All of unit 1 chapter 1-7

Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, Investment Adviser Representatives, and Federal Covered Advisers. when may an adviser borrow money from a client? When the loan is negotiated at arm's length When the client is a broker-dealer When the client is a bank in the business of loaning funds A) II and III B) I and II C) I only D) I, II, and III

A

All of the following are exempt transactions EXCEPT A) an administrator of an estate selling securities to liquidate the estate's assets B) a Certified Financial Planner selling NYSE-listed securities to numerous high-net-worth individual clients C) a client, on his own initiative, requesting a transaction in a security that is not registered in the state D) a pledgee liquidating securities that were put up as collateral for a loan that has now gone into default

B

To enforce the Uniform Securities Act, the Administrator may do all of the following EXCEPT A) refer evidence to the attorney general for possible criminal prosecution B) issue a warrant for the arrest of a suspected violator C) conduct formal investigations D) issue cease and desist orders

B

When using the process of registration by coordination under the Uniform Securities Act, issuers shall simultaneously submit to the state, the documents filed with the SEC under A) the Investment Company Act of 1940 B) the Securities Exchange Act of 1934 C) the National Securities Markets Improvement Act (NSMIA) D) the Securities Act of 1933

D

Which of the following would be deemed to be an assignment of an investment adviser's contracts? All of the stock in NLT Advisers, a corporation, is acquired by MMS Advisers, Inc. The Lucky Seven Partnership is an investment adviser with 7 partners. Four of the partners make a fortune and decide to retire. They are replaced by new partners. Albert is an investment adviser. His clients' accounts are automatically debited monthly for his fee. Because of this steady cash flow, his banker readily accepts a pledge of these accounts as collateral for a loan. A) I and III B) I and II C) II and III D) I, II and III

D

As used in the Uniform Securities Act, the term institutional investor would NOT include A) employee benefit plans with assets of no less than $1 million B) investment companies C) individuals qualifying as accredited investors D) savings institutions

C

Under the Uniform Securities Act, a security that is exempt from the registration requirements is also exempt from the requirements for filing of advertising and sales literature the antifraud provisions the civil liabilities provisions A) I, II, and III B) I and III C) II and III D) I only

D

Although generally prohibited, there are conditions under which a state-registered investment adviser is permitted to charge performance-based fees. Which of the following meets the necessary criteria? A) Charging a performance-based fee to an individual who meets the definition of an accredited investor B) Charging a performance-based fee to an elderly client whose net worth is $2.2 million, with only $150,000 under the adviser's management C) Charging a performance-based fee to an individual with a net worth in excess of $10 million without describing that there is an incentive for the adviser to take greater risks D) Charging a performance-based fee to an aggressive entrepreneur whose net worth is $1.8 million who has $500,000 under the adviser's management

B

When a security registers by using coordination, under normal circumstances, the effective date is determined by A) the underwriter B) the SEC C) the Administrator D) the issuer

B

What is the term used to describe a common stock issued below its par value? A) Nonassessable B) Assessable C) Below book D) Subpar

B Assessable stock is a stock that is issued below its par or stated value. The issuer and/or creditors have the right to assess the shareholder for the deficiency. All stock issued today is nonassessable.

As a general matter, the regulators do not treat posts by customers or other third parties as the firm's communication with the public. Under certain circumstances, however, third-party posts may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has (1) involved itself in the preparation of the content or (2) explicitly or implicitly endorsed or approved the content. Where the firm endorses or approves of the material, but has no part in its creation, it is known as A) entanglement. B) usage. C) adoption. D) retail communication.

C

If a party is acting as a solicitor for a federal covered investment adviser, which of the following statements are TRUE? If the solicitation is for impersonal services, a solicitor is required to provide a disclosure statement to the client. If the solicitation is for other than impersonal services, then the solicitor must give the client a disclosure document. If the solicitation is for impersonal services, the solicitor must receive a signed statement from the client that the investment adviser's brochure and the disclosure document have been received. If the solicitation is for other than impersonal services, the solicitor must receive a signed statement from the client that the investment adviser's brochure and the disclosure document have been received. A) I and III B) II and III C) II and IV D) I and IV

C

The National Securities Markets Improvement Act of 1996 (NSMIA) A) created a national market system B) created the concept of fraud, as used in the Uniform Securities Act C) defined the term "federal covered adviser" D) overcame the restrictions of selling securities in interstate commerce

C

Under which of the following conditions may an agent sell an unregistered nonexempt security? A) When the broker-dealer employing the agent has no office in the state B) Never C) If the order was unsolicited D) Only to a noninstitutional client

C

Under the Uniform Securities Act, before a corporation can issue a security in a state, that security must be A) registered in the state or exempt from registration in the state B) registered with the SEC and in the state of issue C) registered in one other state and with the SEC D) exempt from registration in other states in which it is issued

A

Lucy, an agent of XYZ Securities, works out of an office in Ohio. She calls her client Clark, an individual investor and a resident of Kansas, and recommends that Clark purchase 500 shares of Perfect Pasta, Inc. common stock. Lucy read a report that Perfect Pasta plans to introduce a low-carbohydrate pasta into the marketplace. Perfect Pasta, Inc., common stock is neither exchange traded nor traded on Nasdaq. At the time Lucy makes the recommendation, the stock is not registered with the Securities Departments of Ohio or Kansas. Which of the following statements best reflects this transaction? A) Lucy has not violated the USA because the transaction with Clark is an exempt transaction. B) Lucy has violated the USA because she solicited an order in an unregistered, nonexempt security. C) Lucy has violated the USA because Perfect Pasta, Inc., failed to register its stock with the Securities Departments in both Kansas and Ohio. D) Lucy has violated the USA because Perfect Pasta, Inc., failed to register its stock with the Securities Department in Ohio.

B

Which of the following statements is TRUE? A) The USA only provides for civil liabilities for persons involved in illegal securities transactions in their state, while federal law provides criminal penalties. B) State Administrators are permitted to establish regulations relating to the registration, testing and fees for broker-dealers, agents, investment advisers and investment adviser representatives. C) The Uniform Securities Act is national law that each state enforces through a state Administrator. D) The state Administrator has authority to amend federal law to meet the needs or special circumstance in his state.

B