Exam 7

When registering as an agent, which of the following information is NOT required on the U4 Form? a. A Consent to Service of Process b. Any conviction of a misdemeanor involving a security c. The agent's financial condition d. The state or province of birth

a. A Consent to Service of Process

State Administrators have certain authority regarding the establishment of requirements related to net capital and registration of broker-dealers. Which of the following BEST describes this authority? a. Administrators must establish minimum net capital requirements that are equal to those of the SEC. b. Administrators can act in the public's best interest and establish appropriate minimum net capital requirements for broker-dealers. c. Administrators can only enforce the minimum net capital requirements that are set by the SEC. d. Administrators have no authority to establish or enforce minimum net capital requirements for broker-dealers.

b. Administrators can act in the public's best interest and establish appropriate minimum net capital requirements for broker-dealers

A client of an agent has recently sold a home. Before making an investment decision, the client suggests that the agent hold the money in safekeeping. Which of the following is TRUE of this arrangement? a. In order to act as a custodian for the client's money, the agent must have a power of attorney b. Agents are prohibited from acting as a custodian for money c. Before agreeing to accept the client's money, the agent must have written approval from their broker-dealer d. When acting as a custodian for a client's money, the agent must post a bond and notify the Administrator

b. Agents are prohibited from acting as a custodian for money; only a broker-dealer may act as a custodian

An agent's customer places an order and tells the agent to buy XYZ stock "when the price is right." The customer goes out of town on business and cannot be reached when the agent learns of news about XYZ which the agent believes will drive the price of the stock up. Which of the following actions should the agent take? a. Buy the stock for the customer at the current market price. b. Do nothing until the customer can be reached. c. Asks for discretionary authority over the account from the her broker-dealer's Compliance Department. d. Purchase the shares for her own account and later sell the shares to the customer at the purchase price if the customer agrees.

b. Do nothing until the customer can be reached; discretion that's limited to the time and/or price of execution can be given to an agent, but only until the end of a trading day

An agent of a broker-dealer has a friend who is operating a commodity pool. The friend has a large stake in the pool and wants the agent's assistance in selling shares in the pool to additional investors. If the agent agrees to help the friend, the agent will be: a. Engaging in an outside business activity and must notify the broker-dealer in writing about the activity b. Selling away unless the agent notifies the broker-dealer in writing and the broker-dealer agrees to supervise the sales c. Engaging in insider trading d. Violating the Uniform Securities Act

b. Selling away unless the agent notifies the broker-dealer in writing and the broker-dealer agrees to supervise the sales

All of the following books and records must be readily available at a branch office, EXCEPT: a. Customer account agreements b. The broker-dealer's audited financial statements c. Order tickets d. Compensation records for agents

b. The broker's audited financial statements; the key to this question is the READILY (aka stored in office)

Which of the following is NOT defined as an IAR? a. A person who gives advice and is employed by an investment adviser b.A person who solicits new business for an investment adviser c. A person that manages portfolios and assets for its clients d. A person who manages IARs at an investment advisory firm

c. A person that manages portfolios and assets for its clients; this "person" may or may not be an individual while all other options are

Broker-Dealer X just hired a new agent. The agent has two existing securities accounts: an IRA account with a large mutual fund group in which he may only purchase this these types of securities and a regular account with Broker-Dealer Y. The agent must: a.Immediately close both of the existing securities accounts, open an account with Broker-Dealer X and transfer all the assets to this new account b. Notify the State Administrator on Form U4 about the existing accounts c. Notify Broker-Dealer Y that the agent is now employed by Broker-Dealer X d. Notify both the mutual fund group and Broker-Dealer Y that the agent is now associated with Broker-Dealer X

c. Notify Broker-Dealer Y that the agent is now employed by Broker-Dealer X

According to the Uniform Securities Act, which of the following statements is NOT correct regarding an Administrator's authority over the books and records of an IA? a. The state securities Administrator may indicate the types of books and records that are required to be kept by an investment adviser in its principal place of business. b. The state securities Administrator is allowed to inspect the books and records of any investment adviser both inside and outside its state. c. The state securities Administrator may indicate the types of books and records that are required to be kept by an investment adviser that's registered with the SEC. d. The state securities Administrator may indicate the time periods for the preservation of books and records of investment advisers that have their principal place of business in the state.

c. The state securities Administrator may indicate the types of books and records that are required to be kept by an investment adviser that's registered with the SEC

Which of the following statements is TRUE regarding an options account? a. Before entering an options order, the customer must return the signed options account agreement b. Before entering an options order, the Registered Options Principal (ROP) must receive the Options Disclosure Document c. Before entering an options order, the customer must return the options account agreement d. Before entering an options order, the broker-dealer must deliver the Options Disclosure Document to the customer

d. Before entering an options order, the broker-dealer must deliver the Options Disclosure Document to the customer

An individual is an investment adviser representative of a state-registered investment adviser. Under the Uniform Securities Act, even if the IAR has no place of business in the state, registration is required if her clients include which of the following? a. Another investment adviser b. A mutual fund c. An employee benefit plan d. Eight accredited investors

d. Eight accredited investors

Under the Uniform Securities Act, a state Administrator may require the application for registration as an investment adviser to include which of the following? a. A list of the past five years of records of both current and formerly employed investment adviser representatives (IARs) b. A record of client securities and the location and manner in which they are or will be held c. The compliance procedures of the IA d. The financial condition and history of the IA

d. The financial condition and history of the IA