Series 65 FLASH CARDS
Defalcator Investment Planning (DIP) has $175 million in AUM and has offices in States A, K, and R. DIP would be required to provide a balance sheet as part of its brochure if it charged fees of
$1,500 for the next year's advisory service.
Under Dodd-Frank, when does a State IA have to register with the SEC?
$110M/90 day
Which of the following statements is NOT true?
A broker-dealer must be a firm or corporation (legal person) as opposed to a natural person (human being). An investment adviser must be a firm or a corporation as opposed to a natural person. An investment adviser representative (IAR) cannot, under any circumstances, be employed by a registered broker-dealer.
Which of the following transactions are exempt from registration under the Uniform Securities Act?
A trustee of a corporation in bankruptcy liquidates securities to satisfy debt holders. An offer of a securities investment is directed to 10 individuals in the state during a 12month consecutive period.
Under the Uniform Securities Act, unless renewed, the registration of which of the following securities professionals expires on December 31?
Agents Broker-dealers Investment advisers Investment adviser representatives
Under the Uniform Securities Act, which of the following investment advisers with no place of business in the state must register with the state as an investment adviser?
An adviser rendering advice to no more than 10 individual clients within a 12-month period
Which of the following is NOT included in Form ADV Part 2A?
States in which the investment adviser is registered or intends to register
Which of the following securities is NOT exempt from the registration procedures of the Uniform Securities Act?
Variable annuities issued by an insurance company authorized to do business in this state
As defined in the Uniform Securities Act, an investment adviser is all of the following EXCEPT
a broker-dealer who charges for investment advice a CPA who, as an incidental part of his practice, suggests certain tax-sheltered investments to his affluent clients
The Investment Advisers Act of 1940 requires every registered investment adviser to have a chief compliance officer (CCO). This individual would be responsible for ensuring compliance with the firm's Code of Ethics by all of these EXCEPT
a nonaffiliated broker-dealer through whom the majority of the firms trades are executed
The Uniform Securities Act requires all of the following to be registered as agents of a broker-dealer EXCEPT
a silent partner who has contributed most of the capital of the broker-dealer but takes no part in the firm's activities
As written in the Investment Advisers Act of 1940, a "person associated with an investment adviser" is any partner, officer, or director of such investment adviser (or any person performing similar functions), or any person directly or indirectly controlling or controlled by such investment adviser, including any employee of such investment adviser. Persons associated with an investment adviser whose functions are clerical or ministerial are not included in this definition. Based on that definition, all of the following would be associated persons EXCEPT
an employee of the firm with a degree in communications whose job is the graphic design of the investment adviser's research publications.
An agent registered in one state may solicit business in another state, provided
both the agent and the employing broker-dealer are properly registered in the other state
An individual is employed by a federal covered investment adviser for the sole purpose of giving advice related to monitoring investment portfolios, but only to qualified employee benefit plans. Under the Uniform Securities Act, this individual is
defined as an IAR because the individual is rendering investment advice
An intrastate offering is exempt from
federal registration
Each of the following statements regarding registration of securities by coordination is true EXCEPT
state registration must be effective prior to federal registration
If a person offers to buy a security after reading a tombstone ad, the offer to buy would be considered
unsolicited
Which of the following is NOT defined as a security under the Uniform Securities Act?
A Roth IRA
Which of the following regarding the registration of investment advisers and their representatives is TRUE?
ABC Advisers, Inc., registered with the Administrator, employs an investment adviser representative who left the employment of another investment advisory firm 6 months ago. ABC must notify the Administrator of this association promptly.
A discussion referring to blue-sky laws would include all of the following EXCEPT
the Securities Act of 1933 and Securities Exchange Act of 1934
Which of the following financial instruments are considered securities under the USA?
Collateral trust certificates Investment contracts, including interests in oil and gas drilling partnerships Options listed on the Chicago Board Options Exchange Foreign currency options contracts traded on the Philadelphia Stock Exchange
When an SEC registered IA reports less than $90M on their annual update, when do the have to notify the SEC?
Must withdraw from the SEC and register with the appropriate states within 180 days
Under the USA, the least active review of registration documentation is performed by state Administrators before which of the following becomes effective?
Notice filing
Under the Securities Act of 1933, which of the following securities is required to register with the SEC?
Debentures of First Newtown Bank Holding Corporation
Under state law, the registration of an agent of a broker-dealer is in effect until
December 31, unless renewed
Real estate investment trust certificates Preorganization subscription agreements Shares of treasury stock Voting-trust certificates issued by a corporation undergoing a reorganization
Defined as securities under the Uniform Securities Act
If an investment adviser is registered in another state and has no place of business within an Administrator's state, the adviser is exempt from registration under the Uniform Securities Act if
the adviser has no more than 5 clients who are residents of the state during the preceding 12 months
In which of the following cases would the Uniform Securities Act require registration of an investment adviser who had no place of business in the state?
He had more than 5 noninstitutional clients who were residents of the state.
What is the purpose of the Securities Exchange Act of 1934?
It regulates the persons involved in the secondary market.
Based on the Investment Advisers Act of 1940, which of the following would be excluded from the definition of investment adviser?
Persons whose advice relates solely to government securities
When a new IA files for registration if they anticipate having $100M within the first 120 days where will they register?
SEC even if they don't have $100M on day one
Which of the following is required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser?
State licensing fee
Which of the following statements concerning investment advisers are true?
The SEC can cancel the registration of a federal covered investment adviser if it finds that the adviser is no longer in business. An investment adviser who represents that their qualifications and methods of security analysis have been passed on by the SEC has violated the act.
To which of the following situations does the transaction exemption apply?
The sale of an estate's holding of IBM shares by an executor
If Brokers, Inc., a broker-dealer registered in this state, refuses to comply with the Administrator's order to retain records for 2 years longer than required by the Securities Exchange Act of 1934, which of the following statements are TRUE?
The securities Administrator cannot require registrants to retain books and records longer than required by the SEC. Brokers, Inc., is not in violation of the Securities Exchange Act of 1934.
A pension consultant who advises corporate retirement plans with assets of $135 million must register with which of the following?
The state
The Securities Act of 1933 covers all of the following except
blue-sky laws
An agent lives in Montana and is registered in Montana and Idaho. His broker-dealer is registered in every state west of the Mississippi River. The agent's client, who lives in Montana, decides to enroll in a 1-year resident MBA program in Philadelphia, Pennsylvania. During the 1-year period, when the client is in Philadelphia, the agent may
conduct business with the client as usual
Registration as an investment adviser is required for any firm in the business of giving advice on the purchase of
convertible bonds
All of the following have legal standing as persons under the Uniform Securities Act EXCEPT
minor children
An individual has been employed by a broker-dealer to solicit new subscriptions for the firm's free monthly stock market report. The individual is paid a salary plus bonus based on his success rate with signing up subscribers. Under the USA, this person would
not have to be registered as an agent of the broker-dealer
Under federal law, an application for becoming an associated person of a broker-dealer would be denied for an individual
pleading no contest to a misdemeanor involving a financial matter 65 months ago
When an agent transfers employment from a broker-dealer registered with the SEC to a broker-dealer registered solely in this state
the agent, the former broker-dealer, and the current broker-dealer must all notify the Administrator
All of the following information is required on the SEC registration Form ADV EXCEPT
the personal securities holdings of the principalsof the firm
Under the Uniform Securities Act, the recordkeeping requirements established by the Administrator for out-of-state investment advisers wishing to register in his state are subject to the limitations of
the requirements set by the Administrator of the adviser's home state
An individual may NOT act as an agent for more than one broker-dealer
unless the Administrator, by rule or order, authorizes such employment
Creative Financial Solutions (CFS) is a broker-dealer registered with the SEC. CFS has its principal and only office in State A. CFS also does business with clients in State B. Which of these clients would cause CFS to have to register in State B?
4 retail clients residing in State B
Which of the following is NOT a person as defined by the Uniform Securities Act?
A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.
Under the Uniform Securities Act, which of the following is NOT an investment adviser representative?
A clerk employed by a state-registered investment advisory firm
Under the Securities Act of 1933, the term "person" would NOT refer to which of the following?
A deceased individual
Under the Uniform Securities Act, broker-dealers are required to prepare and maintain certain records. Which of the following statements reflects the position of the act?
A firm registered in more than one state must meet the recordkeeping requirements of the state where its principal office is located, even if those are less comprehensive than those of some of the other states where it is registered. A broker-dealer's website is considered advertising.
Which of the following statements is (are) true?
A person included in the definition of an investment adviser under the Investment Advisers Act of 1940, who manages funds on a regular basis as a business headquartered in a state, is subject to payment of filing fees required by the state Administrator. Broker-dealers who supply incidental investment advice and make securities recommendations to customers who pay commissions for the execution of their trades are not investment advisers subject to state or federal registration.
In defining an investment adviser under SEC Release 1A-1092, which of the following would meet the business standard?
A person who advertises himself as an investment adviser A person who provides securities-related advice on a frequent or regular basis A person who receives separate or additional compensation for securities-related advice
Under the Uniform Securities Act, which of the following would be included in the definition of an investment adviser representative?
A solicitor for an investment advisory firm who is compensated for the service rendered
Under the Uniform Securities Act, which of the following may have to qualify as an investment adviser representative?
A solicitor for an investment advisory firm who is paid a fee for his services
The Affray Compassionate Finance Company (ACFC) is offering $100 million of 150-day commercial paper for sale in State L. The paper is available in minimum denominations of $100,000 and has been rated AA by a leading rating organization. Who of the following would be required to register as an agent in State L in order to legally sell this security in the state?
An agent of a broker-dealer registered in the state.
According to the Investment Advisers Act of 1940, which of the following is always a natural person?
An investment adviser representative
Which of the following statements concerning the books and records of a state-registered investment adviser under the Uniform Securities Act is (are) true?
Books and records must be maintained in the principal office of the adviser for the first two years. Books and records must be maintained in an easily accessible place for no less than five years from the end of the last fiscal year in which an entry was made. Copies of all investment letters, advertisements, or communications to two or more persons must be preserved for five years from the end of the fiscal year of the publication date. An adviser who ceases business continues to be responsible for the maintenance and preservation of certain records, such as corporate charters and minute books, for three years after termination of the enterprise.
Andrew voluntarily leaves his position as an agent with Gibraltar Securities. Which of the following best describes the reporting requirements relative to this termination?
Both Andrew and the firm must notify the Administrator of Andrew's resignation promptly.
Which of the following statements regarding agent registration under the Uniform Securities Act are TRUE?
In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.
According to the Uniform Securities Act, which of the following would be defined as an investment adviser representative?
John, who opens an investment advisory firm where he devotes his time exclusively to management responsibilities as the sole proprietor of the firm Paul, who works for a firm soliciting investment management accounts on behalf of several different investment managers
Long-Term Financial Solutions, Inc. (LTFSI), an investment adviser registered in five states, files a Form ADV-W indicating the business is closing. It is being acquired by another federal covered adviser, Gold and Sylver Advisers, LLC. Which of the following statements is correct?
LTFSI is responsible for ensuring that a copy of the LTFSI corporate charter is preserved for at least three years after the acquisition.
Fast Execution Services (FES), a registered broker-dealer, provides investment advice as an incidental part of its commission business. Madeleine, an agent registered with FES, charges for investment advice as a freelance investment adviser outside the scope of her employment at the firm. Which of the following statements are true?
Madeleine must register as an investment adviser. FES need not register as an investment adviser.
On April 15, ABC Advisers, Inc., made application for registration as an investment adviser with State X. Absent a denial or stop order, registration will become effective
May 15
Which of the following are exempt from registration under the Uniform Securities Act?
Preferred stock issued by ZXZ Corporation, whose common stock is traded on the New York Stock Exchange Common stock issued by a national bank Equipment trust certificates issued by a railroad company regulated by a state or federal agency A debenture traded in the over-the-counter market issued by a corporation whose common stock trades on the NYSE
An agent with a broker-dealer is suddenly called out of town on a personal family matter. While away, the agent's unregistered sales assistant receives a phone call from an existing client wishing to purchase 200 shares of a listed stock. What would be the most appropriate action for the sales assistant to take?
Route the call to a licensed agent in the office
Which of the following statements regarding the differences between Rule 506(b) and Rule 506(c) of Regulation D of the Securities Act of 1933 are TRUE?
Rule 506(c) offerings can be advertised, while Rule 506(b) offerings cannot. Rule 506(c) offerings are limited exclusively to accredited investors, while nonaccredited investors can participate in Rule 506(b) offerings.
Pontourny Advisory and Investment Services (PAIS) is a federal covered investment adviser. Its principal office is in State X. PAIS also maintains branch offices in States Y and Z. Brenda is the manager of the branch office in State Y. Some of the individuals being supervised by Brenda have clients in States X and Y, and others have clients in States Y and Z. Brenda must register as an IAR in
State Y
Which of the following statements is CORRECT?
State-registered investment advisers who have custody of clients' securities are required to provide audited balance sheets to their clients.
Long Range Planning (LRP) is a covered investment adviser doing business in all 50 states. Fred Fergus is an IAR with LRP and splits his time between an office in State A and State D. Fred has retail clients as follows: 16 clients in State A 12 clients in State B 6 clients in State C 4 clients in State D Fred would have to register as an IAR in
States A and D
Howard Robard is an investment adviser representative with Hughes & Company, a state-registered investment adviser having its principal office in State O and offices in States P and D. Howard works out of an office in State P and has 4 retail clients there. In addition, Howard has 25 retail clients in State D, 6 retail clients in State M, and 1 retail client in State O. Howard would be required to register as an investment adviser representative in
States P, D, and M.
Under the USA, which of the following statements regarding the posting of surety bonds is NOT true?
The Administrator requires all broker-dealers to post bonds even if they maintain net capital in excess of minimum amounts.
When comparing the limited offering exemption under federal law with that of the exemption in the Uniform Securities Act, which of the following statements is TRUE?
The Uniform Securities Act's exemption for such transactions is narrower than the comparable federal exemption because offers are limited to a smaller number of nonqualified offerees.
Under the Securities Exchange Act of 1934, the term associated person would include each of the following EXCEPT a person who is associated with a broker-dealer
and whose functions are solely ministerial
Sally is registered as an agent with ABC Securities Co., a major brokerage house with offices in most states. ABC has recently introduced a fee-based asset management program and has asked Sally to devote one hour per day soliciting her existing clients for this program. Under the USA, Sally would
be required to obtain registration as a registered investment adviser representative
The First Fidelity Building and Loan association, organized in State A and authorized to do business in State B, has an offering of common stock being made in State B. In order for an individual selling the offering to be excluded from the definition of agent in State B, the individual A)
could not sell without being an agent
The Uniform Securities Act authorizes the state Administrator to require
either oral or written qualification examinations of investment adviser representatives and officers of investment adviser partnerships or corporations officers of investment advisers to pass a qualification examination an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in the state investment adviser representatives to pass a qualification examination
Information required on an application for registration as an agent would include
felony convictions, whether securities related or not. citizenship information.
Under the Uniform Securities Act, an investment adviser would be exempt from registration in a state in which he has no place of business if he
had no more than 5 clients in that state within the past 12 months
A federal covered investment adviser is one who
has $110 million or more in assets under management manages an investment company registered under the Investment Company Act of 1940
If an agent located in the Ogden, Utah, office of a broker-dealer wishes to solicit prospects residing in California, under the Uniform Securities Act, the agent would
have to register in California
As used in the Uniform Securities Act, the term institutional investor would NOT include
individuals qualifying as accredited investors
Out-of-state investment advisers with no office in this state are not required to be registered if only advising
insurance companies
A person who has no place of business in this state would not be considered a broker-dealer if he effects transactions in this state exclusively with all of the following except
investment advisers.
The Uniform Securities Act would NOT provide an exemption from registration as an investment adviser to an investment adviser who
is an out-of-state investment adviser and directed business communications to fewer than 12 clients in the state in the past 12-month period
Regional Financial Services, LLC, is registered as an investment adviser in States A, B, C, and D. They have just filed an application for registration in State E. Registration of this investment adviser in State E automatically confers registration as an IAR in State E on
officers, partners, and directors of the firm who will be functioning in State E as IARs
An individual has been registered in State C and State D as an agent of a broker-dealer for the past three years. Due to a number of this agent's clients moving to State F, the agent registers there in early November. The individual's new registration in State F will expire
on December 31 of the same year.
The Uniform Securities Act authorizes the Administrator to make certain demands of broker-dealers. In general, the Administrator would not require a broker-dealer to
post a surety bond if the broker-dealer does not have investment discretion over client accounts or does not maintain custody of customer funds and/or securities
Strategic Capital Asset Managers (SCAM) is an investment adviser registered with the SEC. Registration as an investment adviser representative would be required of an employee who
provides recommendations on securities to the firm's bank clients
It would not be a prohibited practice under the Uniform Securities Act for an agent to tell a client that
registered nonexempt securities may properly be sold in the state
Some registered investment advisers are federal covered, while others register on a state by state basis. In the case of a state-registered investment adviser having its only office in Oregon with no offices in any other state, the authority of the office of the Administrator would include
requiring IARs to pass a qualification exam
All of the following securities are exempt from registration under the USA EXCEPT
stock of a bank holding company traded on the OTC Link
In order for a security to lawfully be sold or offered under the USA, it must meet at least one of the following requirements EXCEPT
that it is registered with the SEC
Prompt notification to the Administrator must be made when
there is a material change to any information contained in a broker-dealer's application for registration that is on file with the state
An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients
when informed by the investment adviser that the representative's registration is effective
