Series 63 - Unit 2

The effect of the NSMIA on securities regulation?

Preempts state registration of covered securities

Under the Uniform Securities Act, which person is responsible for proving that a securities issue is exempt from registration?

The person claiming the exemption

Under the registration provisions of the Uniform Securities Act, it is unlawful for an agent in the state to sell XYZ securities unless:

XYZ is a federal covered security

Under the Uniform Securities Act, when an IAR acting in the capacity of trustee of a family trust executes a transaction on behalf of the trust, it is:

a nonexempt transaction

The Administrator may deny or revoke the exemption granted to:

a nonprofit organization or investment contracts issued by employee benefit plans

Under the terms of the USA, an agent who sells shares of a Nasdaq Stock Market security to an insurance company has engaged in:

a sale exempt from the registration and advertising provisions of the USA

As a result of the Howey decision, investment contracts are defined as:

a security under the Uniform Securities Act

A state securities Administrator does NOT require the filing of:

advertising and sales literature relating to the sale of exempt securities

Registration statements for securities may be amended:

after their effective dates as to the amount of securities issued, provided that underwriting fees and the initial offering price have not changed

In the Howey decision, the U.S. Supreme Court held that a security must represent:

an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others

The Uniform Securities Act specifically exempts transactions between:

an issuer and an underwriter

An exempt security is only exempt from the registration requirements and the requirements for filing advertising and sales literature. No security is exempt from:

anitfraud provisions of the act and the liabilities that arise from fraudulent practices

Under the National Securities Markets Improvement Act of 1996 (NSMIA), investment companies registered under the Investment Company Act of 1940 are required to register:

as securities at the federal level only

Alpha Electronics Company wishes to raise capital by issuing some securities in its home state. They have been advised by their legal counsel that registration with the Administrator is unnecessary because the issue is exempt. Should Alpha be served with an order, the burden of proving its issue is exempt is on the:

company

Coordination:

concurrent registration with the SEC and the state for public offerings

If a manufacturing company in the registration process with the SEC is considering registering its securities in a state, the method that it would use to register in the state is:

coordination

Sales made by a bona fide pledgee are:

exempt

Keely Company, Inc., has outstanding equity securities registered with the SEC. The company issues a debt security directly to financial institutions. This sale is an example of a(n):

exempt transaction

Municipal bonds, exempt securities under the Securities Act of 1933, are also federal covered securities with one significant exception:

if the issuer is a political entity in this state and it is sold to a resident of this state, it is not considered a federal covered security in this state.

The Administrator may, as a condition of registration by qualification or coordination, require the security to be deposited:

in escrow and the proceeds to be impounded until the issuer receives a specified amount

If a nonexempt company has authorized a stock split that will give each shareholder 2 shares for every 1 share owned without charge, this transaction:

need not be registered because it is an exempt transaction

Under the USA, it is unlawful to sell a:

nonexempt, nonregistered security issued by a foreign corporation from a country with which the U.S. government maintains diplomatic relations

The state Administrator may, by rule or order, require issuers of federal covered securities to file records with the state that are part of a registration statement filed with the SEC. This procedure is called:

notice filing

Federal covered securities may be required to:

pay a filing fee, provide consent to service, and submit copies of any and all documentation filed with the SEC

If required by the Administrator, a prospectus for securities registered by qualification must be given to each offeree:

prior to the sale

While your application for registration as an agent is pending, you are permitted to:

sell fixed annuities

Securities of domestic banks are exempt from:

state registration under the USA

When a security registration statement filed under the Uniform Securities Act with the state Administrator becomes effective, this means:

the securities that are the subject of that registration statement may be lawfully sold

Under the Uniform Securities Act, a non-exempt transaction may take place in the state only if:

the security is registered, exempt, or federal covered

In the sale of U.S. government securities to a wealthy client, the security is exempt, but:

the transaction is not: Had the sale been to an institutional client, it would have been exempt

Under the USA, a private placement is considered an exempt transaction when directed:

to no more than 10 non institutional persons and in 12 consecutive months

An unsolicited customer order to buy a security is considered an exempt

transaction whether the security is exempt or nonexempt

ABC Securities is a two-office broker-dealer in Idaho that intends to underwrite an initial public offering of 1 million shares of stock for Circular, Inc. If the issue will be offered exclusively to residents of Idaho, registration of this offering:

will most likely occur by qualification

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

Under the USA, the term "institutional investor" includes:

- depository institutions - international banks - insurance companies - investment companies

Items that are not securities under the USA:

- fixed insurance or MEC - Interest in a retirement plan - collectibles - commodities - condominiums - currency

The registration statement must be on file with the Administrator for how many days?

10

Private placements are exempt under the USA if they are offered to no more than:

10 retail investors in any consecutive 12-month period

Securities traded on the electronic OTC Bulletin Board:

are not designated as federal covered

If Ann Smith, an agent with ABC Securities, Inc., sold a security to an investment company registered under the Investment Company Act of 1940, this sale would be considered an example of a(n):

exempt transaction in a security

Unsolicited orders are defined as:

exempt transactions

Solicited trades are generally:

not exempt transactions with institutional buyers

Simus Fund, a new open-end investment company, is preparing its registration statement with the SEC. Under the provisions of the NSMIA, this company would qualify for sale in a state by:

notice filing

Securities exempt under the Uniform Securities Act are exempt from:

registration requirements and sales & advertising literature filing

Securities of a new company's initial public offering have been SEC registered, and the Registration Statement is effective. The securities were not registered in State X before the effective date, and the Administrator has determined that an offering of the securities in State X is not considered to be in connection with the same offering. A broker-dealer in State X wishes to publicly offer the securities in that state. These securities must be registered with the Administrator of State X in which of the following ways?

Qualification