Final Number 8 Missed Questions
Filing of advertising with the Administrator is NOT required for: I U.S. Government securities II Municipal securities III Investment company securities IV NYSE-listed securities A. IV only B. I and II only C. III and IV only D. I, II, III, IV
Filing of advertising with the State cannot be required for exempt securities; exempt transactions; or for federal covered securities. U.S. Governments and municipals are exempt securities. NYSE listed, NASDAQ listed and investment company securities are federal covered securities.
Under the Uniform Securities Act, which statements are TRUE regarding investment advisers that take custody of customer funds? I The administrator must give written approval before an adviser can take custody of customer funds II The administrator can require a higher surety bond for advisers that take custody of customer funds III Statements of account must be sent to customers whose assets are held in custody at least quarterly A. I and II only B. II and III only C. I and III only D. I, II, III
There is no requirement for an investment adviser to get prior approval from the Administrator to take custody of customer funds. The Administrator may, by rule, prohibit advisers from taking custody; and can require a higher surety bond for advisers that do take custody ($35,000 instead of $10,000). If an adviser takes custody of customer funds or securities; account statements must be sent to the customer by the adviser at least quarterly.
An individual sells the securities of a federal chartered bank. This individual will be EXCLUDED from the definition of an agent if the individual: A. is the employee of a broker-dealer B. is the employee of the bank C. only offers the securities to 5 or fewer investors D. only offers the securities in 5 or fewer states
B Employee of ISSUERS (not employees of broker-dealers) that sell specified exempt securities, are excluded from the definition of an agent. These include employees of banks, savings institutions and trust companies, selling that depository institution's securities. For example, the employee of a bank selling that bank's CDs (which are defined as a security) is excluded.
The anti-fraud provisions of the Uniform Securities Act would apply to the sale in the State of: I fixed annuities II variable annuities III whole life insurance IV variable life insurance A. I and II only B. III and IV only C. II and IV only D. I, II, III, IV
C Both a fixed annuity and a whole life insurance policy are insurance products and are not securities
All of the following are requirements for an internet communication (a website) posted by a broker-dealer, agent, investment adviser or investment adviser representative EXCEPT the communication must A. attempt to effect securities transactions or the rendering of personalized investment advice for compensation in the State B. include a firewall or other implemented procedure to ensure that prior to any subsequent communication with prospective clients in the State, that the broker-dealer, agent, investment adviser, or investment adviser representative are registered in the State, or are exempt or excluded from registration C. include a legend that states that: "The broker-dealer, agent, investment adviser or investment adviser representative may only transact business in the State if registered in the State or if exempted or excluded from registration" D. include a legend that states that: "Follow ups or individualized responses to persons in the State by the broker-dealer agent or investment adviser representative that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made absent compliance with State registration requirements or an applicable exemption or exclusion."
A
Under the NASAA Statement of Policy on Dishonest and Unethical Business Practices, which of the following are prohibited business practices? I Exercising discretion in a customer account after obtaining written customer authorization II Taking a portion of the gains in an account funded solely by a customer with written permission of the customer III Executing an order to buy an exempt unregistered security IV Soliciting orders for unregistered non-exempt securities A. I and II B. II and IV C. III and IV D. I, II, III, IV
B Discretion can be exercised in a customer account after a written power of attorney is obtained from the customer. Sharing in the gains of a customer account is prohibited unless there is a written agreement between the agent and the customer approved by the broker-dealer and the agent only shares based on the proportion of capital that he contributes to the account.
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 Only those directors of the RIA that are involved in overseeing the sales or operations of the broker-dealer must be registered in the State and must take the proper licensing exams.
Under the Uniform Securities Act, which of the following persons with no place of business in a State is EXCLUDED from the definition of an "Investment Adviser"? A. A person who gives advice for a fee about public utility mortgage bond issues B. A person who gives advice for a fee about municipal securities C. An insurance company that renders advice about securities for a fee to its clients D. A trust that receives special compensation for rendering advice about securities
D
Which statements regarding registration of a security in a State are FALSE? I Registration is effective for a time period of 1 year II Once registration is declared effective in a State, it is effective in any other State in which a registration statement is filed III A registration statement can be filed in a State by a person other than an issuer IV To maintain registration in a State quarterly and annual financial statements must be filed with the Administrator A. I and III B. I and IV C. II and III D. II and IV
D Once registration is declared effective in one State, it is not automatically effective in any other State in which a registration statement is filed. Each State acts independently, making Choice II false. There is no State filing of an issuer's quarterly and annual financial statements - these are required to be filed by SEC-registered issuers under the Act of 1934 and are public documents, so Choice IV is false.
An individual that has not yet passed the appropriate State licensing examination for agent registration in a State would be permitted to: A. accept an unsolicited order from a customer B. make a recommendation to a customer C. make a cold call to a potential client D. report a completed trade to a customer
D Prior to being licensed as an agent, an individual can only perform clerical functions. What are considered to be clerical functions include the entering of orders that have already been taken from customers; reporting completed trades to customers; taking new account information (such as name, address etc.); and responding to customer questions about account items (such as "What is the current buying power in my account?").
XYZ Advisers is a federal covered adviser with an office in State A. It has 400 clients in State A; 6 clients in State B; and 3 clients in State C. A customer in State C files a complaint with that State's Administrator alleging that XYZ adviser made misleading statements. Which State Administrator(s) has the authority to revoke XYZ Adviser's registration? A. State A only B. States A and B only C. States A, B and C D. None of the above
D This is a federal covered adviser, so it is not registered with any State; rather, it is registered with the SEC and only the SEC can revoke its registration.
For initial registration as an agent in a State, all of the following are required EXCEPT: A. Consent to Service of Process B. Filing Fee C. Registration Application D. Government Issued Photo I.D.
D A Government Issued Photo ID is not required for registration as an agent in the state
A NASDAQ listed issuer plans on offering 5,000,000 new shares in an "add on" offering that will be sold by its underwriters in all 50 States. Which statements are TRUE? I The security must be registered in each State II A notice filing and filing fee are required in each State III A prospectus must be filed in each State IV A consent to service of process must be filed in each State A. I and III B. I and IV C. II and III D. II and IV
D Because this is an offering of a "federal covered" security (exchange listed or NASDAQ listed), the States cannot require a registration filing. The only registration filing is with the SEC. However, each State will still require a "notice" filing and payment of a filing fee; along with the filing of a consent to service of process.
Under the Uniform Securities Act, all of the following transactions are exempt EXCEPT the sale of stock: A. by a trustee in a bankruptcy proceeding B. to an insurance company C. by the executor of an estate D. in a transaction solicited by a registered agent
D Sales of securities by fiduciaries such as executors of estates, or trustees in a bankruptcy proceeding, are exempt. Sales to financial institutions are also exempt transactions since the general public is not involved. Solicited sales of securities by agents are not exempt transactions. The security must be registered to solicit in the state unless another exemption is available. Please note, however, that unsolicited transactions are exempt from state registration requirements.