a 12 month period. All purchases must be made for long term investment; and no commissions may be paid to anyone other than for transactions with financial and institutional investors.
An investment adviser that claims that it is a "fee only" adviser could NOT be compensated based on:
12b-1 fees paid by mutual funds
Under NASAA recordkeeping rules for investment advisers, any advertisement, circular or other communication must be retained:
2 or more persons must be retained for 5 years.
If a customer exercises the right of recession allowed under the Uniform Securities Act. The offer must be accepted within:
30 days of written notice from the seller.
If an offer of rescission is made to the buyer, then the seller must either accept in writing in
30 days or the offer is void.
A research report on an issuer cannot be published the underwriter of that issuer's securities for the time period encompassing:
40 days following the effective date for an IPO 10 days following the effective date for a secondary offering
A written customer complaint is received by mail that the firm resolves to the customer's satisfaction. Which statement is TRUE regarding keeping this record?
A copy of the original complaint along with its resolution must be retained in the file of the agent by the broker-dealer. SEC Rule 17a-3
Who does NOT have to be registered in the State as an agent of a broker-dealer?
A director of the company that is not involved in sales
Under the Uniform Securities Act, all of the following are defined as "persons" EXCEPT:
Administrator of the State
Which statement is TRUE about the retention of Internet advertising by broker-dealers?
All web pages that have ever been created and displayed must be archived.
Which of the following individuals are defined as an agent under the Uniform Securities Act?
An agent is an individual who represents a broker-dealer selling any type of security - whether it is exempt or non-exempt. an individual who represents an issuer selling non-exempt securities is an agent, and must be registered.
All of the following media can be used to store data under Uniform State Law EXCEPT:
Audio tape
Which security is NOT subject to registration under the Uniform Securities Act?
Equipment trust certificate of a railroad subject to interstate commerce commission regulations. Canadian Gov. Securities(not common stocks of Canadian Companies) Bank Issues (not securities issued by bank holding companies!) Savings and Loans issues (not limited partnerships that invest in such securities!)
Which investment advisory fee arrangement would MOST likely be viewed an unreasonable for a client with a small amount of assets under management?
Flat fee assessed for the year
Which of the following is (are) prohibited in a margin account?
I A customer buying a security without the intention to pay on settlement II A customer selling a security without the intention to deliver on settlement III A customer selling short a security that cannot be borrowed and delivered on settlement
Under the Uniform Securities Act, which of the following are defined as federal covered investment advisers?
I Investment advisers managing assets of $100,000,000 or more II Investment advisers to investment companies registered under the Investment Company Act of 1940
A person who renders advice on variable annuities for a fee; and who then sells the annuities, charging a commission, MUST:
I register as an investment adviser in that State II register as a broker-dealer in that State
Which of the following information MUST be included on a customer confirmation?
II Whether a payment for order flow was made III The customer name and account number IV The price of execution
Those not identified as agents are...
Individuals who represent issuers in trading exempt securities or in exempt transactions are not defined as agents.
NASAA has the power to set record retention rules for a Federal Covered Adviser that cover which of the following records?
NASAA does not set rules for federal covered advisers- only the Investment Advisers Act of 1940 applies NASAA rules for IA's only apply to State-registered advisers(those advisers with less than $100 million of assets under management).
Which records MUST be retained in a state-registered investment adviser's principal office?
NASAA rules require that State-registered advisers keep, in their principal office, records of: customer purchases and sales; and customer securities positions (account statements).
If an investment adviser buys out another investment advisory firm, which statement is TRUE about filing fees paid to the State?
No additional filing fee is required
The Uniform Securities Act exempts from registration securities issued by municipal issuers; and exempts corporate "blue chip" issues that are exchange or NASDAQ listed from State registration requirements.
Note that major exchange listed securities are now defined as "federal covered securities" which are only required to be registered with the SEC and not in each State.
Prospectus delivery is only required for new issues being sold in the primary market.
Once a company is trading in the secondary market, it is reporting its results to the SEC and this information is publicly available.
Under the provisions of the Uniform Securities Act, required records for broker-dealers must be kept in accordance with the provisions of the....
Securities Exchange Act of 1934
Which order is NOT required to be retained as a record by a broker-dealer?
Subscription order pursuant to a rights offerings .
Regarding surety bond coverage required by the Administrator as a condition of registration, which statement is FALSE?
The Administrator may disallow the posting of cash and require a policy issued by a licensed insurance company
A federal covered adviser with its only office in State A conducts business with three clients in State B. Who is permitted to audit the investment adviser?
The administrator of State A. The state only has jurisdiction if the adviser has an office in the state, or if the adviser has no office in the state the adviser has six or more clients in that state.
A customer holds 52% of ABCD Corp. common stock, a thinly traded stock listed in the OTCBB. The customer wishes to sell 1% of her holding and requests that the broker display her offering quote. Which statement is TRUE?
The dealer can enter the quote only if it is bona-fide
In order for the state administrator to enter an order for the State Administrator to enter an order revoking or suspending a registration, which requirement MUST be present?
The order must be in the public interest.
A mutual fund is offered with no up-front sales charge and no contingent deferred sales charge. It charges 50 basis points of 12b-1 fees annually. The fund publishes an advertisement stating that: "This is a no-load fund." Which statement is TRUE?
This statement is misleading because a no-load fund cannot charge more than 25 basis points of 12b-1 fees
Under NASAA recordkeeping rules for investment advisers, any advertisement, circular or other communication:
Under the NASAA model rule, advertisements, circulars, bulletins or other communications circulated by the adviser to 2 or more persons must be retained for 5 years. Such communications can recommend the purchase or sale of a specific security and if the communication does not state the reasons for the recommendation, a memo must be retained indicating the reasons for the recommendation.
All of the following information must be included on a customer confirmation EXCEPT:
Whether a trade is solicited or not is required on an order ticket, but not on a trade confirmation. The amount of commission charged and if a payment was made for order flow must be disclosed. Finally, the customer name, account number, size of the trade, and price of execution must all be on the CONFIRMATION.
An investment adviser that claims that it is a "fee only" adviser could be compensated based on:
a percentage of assets under management a flat annual or hourly fee for all work performed for wealthy investors a performance based fee for wealthy investors
The Administrator can require the posting of a surety bond (typically $10,000 minimum) for registration
as a broker-dealer, agent, or investment adviser. Note that there is no surety bond requirement to register an investment adviser representative.
A B/D application is received by the State Administrator for a new broker-dealer subsidiary of a Swiss securities firm. The application includes the disclosure that the parent firm was suspended from membership on the Deutsche Bourse 6 years ago because of unauthorized trading by its Hong Kong branch. The State Administrator
cannot deny registration based on the suspension that was imposed by a foreign regulator
A willful and fraudulent violation of the Uniform Securities Act occurs if a(n):
deceptive sales presentation is made to a client, but no sale results
Both exempt securities and exempt transactions are specifically...
excluded from the Act's advertising filing requirements.
All securities placed by customers with a broker-dealer whether...
executed, unexecuted, or canceled must be retained as a record by broker dealers. The retention period for these is set under the Securities Exchange Act of 1934 at 3 years.
Filing fees are only required for securities transactions in the state
for the primary market, not for the secondary market transactions that occur in the state.
Internet disclaimer disclaimer:
is that anyone who views the site cannot be solicited by persons associated with the site unless those persons are registered in that state (or are excluded or exempt from registration).
An investment adviser will always be considered to have taken custody if the adviser:
is the trustee for the client in a trust account
The amount of commission charged to a customer to effect a securities transaction:
must be disclosed on the trade confirmation is not required to be disclosed prior to executing the transaction
If the composition of the ownership of a State registered investment adviser changes, the registrant:
must file a correcting amendment with the Administrator promptly.
An individual who represents an issuer selling federally covered nationally traded securities:
must register as an agent in the State if compensation is being paid for this activity
A fee payment is NOT required to be made when a(n)
new broker-dealer files as a successor to a firm that has ceased operations
The issues of Canadian companies are...
non-exempt and must be registered.
Under the Uniform Securities Act, which of the following are defined as securities?
preorganization subscriptions (such as a subscription agreement to join a limited partnership), certificates of deposit for a security (e.g. an American Depositary Receipt), collateral trust certificates, and voting trust certificates are all defined as securities. These securities are non-exempt.
An agent of a broker-dealer "A" has been terminated and is associating with broker-dealer "B." The terminated agent agrees to turn over his clients to another agent at broker-dealer "A" in return for half of the commissions generated by those clients over the following year. This arrangement is:
prohibited because during the life of the agreement, the agents will be working at different broker-dealers. Splitting commissions is only permitted between registered individuals who work at the same broker-dealer.
A broker-dealer has a website that is continuously updated. Under NASAA rules, the broker-dealer is:
required to retain both the current and superseded web pages. Web pages are considered to be an item of advertising that a broker-dealer or investment adviser must retain as a record. If any updates are made to the website, the old version must be archived and be available for inspection or filing. The State usually requires such a filing in printed (not electronic) form - but either form can be requested by the State.
