Series 66 Q-Bank

Which of the following are considered to be exempt issuers under the Uniform Securities Act? State of Georgia. City of London, Ontario. City of London, England. Kapco Income Fund, a hedge fund not registered with the SEC. A) I and II. B) I, II and III. C) I, II, III and IV. D) I, II and IV.

(A) I and II. Any state or Canadian province, or political subdivision thereof, is considered an exempt issuer. Foreign governments with whom the United States has diplomatic relations, but not their political subdivisions, are considered exempt issuers. SEC-registered investment companies are non-exempt issuers under the USA. That is, the act does not include them in the list of exempt issuers. However, under the NSMIA, they are federal covered securities and, as such, do not register with the states other than filing a notice. All the more so, hedge funds that are NOT registered with the SEC would not be exempt issuers.

XYZ Securities, Inc. is a broker/dealer registered in the states of Alabama, Tennessee, Georgia, and Florida. The home office is in Birmingham with branches in Nashville and Atlanta. One of their clients living in Miami feels that his Nashville-based agent has been churning the account. If a complaint is filed, which Administrator would have jurisdiction? Alabama. Florida. Georgia. Tennessee. A) II and IV. B) I and II. C) II and III. D) I and IV.

(A) II and IV. The Administrator in the state of residence of the client would certainly have jurisdiction. It is also likely that the Administrator in the state where the agent is located would also have jurisdiction because all offers were being made from Nashville. The fact that the home office is in Alabama does not enter into the discussion.

Under the Uniform Securities Act, which of the following statements is NOT true regarding registration of securities? A) Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. B) A post-effective amendment must be filed if there are any material changes in the information on file. C) The Administrator may require periodic sales and other reports to be filed. D) The Administrator may require the proceeds of the sale of securities be escrowed until sales reach a certain level.

(A) Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. The Administrator may require certain reports to be filed and the registration statement and other offerings be updated as necessary. A post-effective amendment must be filed if there have been any material changes to information on file. Administrators may require the proceeds of the sale to be escrowed when it would take specific amounts of money to achieve the primary purpose of the offering. Registration of investment companies must comply with the Investment Company Act of 1940, and investment companies are not required to register with the state.

The Administrator of a state securities department conducted a hearing regarding misconduct by an investment adviser registered at the state level. The Administrator required the adviser, as well as several clients who had lodged complaints against the adviser, to take a sworn oath that their testimony was true. Does the Administrator have the power to require sworn oaths? A) Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction. B) Yes, the Administrator may require witness oaths because the Administrator is appointed as a judge. C) Yes, the Administrator has the power to require witness oaths because an Administrative hearing is functionally a legal proceeding. D) No, the Administrator was merely attempting to emphasize the seriousness of the hearing, but he holds no such power.

(A) Yes, because the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction. The USA empowers Administrators to administer oaths, Sworn oaths typically occur in conjunction with hearings.

Fusion Financial is a broker-dealer registered in States A, B and C with its home office in State B. A complaint is filed against the firm by a client who resides in State A. Under the powers granted under the Uniform Securities Act, the Administrator of State B could do all of the following EXCEPT A) issue an injunction against Fusion Financial B) gather evidence from State A C) subpoena witnesses from State C D) gather evidence from State B

(A) issue an injunction against Fusion Financial ​​An Administrator has the power to gather evidence both within and outside of the home state as well as subpoena evidence and witnesses in any state.​ Only the courts can issue an injunction.​

Section 15 of The Investment Company Act of 1940 spells out many of the specific requirements for the contract between a management investment company and its investment manager. Among those requirements is that: I. no contract may be terminated with more than 60 days notice in writing. II. the initial contract is for a maximum of one year and then may be renewed on either an annual or biannual basis. III. unless a specific exemption applies, the fund may not engage in margin trading . IV. the contract must be in writing. A) II and IV. B) I and IV. C) II and III. D) I and III.

(B) I and IV. Contracts between funds and their advisers may not be terminated with more than 60 days notice and these contracts must be in writing. The initial contract is for a 2-year period and then renewed on an annual basis. Whether or not the fund can trade on margin is not a function of the management contract.

Mary bought 1,000 shares in the morning and sold 1,000 shares of the same security in the afternoon. Under the Securities Exchange Act of 1934's rules dealing with the regulation of the use of manipulative and deceptive devices, which of the following statements is TRUE? A) She has violated the act if a profit was made. B) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance. C) Her broker has violated the act. D) She has violated the act.

(B) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance. The purchase and sale of the same security on the same day are permissible as long as the investor is not attempting to create the appearance of market activity.There is nothing in the act prohibiting "day-trading"; only trading made for the purpose of manipulating market prices.

An agent of a broker/dealer registered in Illinois terminates his employment to accept a new position with broker/dealer who is also registered in Illinois. If his previous employer fails to notify the state Administrator of the termination, the agent must: A) notify his new employer that he has terminated his registration. B) notify the Administrator in Illinois of his termination. C) not seek employment with another broker/dealer until his registration is renewed. D) notify the Administrator only if he learns that his previous employer has failed to notify the Illinois securities Administrator.

(B) notify the Administrator in Illinois of his termination. When an agent begins or terminates a connection with a broker/dealer, the agent as well as the broker/dealer must promptly notify the Administrator. The agent has no responsibility to insure that the previous employer has notified the Administrator.

Under the Securities Act of 1933, a registration statement for a security generally becomes effective how many days after it is filed? A) 30 days. B) 31 days. C) 20 days. D) 10 days.

(C) 20 days. A registration statement for a security becomes effective 20 days after it is filed, unless the SEC orders a delay.

Under which of the following circumstances will a private placement fail to qualify for exemption from registration under the USA? A) A bank holding company purchases the offering for trading purposes rather than investment purposes. B) The offer is directed to only five individuals during any 12-month period. C) A modest commission is paid to the agents who sell the offering to noninstitutional clients. D) The seller reasonably believes that individual purchasers are buying for investment purposes rather than immediate resale.

(C) A modest commission is paid to the agents who sell the offering to noninstitutional clients. A private placement will lose its exemption if those who sell the offering are paid commissions on sales to noninstitutional clients. For a private placement to be exempt, the offer cannot be directed to more than 10 persons during a 12-month period. In the case of noninstitutional buyers, the seller must reasonably believe (nice to have it in writing, but not required), they are purchasing the offering for investment purposes only. Institutional purchasers do not have to purchase the offering for investment purposes.

In cases of fraudulent sales practices or advice with respect to securities, state securities Administrators may: not take enforcement action against federal covered investment advisers. take enforcement action against federal covered investment advisers. not take enforcement action against state registered investment advisers. take enforcement action against state registered investment advisers. A) I and IV. B) I and III. C) II and IV. D) II and III.

(C) II and IV. State securities Administrators have jurisdiction over any securities transaction or investment advice that involves fraud, whether or not the person involved is a federal covered investment adviser. If it involves a security, there are no exemptions from the Uniform Securities Act for fraud.

Which of the following acts requires publicly traded corporations to issue annual reports? A) Investment Company Act of 1940. B) Securities Act of 1933. C) Securities Exchange Act of 1934. D) Trust Indenture Act of 1939.

(C) Securities Exchange Act of 1934. The Securities Exchange Act of 1934 mandates that public issuers file annual and quarterly reports with the SEC.

An Administrator may restrict the activities of a registered agent who is: A) found to split commissions with another agent in his office. B) found to be a citizen of another country. C) determined to have become insolvent. D) found to have inadequate experience.

(C) determined to have become insolvent. An Administrator may, by order, restrict the activities or revoke the registration of a registered agent who is determined to have become insolvent. Lack of experience by itself is not a sufficient reason to restrict an agent's activities. Citizenship is not a requirement for registration under the Uniform Securities Act.

In order to come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over: A) a portfolio of at least $100 million. B) a portfolio of at least $50 million. C) more than 10% of the outstanding voting securities of a reporting company. D) a portfolio of at least $100 million of 13(f) securities.

(D) a portfolio of at least $100 million of 13(f) securities. An institutional money manager, with at least $100 million in 13(f) securities under discretionary management, is required to file Form 13F.

The first of the federal securities acts was the Securities Act of 1933. This act requires persons selling a new offering to their clients to: A) deliver a copy of the registration statement no later than with confirmation of the sale. B) be properly registered prior to making the offer. C) deliver a preliminary (red herring) prospectus prior to the sale. D) deliver an effective (final) prospectus no later than with confirmation of the sale.

(D) deliver an effective (final) prospectus no later than with confirmation of the sale. The Securities Act of 1933, sometimes referred to as the "paper act", requires that an effective, or final prospectus be delivered to all purchasers of a new offering no later than with confirmation of the sale. It is not required that purchasers receive a red herring prospectus and only the SEC gets copies of the registration statement. Yes, they must be properly registered to make the offer (and sale), but that comes under the "people act", the Securities Exchange Act of 1934.

An agent's former college roommate urges him to invest capital in his privately owned toy company, which has no plans to issue its securities to the general public (it intends to stay private). The agent and his spouse invest in the business but the agent neither recommends investment in the company to any of his customers, nor does he discuss this private investment with his firm. In this situation the agent has acted: A) unlawfully, because the agent did not receive permission from the firm (broker/dealer) prior to entering the transaction. B) unlawfully, because the issuer had no intention to offer securities to the general public. C) lawfully, because ​agents and their spouses are permitted to invest as desired when there is no conflict of interest. D) unlawfully, because the transaction involved unregistered, nonexempt securities.

C) lawfully, because ​agents and their spouses are permitted to invest as desired when there is no conflict of interest. The agent acted lawfully in all cases because there does not appear to be any conflict of interest.

All of the following statements about an agent's need to be registered in a state are correct EXCEPT: A) registration is not required in a state where the agent has no place of business and only deals with existing clients who are vacationing in that state. B) registration is required when they limit their activity to the sale of exempt securities. C) registration is required if they solicit the sale of securities by telephone to fewer than 6 individuals residing in that state. D) registration is required in each state in which the employing broker/dealer has a place of business.

D) registration is required in each state in which the employing broker/dealer has a place of business. The fact that the broker/dealer does business in a state has nothing to do with a specific agent. Many broker/dealers are registered in all states; very few agents are. Agents must register in each state where they are selling or offering securities, even if the security or the transaction is exempt. That exemption only applies to the need for the security to be registered, not the agent. Soliciting the sale of securities by telephone is considered making an offer and there is no de minimis exemption available. Finally, registration is not required when making use of the "snowbird" exemption.