Series 63
Which of the following persons would be considered an agent according to the Uniform Securities Act? A state official selling investment-grade G.O. bonds to qualified pension plan buyers A CEO selling shares of his company through an IPO to family and friends A CFO structuring a PIPE offering with his company's investment banker All of the above
A CEO selling shares of his company through an IPO to family and friends
Which of the following choices is NOT a federal covered security? A Nasdaq Global Market stock A Section 504 private placement Shares in a registered investment company An exchange-listed ETF
A Section 504 private placement
Which of the following statements is NOT TRUE concerning agency cross trades? A client must provide written authorization for such activities Such trades should be unsolicited for at least one side of the trade The trades are summarized annually to clients A client may provide verbal authorization for up to 10 days
A client may provide verbal authorization for up to 10 days
An agent opens a new account. The client refuses to answer most of the financial and suitability questions in the New Account Document, checking only the boxes that indicate a conservative risk tolerance and an investment objective of capital appreciation. According to NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents, the agent may recommend which securities for the account?
A conservative growth fund
Which of the following issuers would be most likely to use registration by qualification in order to register its securities? A local or state government unit A local company whose shares will be sold within the state A national company with outstanding securities listed on the NYSE A registered investment company
A local company whose shares will be sold within the state
The owner of an electronics store wants to sell shares in his business to the public to raise additional capital. The owner will take an active role in selling the shares, but will not receive commissions for the sales. Under the Uniform Securities Act, the owner will be considered a(n):
Agent
Under the Uniform Securities Act, if an investment adviser receives an advisory fee of $1,000 six months in advance, the adviser must provide:
An audited balance sheet
An investment adviser's contract with its clients may contain all of the following provisions, EXCEPT: A provision detailing possible assignment of the advisory contract An exculpatory provision A provision for performance-based fees Termination provisions and penalties
An exculpatory provision
An agent is soliciting investors for a private placement of securities issued under Regulation D. Which of the following choices are accredited investors according to Regulation D? A couple with a net worth of $1 million, inclusive of their primary residence A 55-year-old investor who has just taken early retirement, whose annual income was $250,000 during the last two years A corporation with $500,000 in assets An insurance company
An insurance company Need 200k of annual income (300 if married) Net worth $1 mil, not including house Banks, insurance companies, investment companies Corporations w/ assets of $5 million or more
According to the Uniform Securities Act, the term sale means: Any attempt to dispose of a security A solicitation of an offer to buy Any contract to dispose of a security for value
Any contract to dispose of a security for cash value
A client would like her IAR to use funds in her account to pay her electric bill while she travels. Her IAR would:
Be required to obtain full POA
The Administrator in State B has conducted an investigation into the activities of an investment adviser representative who is registered in State A and State B. The Administrator believes that the IAR has engaged in fraudulent activities in State B. The IAR claims no knowledge of any wrongdoing and documents his recommendations by cross-referencing a list of recommended securities provided by a third-party research firm. What action would the Administrator most likely take in this situation?
Bring an action to impose a fine but not a prison sentence
The term agent includes a person who represents an issuer in transactions involving: Exchange-listed securities Investment company shares Foreign stock Qualified purchasers
Foreign stock (for issuer's you're only agent if the securities need to be registered)
Which of the following persons would be required to register as an agent according to the Uniform Securities Act? Dusty Roads, the CEO of Big Slam Industries, who sells a new issue of stock to Big Dog Brokerage, the issuer's underwriter Robert Backlyn, a life insurance salesperson who solicits sales in separate account products Brent Heart, an outside consultant who has contracted with the city of Detroit to help market that issuer's debt obligations Rodney Piper, a branch manager at Big Show Brokerage, who supervises several salespersons engaged in the solicitation of qualified 403(b) plan business
II and IV
The retention requirements for the maintenance of books and records of investment advisers and broker-dealers are: Five years for a broker-dealer with the most recent two years easily accessible Three years for investment advisers with the most recent two years in the appropriate office Three years for a broker-dealer with the most recent two years easily accessible Five years for an investment adviser with the most recent two years in the appropriate office
III and IV
Kelly, an adviser with FairTrade Investments, would like to recommend numerous individual emerging markets high-yield bond funds to some of her more aggressive accounts. Since Kelly focuses on equity investments, she would like to use an outside adviser that specializes in fixed-income investments to help in the selection process. In this situation, which of the following statements is TRUE under the UPIA? Kelly may delegate her investment decision-making authority as long as the manager's recommendations meet the client's objective Kelly may delegate her investment decision-making authority once each client signs a third-party indemnity waiver form An adviser may use an outside resource, provided the expert is given full documentation regarding each client, prior to making any recommendations Kelly is expressly prohibited from using outside experts, since any fees paid would increase a client's management cost
Kelly may delegate her investment decision-making authority as long as the manager's recommendations meet the client's objective
According to the Uniform Securities Act, the application process for an investment adviser may include: Meeting a capital requirement equal to at least 2% of the assets managed Filing contracts with the Administrator Making a daily determination of the value of each account Posting a notice in a newspaper that the adviser is an applicant for registration
Posting a notice in a newspaper that the adviser is an applicant for registration
The Uniform Securities Act prohibits which of the following? Soliciting orders for unregistered nonexempt securities Maintaining discretionary accounts Charging extraordinary commissions on certain transactions All of the above
Soliciting orders for unregistered nonexempt securities
Which of the following activities is considered a prohibited business practice by a broker-dealer? Stating to a client that the offering price of a security is the current market price, if the broker-dealer is the only market maker in that security Stating to a client that the offering price is the current market price, if the broker-dealer is part of an underwriting syndicate in that security Stating that the price at which it is offering to sell a security to a client is the current market price if the broker-dealer is one of five registered market makers in that security Stating that the price at which it is offering to sell a security to a client is the current market price if the security is listed on the New York Stock Exchange
Stating to a client that the offering price of a security is the current market price, if the broker-dealer is the only market maker in that security
An agent is soliciting investors for a private placement. Under the Uniform Securities Act, this is an exempt transaction as long as the agent does not offer the securities to more than:
Ten retail investors during a 12-month period
An investment adviser representative and a client have similar financial resources, investment goals, and risk tolerance. However, although the IAR recommends penny stocks as a small part of her client's portfolio, she would never consider investing in such securities herself. Which of the following statements is TRUE? As long as the recommendations to her clients are suitable for them, it does not matter what the IAR chooses to include in her portfolio The IAR should tell her client that the recommendation is inconsistent with her own investment policy An IAR is not allowed to reveal to a client what is in her personal portfolio Penny stocks are never suitable investments
The IAR should tell her client that the recommendation is inconsistent with her own investment policy
An agent inadvertently misrepresents the risks associated with U.S. Treasury bonds. Under the Uniform Securities Act, which of the following statements is TRUE? The activity constitutes fraud. The activity is unethical. There's no violation since the action was inadvertent. Since there are no risks associated with U.S. Treasury bonds, there's no violation of the USA.
The activity is unethical.
An issuer in New Jersey has filed a registration statement in that state to offer securities. Which of the following choices would NOT be a valid reason for the Administrator to deny registration? It is in the public interest to deny the registration The issuer's method of doing business is illegal in NJ The issuer has not filed a registration statement with the SEC The issuer has not paid a registration fee
The issuer has not filed a registration statement with the SEC
What is likely to happen if an investment adviser representative fails to appear at a hearing as directed by a court subpoena? The representative will lose his registration The representative may be found in contempt of court The representative will be suspended until he provides testimony The hearing will be rescheduled
The representative may be found in contempt of court
After many years of failing to establish a viable practice, Jan Edworz has decided to close her small investment advisory practice. The firm currently has a sizable surety bond posted with the state Administrator and Jan would like to use these funds to purchase a retirement residence. Jan will be required to maintain her firm's bond with the Administrator for:
Three years following the firm's withdrawal date
