Final 2
The "tipper-tippee" doctrine applies only to cases where the tipper
"intentionally" gives the information to the "tippee," who then trades on it
Way of taking custody is
$500 prepaid for 6 months
The advisory contract, under NASAA rules, must include
1. Description of services provided; 2. Term of contract; 3. Formula for computing fees; 4. Amount of prepaid fees to be returned if contract is terminated early; 5. Assignment of the contract is not permitted unless the customer approves; 6. Whether the contract grants discretionary authority to the adviser; and 7. Disclosure that the fee for managing equity securities may be higher than the fee for managing debt securities
What is relevant is
1. whether the active trading is in line with the customer's investment objective 2. the character of the customer's account 3. the financial condition of the agent
A customer opens an account at a brokerage firm to purchase securities in an offering. The customer must receive the disclosure document/prospectus: A. no later than the confirmation of the sale B. no later than the settlement of the transaction C. within 7 days of the transaction D. within 90 days of the transaction
A
An agent of a broker-dealer is told by a wealthy, well-connected client that "I just talked to the president of ABCD Corp. (an NYSE listed company) and was told that this quarter's results are going to be lousy." Which statement is TRUE? A. The agent can discuss this phone conversation with his branch manager B. The agent can discuss the phone conversation with his spouse C. The agent can discuss the phone conversation with anyone who is registered as an agent in that State D. The agent cannot discuss this phone conversation with anyone
A. D is plausible as well
A Federal Covered Adviser discovers a material error in its Form ADV. When must Form ADV be amended with the State to correct the error? A. There is no requirement to amend the filing in the State because the investment adviser is Federal covered B. Within 30 days C. Within 60 days D. Within 90 days
B
A Registered Investment Adviser is the beneficiary in the liquidation of a partnership investment that it made years ago and in settlement, receives the assets of an existing broker-dealer. As a result of this, the directors of the RIA: A. are required to register in the State as directors of the broker-dealer B. are not required to register in the State as directors of the broker-dealer, nor take qualification exams, as long as they are not involved in overseeing the sales or operations of the broker-dealer C. must register in the State as directors of the broker-dealer but are not required to take qualification exams D. are not required to register in the State as directors of the broker-dealer
B
An investment adviser has 3 managing partners and 3 investment adviser representatives. All of the partners have completed the Certified Financial Planner (CFP) program and received the designation. The 3 IARs have been enrolled in a CFP preparation course and are scheduled to take the next CFP exam. The IA publishes an advertisement that states: "All of our partners are Certified Financial Planners." This advertisement is: A. fraudulent and misleading B. unethical because an advertisement cannot include the qualifications of the firm's principals C. permitted since it is true D. permitted only after the IARs pass their CFP exams
C
Which State-registered adviser is considered to have taken custody of client funds? A. An adviser that accepts $300 of advisory fees as a prepayment covering the upcoming 5 months B. An adviser that accepts $400 of advisory fees as a prepayment covering the upcoming 4 months C. An adviser that accepts $500 of advisory fees as a prepayment covering the upcoming 6 months D. All of the above
C
Final prospectus must be given at or prior to
CONFIRMATION
A member firm is negotiating with an issuer to underwrite an add-on common stock offering and a registration statement has not yet been filed. A research analyst at the firm has been following the company for the past 5 years and now wishes to change the broker-dealer's rating from "Hold" to "Buy." The member firm should: A. issue the report in its normal fashion B. issue the report only to its best customers C. buy the stock in the market before issuing the report D. not issue the report until at least 3 days after the effective date
D
An order ticket for the purchase of stock does NOT contain: A. Quantity B. Time that the order is placed C. Fill price D. Market price at the time that the order is placed
D
The vice president of a publicly traded company casually tells a close friend over dinner that the company's results are looking very weak this quarter. The friend offers some comforting words to the vice president and does not tell anyone else about the news. Which statement is TRUE? A. The vice president has violated the insider trading laws B. The friend has violated the insider trading laws C. Both the vice president and the friend have violated the insider trading laws D. Neither the vice president nor the friend have violated the insider trading laws
D
Which of the following persons is required to register as an investment adviser under the Uniform Securities Act? A. An attorney who writes a legal opinion included in the registration statement filed with the State for a new non-exempt securities offering B. A broker-dealer who gives investment advice in the regular course of business executing transactions for customers C. An agent of a broker-dealer who gives investment advice as part of his or her regular duties and who charges a fee for such advice D. A broker-dealer that charges an annual flat fee to customers for both investment advice and portfolio trade executions
D
Under the Uniform Securities Act, which of the following would be defined as an investment adviser? A. U.S. Trust Corporation B. Countywide Savings and Loan C. IZZI Advisers, which has $110 million of assets under management D. ACCO Publishers, which has a website that charges for customized financial plans based on customer input
D. C is a federal covered adviser because of over $100M
Which of the following are prohibited practices under NASAA guidelines? I An investment adviser lending money to a customer II An investment adviser lending money to a customer that is a relative III An investment adviser lending money to a customer through a bank affiliate IV A broker-dealer lending money to a customer where securities are collateral under Regulation T
I, II
Which of the following statements are TRUE regarding private placements under the Uniform Securities Act? I No commissions can be paid for sales to individual investors II No more than 10 prospective investors may be contacted III General advertising is prohibited
I, II, II
Federal securities laws supersede the provisions of the Uniform Securities Act in which of the following? I Registration requirements applicable to securities offerings II Registration requirements applicable to investment advisers III Broker-dealer capital, custody, financial responsibility and recordkeeping requirements IV Investigation and bringing enforcement action against broker-dealers for unlawful conduct
I, II, III
An unregistered agent is permitted to
Report completed trades of securities to customers
U.S. Government bonds give
a higher (taxable) yield than municipals
Securities file
consent to service of process
No commissions can be paid
in private placements
As a general rule, States have jurisdiction over securities transactions that occur within the State; while Federal legislation applies to
interstate transactions
Even if a municipal bond is issued outside of that state
it is still exempt from registering in that state
Insider info can be told to
legal department
The length of time that a customer had an account has
no relevance when attempting to determine if churning has occurred
Customer address does not need to be
on order ticket
If a customer is past their life expectancy
they are non insurable (DO NOT RECOMMEND VARIABLE ANNUITIES OR INSURANCE PRODUCTS)