Guarantee exam 1 Series 63
#44. Under the federal law, what is the maximum penalty that the SEC can seek against the CEO of an investment adviser who is convinced of embezzling clients funds?
$10,000 and 5 years in prison.
#2. Which of the following are securities under the Uniform securities Act(Usa)?
1. Collateral mortage obligation or CMO. 111. A whiskey warehouse receipts. IV. Interest in an oil and gas drilling program. A security is defined as n instrument that trades for value where an investor can expect the profit from a third-party efforts.
#40 During Sales presentation an agent may NOT
1. Project specific future performance results. II. Omit Material Facts about the Security.
#41 The basic definition of a security includes various corporate issues. These are CORPORATE ISSUES
1. Voting trust certificates. III. American depository receipts. IV. Collateral trust certifications.
#60 Which of the following accounts is NOT required to have an annual " surprise audit" by an independent accountant?
A custodial account in which the investment adviser has authority to withdraw funds to pay its ADVISORY FEE ONLY Investment advisers whose custody is limited to the withdrawal of their advisory fee are not required to have a surprise audit.
#59 The ACME securities company is currently providing investment research for monetary advisers inc. In exchange for a bigger share of investment trades that monetary produces based on its clients accounts. This type of arrangement is.
An example of a soft dollar allience, but must be periodaclly reviewed for potential conflict of interest. "soft dollars" are an alliance created by investment advisers with specific B/D who provide research or brokerage services in exchange for potential future transactions by the adviser with that B/D.
#52 All of the following situations would result in possible civil liabilities under the act EXCEPT.
An issuer makes on offer to sell a security in violation of the act but the sale does not transpire.
#3. All of the following are correct regarding investment adviser custody of customer assets Except.
Both the investment adviser and the qualified custodian are required to send quarterly statements to customers. If the adviser has a reasonable basis to believe that the client is receiving statements from the custodian the adviser is not required to also send statement.
#43 Under the securities act, which of the following is true regarding record keeping requirements for broker/dealers and investment advisers?
Broker/dealers must maintain record for 3 years. Investment advisers for 5 years unless the administrator or federal law requires otherwise.
#29 issuers of guaranteed securities guarantee all of the following EXCEPT.
Capital gains. Issuers of guaranteed securities guarantee RETURN of principal and PAYMENTS of DIVIDENDS and INTEREST: capital gains are not guaranteed.
#33. An investment adviser subject to notice filling may be required to submit which of the following items to the state administration
Consent to service of process.
#32. The right of an investor who incurred losses due to trading around the same time as an investor who traded illegally on insider information is called.
Contemporaneous Traders.
#27 According to the uniform securities act, promissory notes that mature in 9 months or less that are issued in denominations of at least $50,000 and a carry a rating in one of the thee highest categories of a nationally recognized rating organization are.
Exempt securities These notes, commonly known as commercial paper, are specified as exempt securities under the act.
#51 According to the uniform securities act, a PUBLIC UTILITY ISSUE Regulated by the public utility holding act of 1935 is considered.
Exempt security.
#6 SANCTIONS imposed on an investment adviser are listed in which of the following?
Form ADV Part 1 Form ADV part 1 of the investment advisory brochure provides general information contact information and lists sanctions against the investment adviser.
#55. In the course of an investigation conducted by the administrator, failure to comply with subpoena to testify or produce documentation.
I Can be enforced by petitioning the courts. II Is referred to as a contumacy.
#12 An investment adviser has allowed its net worth to fall below the required minimums in its home state and is now required to file a financial report with the home state administrator. This report must include which of the following?
I. A balance of all ledger accounts. II. A computation of client debit balances. III A statement of all client funds or securities that have not been segregated IV. The number of client accounts.
#18 Consent to service of process is required with which of the following registrations?
I. Agent. II. Broker/Dealer. III.Registered investment adviser representative. IV .Investment adviser.
#26 Which of the following is Not included in the definition of a broker/dealer?
I. An Agent registered with the broker/dealer. IV. An issuer. (An underwriter and a market maker ARE considered broker/dealers)
#13 Which of the following are EXCLUDED from the definition of an Agent?
I. Employees who only do managerial duties and do not effect trades. III. Employees who only perform clerical duties and do not effect trades.
#36. Which of the Following are NOT true concerning Investment Advisory Contracts?
I. In the absence of a complete and current Advisory Brochure, there must be a written advisory contract. III.If the Adviser is a partnership, any change in the members of the partnership will void the contract.
#64 If you hear a rumor that could affect a stocks performance and relay this information to a client, you are
I. Subject to civil liabilities II subject to criminal liabilities III engaging in an unethical practice.
#10 Which of the following are considered dishonest and unethical practices when committed by an agent?
I. Telling clients that registration of a security means approval of that security. III. Failure to inform a client of a larger than normal commissions. IV. Providing inaccurate market quotations.
#21 If an investment adviser has no place of business in the state and solicits 5 clients in that state within 12 months, which of the following is true?
I. The firm must be registered with the SEC depending on assets under management. III. The firm is exempt from registration requirements in that state. An investment adviser is exempt for the registration requirements in a state if it has no place of business in the state and solicits no more than 5 retail clients in the state within a 12 month period.
#5 The term investment adviser is used to refer to which of the following?
I. The person charged with managing a mutual fund investment portfolio in order to achieve the funds stated objectives. III. A firm that, for compensation, advises others as to the merits of purchasing or selling specific securities.
#31 If a Broker/Dealers registration is revoked, which of the following would be true?
II .B/D agents registration are no longer in effect. III. B/D agents must re-register with another B/D
#35 An investment advisory brochure
II. Can be furnished at the signing of an advisory contract under certain conditions. IV. Is furnished prior to entering into an investment advisory contract.
#62 Which of the following are criminal penalties for violating insider trading rules?
II. Imprisonment for up to 20 years. IV. Up to $25 million to fines per corporation.
#9 Which of the following statements are true regarding an offer versus a sale of securities under the USA?
II. Sale = A Sale of a contract III Offer = An offer is a proposal or attempt to sell securities.
#7 An adviser that maintains custody of clients funds must d which of the following?
II. Send Quarterly statements which list all held securities, number of shares, value of account, and all transactions since the last statement. III. Segregate the clients funds and securities from any other account unless the client has given expressed written consent to permit commingling.
#45 Investment adviser that enters into a contract with a municipal bond fund registered under the investment company act of 1940 to provide statistical research on the default rate of municipal bonds.
Is not required to provide the client with an Investment Advisory Brochure.
#57 An investment adviser filled form ADV-W while being sued by three of its clients. When is the effective date for the form ADV-W?
It is unknown,. It is unknown because an IA cannot withdraw a registration while subject to legal proceedings.
#23 A customer has an investment objective o safety and conservation of principal. He calls up his agent and instructs him to purchase a large order of a speculative security. The agent informs the customer that he believes the security to be unsuitable. The customer tells the agent to "just do it". The agent should
Just do it. The Agent should follow the customers instructions. The agent would be very prudent to obtain a signed non-solicitation letter form the customer before effecting the transaction.
#8 Under the Act, all of the following may be required of applicants for registration EXCEPT
Minimum net worth for broker/dealers and agents.
#11 The Following statements are correct concerning an agents handling of a customer account EXCEPT
Recommendations to use options to hedge against loss are prohibited.
#56 Canadian broker/dealer existing customer relocates to Seattle,Washington. The customer regularly trades in corporate securities, both stocks and bonds. If the Canadian B/D wishes to continue transacting business with the customer in her brokerage account, the broker/dealer and the agent must do which of the following?
Register with FINRA and with the State of Washington.
#34 Which of the following securities registrations is accessible to nearly any issuer?
Registration by Qualification Registrations by QUALIFICATION is the most difficult BUT IT IS AVAILABLE TO ANYONE.
Under the Uniform Securities act, which of the following is NOT considered a person.
The Beneficiary of a UGMA account.
#63 What type of disclosure is required of a B/D that is also an investment adviser, acting as principal on a trade with a non-advisory customer?
The Broker/dealer capacity must be disclosed on the trade confirmation.
#47 An agent has a close friend who works at trimark enterprises, a publicly traded company. The friend tells the agent that the chairman has been going through some mental depression and will be stepping down from his position. The agent then calls each of hisis clients who hold a position in the company and tells them to sell. Which of the following statements is true?
The agent has used hearsay to induce trading, which is a violation. The agent has violated the act by using a rumor, or hearsay to induce customer trading.
#1. Registration Statements must be filed by
The issuer, a registered broker/dealer, or a person on whose behalf the offering is being made.
#15. The administrator may summarily deny, postpone or suspend a registration pending a final determination if he considered it to be in the public interest and
The registrant and the employing firm are given written notice and opportunity for a hearing.
#4. A Federally registered investment adviser has employed a rep to solicit investment adviser clients n its behalf. Which of the following statements is true about the reps registration requirements?
The rep is required to register as an investment adviser representative in any state in which he was planning to solicit business on behalf of the adviser.
#16 Which of the following would govern under a fiduciary under the Prudent man Rules?
The state in which the fiduciary is operating in.
#58 As an Agent for a B/D, you inform a client that a security in his account is higher priced than it actually is. The client sells the security based on this quote. which of the following action is true.
You are subject to civil and criminal actions.
