FINRA Series 63 Unit 2

Notice Filing

1) Method by which a registered investment company and certain other federal covered securities file records with state securities Administrators 2) SEC-registered advisers (federal covered) may have to provide state securities authorities (the Administrator) with copies of documents that are filed with the SEC and pay a filing fee

B. in which the issuing corporation will not receive the proceeds from the transaction

A nonissuer transaction is a transaction A. between two corporations, in which one is issuing the stock and the other is purchasing B. in which the issuing corporation will not receive the proceeds from the transaction C. in which a mutual fund purchases a Treasury bond directly from the government D. in which the security must be registered

Registration by Qualification

A security is eligible for this in a state if all of the offering is to be sold in a single state or if the security is not eligible for another method of state registration. Net worth and disclosure requirements apply, and registration does not become effective until the Administrator so orders.

Registration by Coordination

A security is eligible for this in a state if the issuer files for registration of that security under the Securities Act of 1933 and files duplicates of the registration documents with the state Administrator. The state registration becomes effective at the same time the federal registration statement becomes effective.

Exempt Security

A security that need not be in formal compliance with a given piece of legislation, such as the Securities Act of 1933 or the Uniform Securities Act as adopted by a state. Examples are U.S. governmental and municipal securities. No security is exempt from the antifraud provisions of any securities legislation.

Federal Covered Security

A security that was exempt from registration on the state level

Exempt Transaction

A transaction exempt from registration, sales literature, and advertising requirements under the Uniform Securities Act.

Nonissuer Transaction (Secondary Transactions, Transactions Between Investors)

A transaction in which the proceeds of the sale do not go, either directly or indirectly, to the entity that originally offered the securities to the public

Issuer Transaction

A transaction in which the proceeds of the sale go to the issuer.

D. Joe Smith, an employee of Amalgamated National Bank, buys securities from ABC Brokerage Corporation

All of the following describe exempt transactions EXCEPT A. ABC, a broker-dealer, purchases securities from XYZ Corporation as part of an underwriting commitment B. First National Bank sells it entire publicly traded bond portfolio to Amalgamated National Bank C. Amalgamated National sells it publicly traded bond portfolio to ABC Insurance Company D. Joe Smith, an employee of Amalgamated National Bank, buys securities from ABC Brokerage Corporation

Common Enterprise

An enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a third party, or other investors

Institutional Investor

An investor that manages large amounts of money, such as a mutual fund, an insurance company, a bank, or a pension fund.

Accredited Investor

An investor who meets the accredited investor standards of Regulation D Rule 501 of Regulation D considers an individual with net worth greater than $1 million on the date of purchase, individually or with a spouse.

Primary Offering

An issuer transaction involving new securities

Issuer

Any person who issues (distributes) or proposes to issue a security

Subsequent Public Offering (SPO)

Any subsequent issuance of new shares to the public

Within Past 3 Years, To a Promoter at Price Different than Offering Price, To Anyone For a Consideration Other Than Cash

As a conditions of registration under coordination or qualification, the Administrator may require that a security be placed in escrow if the security is issued...

Nonsecurity Investments

Collectibles, fixed annuities, precious metals, grains, futures, real estate, and currencies are examples of...

Any Security Issued or Guaranteed by the U.S. or any Bank Regulated by the Federal Reserve Board, Securities Offered by a Municipal Issuer, Offers and Sales of Securities sold Through certain Transactions, such as Securities Offered to Qualified Purchasers Under Regulation D of Securities Act of 1933

Examples of certain exempt securities

Isolated Nonissuer Transactions, Unsolicited Brokerage Transactions, Underwriter Transactions, Bankruptcy, Guardian, or conservator Transactions, Institutional Investor Transactions, Limited Offering Transactions, Preorganization Certificates, Transactions with existing Security Holders, Nonissuer Transactions by Pledges, Unit Secured Transactions, Rescission Offers

Examples of different types of exempt transactions

Open-End Management Investment Companies, Closed-End Management Investment Companies, Unit Investment Trust, Face-Amount Certificates

Examples of investment company securities registered under the Investment Company Act of 1940

U.S. and Canadian Government and Municipal Securities, Foreign Government Securities, Depository Institutions, Insurance Company Securities, Public Utility Securities, Federal Covered Securities, Securities Issued by Nonprofit Organizations, Securities Issued by Cooperative, Securities of Employee Benefit Plans, Certain Money Market Instruments

Exempt securities

Investment of Money, Common Enterprise, Expectation of Profits, Derived from Efforts of a Person (other than investor)

For an instrument to be a security, the court held, it must constitute...

Copies of Latest Prospectus, Copy of Articles of Incorporation and Bylaws, Underwriting Agreement or Specimen copy of Security, Copies of Any Other Information Filed by Issuer, Each Amendment to Federal Prospectus

In coordinating a federal registration with state registration, issuers must supply what records in addition to the consent to service of process?

C. Management activity by owner

In the Howey Case, the U.S. Supreme Court defined an investment contract as having 4 components. Which of the following is NOT part of the 4-part test for an investment contract? A. An investment of money B. An expectation of profit C. Management activity by owner D. Solely from the efforts of other

Registered Under the Act (Uniform securities act), Security or Transaction Exempted from Registration, Federal Covered Security

It is unlawful for any person to offer or sell any security in the state unless...

Registered Under the Act, Security or Transaction is Exempted Under the Act, Federal Covered Security

It is unlawful for any person to offer or sell any security in this state unless...

Registered or Exempt

It is unlawful for any person to offer or sell any security in this state unless...

An Insurance or Endowment Policy or Annuity Contract Under Which an Insurance Company Promises to Pay a Fixed Sum of Money Either in a Lump Sum or Periodically, Interest in Retirement Plan, Collectibles, Commodities, Condominiums, Currency

Items not securities under the Uniform Securities Act

Seller Believes Purchase for Investment Purposes Only, No Commission (or other remuneration), No General Solicitation or Advertising

Limited offering transaction include any offering, called a private placement, directed at not more than 10 persons (called offerees) other than institutional investors during the previous 12 consecutive months, provided that...

Notice Filing, Coordination, Qualification

Methods of state registration of securities

A. Exempt

Mr. Thompson, an agent with First SEcurities, Inc., (a broker-dealer), receives an unsolicited request to purchase a security for Mary Gordon, a high net worth individual A. Exempt B. Nonexempt

C. need not be registered if sold in an exempt transaction

Nonexempt securities A. need not be registered in the state in which they are sold B. always must be registered in the state in which they are sold C. need not be registered if sold in an exempt transaction D. need not be registered if sold in a nonexempt transaction

Exempt

Not subject to registration

Quarterly

Ongoing reports cannot be required more often than ___________________.

No Stop Orders and No Proceedings Pending, Registration Filed at Least Minimum Number of Days (specified by the administrator, 10-20), Statement of Maximum and Minimum Proposed Offering Prices and Maximum Underwriting Discounts and Commissions have Been Filed or 2 Full Business days

Registration by coordination becomes effective at the same time the federal registration becomes effective, provided that...

B. Noneempt

Sale of stock of a privately owned company to the public in an initial public offering. A. Exempt B. Nonexempt

Amount of Securities Issued in State, States in Which the Security is to be Offered, Advers Oeder (or Judgement) Concerning the Offering, Anticipated Effective Date, Anticipated Use of the Proceeds

State Administrators require every issuer to supply what information on their applications?

Uniform Securities Act (USA)

Template legislation written by the NCCUSL to serve as the basis for a state's securities legislation if the state wished to adopt it. It regulates securities, persons (broker-dealer and their agents and investment advisers and their representatives), and transactions in the securities markets within the state. All but a few of the states have adopted this in some form.

Matures 9 Months or Less, Issued in Minimum Denominations of $50,000, Receives One of the Three Highest Ratings

The USA also grants an exemption for certain short-term debt securities. Examples are a promissory note (commercial paper), draft, bill of exchange, or banker's acceptance if it

Initial Public Offering (IPO)

The first time an issuer distributes securities to the public

Filing Fee

The issuer must pay a _______________ as determined by the Administrator when filing the registration.

Securities Listed on NYSE, Chicago Stock Exchange, Nasdaq Stock Market, and Other Securities Exchanges, Investment Company Securities Registered Under the Investment Company Act of 1940, Offers and Sales of Certain Exempt Securities

The major categories of federal covered securities that cannot be regulated by state securities Administrators include...

Registrant

The person registering the securities

A. Exempt

The sale of an unregistered security in a private, nonpublicly advertised transaction offered to 10 or fewer retail investors over the last 12 months A. Exempt B. Nonexempt

A. Exempt

The sale of unclaimed securities by the sheriff of Santa Fe, New Mexico. A. Exempt B. Nonexempt

National Securities Markets Improvement Act of 1996 (NSMIA)

This law effectively divided the responsibility for regulating investment advisers between the states and the SEC by bifurcating (splitting in two) the regulation of investment advisers and creating the category of registration known as a federal covered adviser.

Nonexempt

Those securities that are ______________ must register unless sold in exempt transaction.

Name, Address, and Form of Organization, Information on Directors/Officers/ and every owner of 10% or more, Description of issuer's capitalization and Long-Term Debt, Estimated Proceeds and Use, Type and amount of Securities Offered, Offering Price, and Selling and Underwriting Costs, Stock Options, Prospectus, Pamphlet, Circular, or Sales Literature, Specimen Copy of Security, Audited Balance Sheet

To register by qualification, an issuer must supply a consent to service of process and the following information...

True

True or False: ABC Shoe Company, a new retail shoe store chain, has applied for the registration of its securities with the SEC as required by the Securities Act of 1933 and wants to register its securities in the state of Illinois. ABC Shoe Company would most likely register by Coordination.

False

True or False: Any company may register by qualification, whether or not it files a statement with the SEC.

C. II and III

Under the USA, all of the following are exempt securities EXCEPT I. U.S. government securities II unsolicited transactions III. transactions between issuers and underwriters IV. securities of federally charted credit unions A. I, II, and IV B. I and IV C. II and III D. IV only

Note, Stock, Treasury Note, Bond, Debenture, Evidence of Indebtedness, Certificate of Interest or Participation in a Profit-Sharing Agreement, Collateral Trust Certificate, Preorganization Certificate or Subscription, Transferable Share, Investment Contract, Voting Trust Certificate, Certificate of Deposit, Certificate of Interest or Participation in an Oil, Gas, or Mining Title, Puts, Calls, Straddles, Options, or Privilege on Security, Interest or Instrument Commonly Known as Security, Certificate of Interest or Participation in Receipts of, Guarantees of, or Warrants or Rights to Subscribe to or Purchase Any of the Above

Under the Uniform Securities Act, "security" means any...

Documents Filed Along with Their Registration Statements Filed with the SEC, Documents Filed as Amendments to the Initial Federal Registration Statement, Report on the Value of Such Securities Offered in State, Consent to Service of Process

Under the notice filing procedure, state Administrators may require the issuer to file what documents as a condition for sale of their securities in the state?

C. Commodity future contracts, fixed-payment life insurance contracts

Which list of instruments below is NOT composed of securities? A. Stock, treasury stock, rights, warrants, transferable shares B. Voting trust certificates, interest in oil and gas drilling programs C. Commodity future contracts, fixed-payment life insurance contracts D. Options on stock, debentures

C. II and IV

Which of the following are exempt transactions? I. An agent sells a security issued y a foreign government with which the United States has diplomatic relations to an individual client II. An unsolicted request from an existing client to purchase a nonexempt security III. The sale of an unregistered security in a private, nonpublicly advertised transaction to 14 noninstitutional investors over a period not exceeding 12 months IV. The sale of unlisted securities jby a trustee in bankruptcy. A. I and II B. I and III C. II and IV D. III and IV

D. I, II, III, and IV

Which of the following securities is (are) exempt from the registration and advertising filing requirements under the USA? I. Shares of investment companies registered under the Investment Company Act of 1940 II. Shares sold on the Nasdaq Stock Market III. AAA rated promissory notes of $100,000 that mature in 30 days IV. Shares sold on the New York Stock Exchange A. I only B. II, III, and IV C. II and IV D. I, II, III, and IV

D. Variable annuity contract issued by Metrodental Insurance Co.

Which of the following securities is NOT exempt from the registration and advertising requirements of the USA? A. Shares of Commonwealth Edison, a regulated public utility holding company B. Securities issued by the Carnegie Endowment for Peace C. Securities issued by a bank that is a member of the Federal Reserve System D. Variable annuity contract issued by Metrodental Insurance Co.

C. II and III

With regard to the registration requirements of the Uniform Securities Act, Which of the following statements is TRUE? I. Only the issuer itself can file a registration statement with the Administrator II. An application for registration must indicate the amount of securities to be issued in the state III. The Administrator may require registrants to file quarterly reports A. I and II B. I and III C. II and III D. I, II, and III

Public Offering Price is Not Changed, Underwriters' Discounts and Commissions are Not Changed

a registration statement may be amended after its effective date so as to increase the securities specified to be offered and sold if what two conditions are met