Session 2 Quizzes
Exempt or Nonexempt? The sale of unclaimed securities by sheriff of Santa Fe, New Mexcio
Exempt
Exempt or nonexempt? Mr. Thompson, an agent with First Securities, Inc. (a broker-dealer), receives an unsolicited request to purchase a security for Mary Gordon, a long-time client
Exempt
Exempt or nonexempt? The sale of an unregistered security in a private, nonpublicly advertised transaction, offered to 10 or fewer retail investors over the previous 12 months
Exempt
T or F? A Canadian broker-dealer, properly registered with the Administrator of the province in which he is headquartered and with no office in the state may do business with his customers who are on a skiing vacation in Vail without registering with Colorado Administrator
False
T or F? A consent to service of process must be submitted with each renewal application.
False
T or F? A broker-dealer registered with the SEC and several states must meet the net capital standard of the state with the most stringent requirements.
False
T or F? If an Administrator Determines that a registration statement for a security is incomplete, he may issue a cease an desist order.
False
T or F? The GEMCO Employees Retirement Plan currently has assets of $750,000. Under the Uniform Securities Act, the plan wold be considered an institutional investor.
False
T or F? In general, a person who effects transactions in securities for itself or for the account of others in the course of business must register in the state as a broker-dealer.
True
T or F? Under the Uniform Securities Act, an out-of-state firm that transacts business with an established customer who is on vacation is not considered a broker-dealer in the state in which the customer is on vacation.
True
T or F? Under the Uniform Securities Act, the city of Atlanta would be included in the definition of the term person.
True
Unlawful or Lawful? A nondiscretionary customer calls his agent and places a buy order for 1,000 shares of any hot internet company. Later in the day, the agent enters an order for 1,000 shares of Global Internet Services.
Unlawful
Unlawful or Lawful? An agent guarantees a client that funds invested in mutual funds made up of government securities cannot lose principal
Unlawful
Unlawful or Lawful? An agent recommends that her client buy 1,000 shares of Internet Consultants, Inc. an unregistered nonexempt security with a bright future.
Unlawful
Unlawful or lawful? A client writes a letter of complaint to his agent regarding securities that the agent had recommended. The agent calls the client to apologize and then disposes of the letter because the client seemed satisfied.
Unlawful
Unlawful or lawful? An agent is convinced that Internet Resources will rise significantly over the next 3 months. She offers to buy the stock back from her customers at 10% higher than its current price at any time during the next 3 months.
Unlawful
Unlawful or lawful? An agent who works for a small broker-dealer that employs no securities analysts assures her clients that she can analyze any publicly traded security better than any analyst and that she will do it personally for each security purchased by a client, regardless of the industry.
Unlawful
T or F? 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 and several neighboring states. ABC would most likely register by coordination.
True
T or F? Any company may register by qualification whether or not it files a statement with the SEC.
True
T or F? When a securities professional registers in a state, he must provide the state Administrator with a list of all the states where he intends to register.
True
T or F? A final Order may be entered only after opportunity for a hearing has been granted.
True
T or F? A person not defined as a broker-dealer in the state under the USA need not register as such.
True
Exempt or Nonexempt? Sale of stock of a privately owned company to the public in an initial public offering
Nonexempt
A - agent or B - not an agent An agent's salaried secretary who takes orders
A.
A - agent or B - not an agent An individual who represents her nonexempt employer in the sale of its securities to existing employees for a commision
A.
A - agent or B - not an agent Person who effects transactions in municipal securities on behalf of a broker-dealer
A.
According to the Uniform Securities Act, a consent to service of process must accompany which of the following? I. Agent's initial registration application II. Civil complaint against a broker-dealer III. Broker-dealer's initial registration application IV. A cease and desist order A. I and III B. I and IV C. II and III D. II and IV
A.
It is permitted under the USA for an individual licensed as an agent in the state to tell a client that A. a registered security may lawfully be sold in that state B. an exempt security is not required to be registered because it is generally regarded as being safer than a nonexempt security C. her qualifications have been found satisfactory by the Administrator D. a registered security has been approved for sale in the state by the Administrator
A.
The administrator has authority to I. issue a cease and desist order without a hearing II. issue a cease and desist order only after a hearing III. suspend an effective securities registration upon discovering an officer of the registrant has been convicted of a nonsecurities related crime IV. sentence violators of the USA to 3 years in prison A. I only B. I and IV C. II and II D. II and IV
A.
Under the Uniform Securities Act, an individual licensed as an agent by the state may NOT A. simultaneously represent two different unrelated broker-dealers in the same transaction B. be licensed by both an independent insurance company and a securities broker-dealer C. be registered with two broker-dealers under common control D. be registered with a licensed real estate broker as well as with a licensed securities broker-dealer
A.
What is the official designation of the person or agency that enforces the USA in each state? A. Administrator B. Transfer agent C. Registrar D. Issuer
A.
With regard to the registration requirements of the Uniform Securities Act, which of the following is NOT a correct statement? A. only the issuer itself can file a registration statement with the administrator B. and application for registration must indicate the amount of securities to be issued in the state C. the administrator may require registrants to file quarterly reports D. the administrator may require the proceeds of an offering be placed into an escrow account until the issuer receives a specified amount form the sale of the security
A.
XYZ corporation has been in business for over 20 years. They need additional capital for expansion, and determine that a public offering in their home state and neighboring states is appropriate. Which method of securities registration would most likely be used to register this initial public offering? A. Coordination B. Notice filing C. Qualification D. Registration
A.
A - agent or B - not an agent A person who represents an issuer in effecting transactions with underwriters
B.
A - agent or B - not an agent An employee of a bank that is issuing shares who receives a commision for selling the bank's securities
B.
A nonissuer transaction is a transaction A. between two corporations where one is issuing the stock and the other is purchasing B. in which the issuer of the security will not receive the proceeds from the transaction C. where a mutual fund purchases a Treasury bond directly from the government D. where registration is always required
B.
If a broker dealer wishes to conduct operations on the premises of a financial institution, it is required to I. disclose both in writing and orally to customers that the investments being sold are not FDIC insured, may lose value and are not obligations of the financial institution II. make a reasonable attempt to be in a location physically distinct from that where retail deposits are taken III. attempt to obtain written acknowledgement from customers that they have received and read the disclaimers IV. be under common control with the institution A. I and IV B. I, II, and III C. II and III D. I, II, III, and IV
B.
If convicted of a willful violation of the USA, an agent is subject to A. imprisonment for 5 years B. a fine of $5,000 and/or imprisonment for 3 years C. a fine of $10,000 D. disbarment
B.
KAPCO dividend yield fund, a closed-end investment company registered under the Investment Company Act of 1940, wishes to commence offering its shares in States A, B, C, and D. It could be required to A. coordinate its federal registration with each of the four states B. notice file C. register by qualification in each of the states D. do non of these because investment companies registered under the Investment Company Act of 1940 are federal covered securities and are exempt form registration
B.
Securities exempt under the Uniform Securities Act are exempt from I. registration requirements II. antifraud provisions of state securities laws III. filing sales and advertising literature with the Administrator A. I and II B. I and III C. II and III D. I, II, and III
B.
To protect the public, the Administrator may I. deny a registration if the registrant does not have sufficient experience to function as an agent II. consider that an applicant for registration as an investment adviser is not necessarily qualified solely on the basis of experience as a broker dealer or agent and, therefore, when he finds that an applicant for initial or renewal registration as a broker-dealer is not qualified as an investment adviser, he may by order condition the applicant's registration as a broker-dealer upon his not transacting business in this state as an investment adviser III. take into consideration that the registrant will work under the supervision of a registered investment adviser or broker-dealer in approving a registration IV. deny a registration, although denial is not in the public's interest. if it is prudent in view of a change in the state's political composition A. I and II B. II and III C. III and IV D. I, II, III, and IV
B.
Under powers granted by the USA, the Administrator may take all of the following actions EXCEPT A. issue a cease and desist order against a broker-dealer B. issue an arrest warrant for an investment adviser representative C. refer evidence concerning violations of this act to the attorney general or the proper district attorney who may institute the appropriate criminal proceedings D. file a civil complaint against an agent
B.
Under the Uniform Securities Act, the term agent would include A. an individual who represents an issuer in an exempt transaction B. an individual who represents a broker-dealer in a transaction in an exempt security C. a receptionist for a broker-dealer who directs calls for trade information to the appropriate individual D. the vice president for personnel for a national brokerage firm
B.
Which of the following statements relating to penalties under the USA is TRUE? A. Unknowing violation of the USA by an agent is cause for imprisonment under the criminal liability provisions of the act B. a purchaser of a security where an agent committed a violation of the USA may recover the original purchase price plus legal costs plus interest, less any income already received C. a seller who notices that a sale was made in violation of the act may offer a right of rescission to the purchaser; this must be accepted within the sooner of two years after notice of the violation or three years after the sale D. any person aggrieved by an order of the administrator may request an appeal of the order within 15 days, which, in effect, functions as a stay of the order during the appeal period
B.
Although the Administrator has great power, the USA does place some limitations on the office. Which of the following statements regarding those powers are TRUE? I. In conducting an investigation, an Administrator can compel the testimony of witnesses II. Investigations of serious violations must be open to the public III. An Administrator in Illinois may only enforce subpoenas from South Carolina if the violation originally occurred in Illinois IV. An administrator may deny the registration of a securities professional who has been convicted of any felony within the past 10 years. A. I, II and IV B. I, III and IV C. I and IV D. II and III
C.
An Administrator has jurisdiction over an offer to sell securities if it is made in a newspaper published within the state with no more than A. 1/3 of its circulation outside the state B. 1/2 of its circulation outside the state C. 2/3 of its circulation outside the state D. 90% of its circulation outside the state
C.
Market manipulation is one of the prohibited practices under the uniform Securities Act. WHich of the following is an example of a broker-dealer engaging in market manipulation? I. churning II. arbitrage III. wash trades IV. matched orders A. I and II B. I, III, and IV C. III and IV D. IV only
C.
Nonexempt securities A. need not be registered in the state in which they are sold B. must always 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
C.
The US Supreme Court defined an investment contract as having four components. Which of the following is NOT part of the four-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 others
C.
The regulatory bodies consider which of the following social media sites to be predominately used for business rather than personal communications? A. facebook B. instragram C. linkedin D. twitter
C.
Under the USA, all of the following are exempt securities EXCEPT I. US government securities II. unsolicited transactions III. transactions between issuers and underwriters IV. securities of federally chartered credit unios A. I, II and IV B. I and IV C. II and III D. IV only
C.
Under the Uniform Securities Act, a broker-dealer is defined as a person who A. buys securities B. sells securities C. is in the business of effecting securities transactions for its own account of for the accounts of others D. is registered with the SEC
C.
What is the difference between an offer and a sale of a security? A. an offer can be made only by a customer and a sale can be made only by a broker dealer B. an offer is a binding proposal to sell and a sale is a nonbinding proposal to sell C. an offer is the attempt to sell and a sale is a binding contract to transfer a security for value D. an offer must be approved by a designated supervisory person and a sale needs no such approval
C.
When making an offer of a new issue that is in registration to a prospective client, an agent claims that his registration with the Administrator is proof of his qualifications. Under the USA A. claiming his registration is approved by the administrator while making an offer of a security undergoing registration subjects this agent to a vivil liability claim B. claiming his registration is approved by the administrator while making an offer of a security does not subject this agent to a civil liability claim until the registration becomes effective C. claiming his registration is approved by the administrator subjects this agent only to civil liability if a sale results D. regardless of whether a sale takes place, an agent making a misleading statement of this type subjects himself to possible civil liability
C.
Which list of instruments below is NOT composed of securities? A. Stock, treasury stock, rights, warrants, and transferable shares B. voting trust certificates and interests in oil and gas drilling programs C. commodity futures contracts and fixed payment life insurance contracts D. options on securities and interests in Multilevel distributorship arrangements
C.
Which of the following are exempt transactions? I. A nonissuer transaction with a bank in a Nasdaq Capital Market Security II. An unsolicited request from an existing client to purchase a nonexempt security III. The sale of an unregistered security in a private, nonpublicly advertised transaction to 10 noninstitutional purchasers over a period not exceeding 12 months IV. the sale of unlisted securities by a trustee in bankruptcy A. I and II B. I, II and III C. I, II, and IV D I, II, III, and IV
C.
Which of the following is NOT a factor when a communication to be distributed to the public is either being reviewed or approved by the broker-dealer? A. Whether statements of benefits are balanced with statements of potential risks B. the nature of the audience to which the communication is intended to be distributed C. whether the piece will be distributed in written form or on the firm's website D. Whether the communication is targeting existing customers or prospective ones
C.
A customer is upset with her agent for no servicing her account properly and sends him a complaint letter about his actions. Under the Uniform Securities Act, the agent should A. call the customer, apologize, and attempt to correct the problem B. tell the customer he is willing to make rescission C. do nothing D. bring the customer complaint to his employer immediately
D.
A state's securities Administrator has jurisdiction over a securities offering if it was A. directed to residents of that state B. originated in that state C. accepted in that state D. all of the above
D.
All of the following are prohibited practices under the USA EXCEPT I. borrowing money or securities from the account of a former banker with express written permission of the bank II. failing to identify a customer's financial objectives III. selling rights instead of exercising them IV. supplying funds to a client's account only when or if it declines below a previously agreed-upon level A. I and II B. I, II, and III C. II and IV D. III only
D.
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 its entire publicly traded bond portfolio to Amalgamated National Bank C. Amalgamated National Bank sells its publicly traded bond portfolio to ABC Insurance Company D. Joe Smith, and employee of Amalgamated National Bank, buys securities from ABC Brokerage Corporation
D.
An agent hears a rumor concerning a security and uses the rumor to convince a client to purchase the security. Under the USA, the agent may A. recommend the security if it is an appropriate investment B. recommend the investment if the rumor is based on material inside information C. recommend the security if the source of the rumor came from a reliable source D. not recommend the security
D.
An agent of a broker-dealer who willfully violates the Uniform Securities Act may be subject to which of the following? I. Civil liabilities II. Criminal Penalties III. Action taken by the Administrator to deny, suspend, or revoke the agent's registration A. I only B. I and II C. II and III D. I, II, and III
D.
Under the Uniform Securities Act, the term agent would include an individual who represents an issuer in effecting non-exempt transactions in A. a city of Montreal general obligation bond B. common stock offered by a commercial bank C. a New Jersey Turnpike Revenue bond D. commercial paper with a 19-month maturity
D.
Under the rules of the Uniform Securities Act, an agent who sells shares of a Nasdaq Stock Market security to an insurance company has engaged in (a/an) A. issuer transaction B. unsuitable transaction C. unlawful transaction D. sale exempt from the registration and advertising provisions of the USA
D.
Which of the following is (are) prohibited under the uSA? I. Recommending tax shelters to low-income retirees II. stating that a state Administrator has approved an offering on the basis of the quality of information found in the prospectus III. Soliciting orders for unregistered, nonexempt securities IV. Employing an device to defraud A. I only B. I and II C. I, II and III D. I, II, III, and IV
D.
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. Share sold on the Nasdaq Stock Market III. AAA rated promissry notes of $100,000 that matrue in 30 days IV. Share sold on the New York Stock Exchange A. I only B. II, III, andIV C. II and IV D. I, II, III, and IV
D.
Which of the following securities is (are) exempt from the registration provisions of the USA? I. Issue of a savings and loan association authorized to conduct business in the state II. General obligation municipal bond III. Bond issued by a company that has common stock listed on the Chicago Stock Exchange A. I only B. II only C. II and III D. I, II, and III
D.
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 contracts issued by Metrodential Insurance Company
D.
Which of the following statements relating to termination of registration is TRUE? A. a registration, once in effect, may never be voluntarily withdrawn. B. an administrator may no cancel a registration of a securities professional who is declared mentally incompetent C. an administrator may revoke the registration of a securities professional who is declared mentally incompetent D. an administrator may cancel the registration of a registrant no longer in business
D.
With regard to the powers of the Administrator, which of the following statement are NOT true? I. the administrator must seek an injunction to issue a cease and desist order II. the USA requires an Administrator to conduct a full hearing, public or private, before issuing a cease and desist order III. the USA grants the Administrator the power to issue injunctions to force compliance with the provisions of the act A. I and II B. I and III C. II and III D. I, II and III
D.
Unlawful or Lawful? An agent receives a call from his client's spouse, advising him to sell her husband's securities. Her husband is out of the country and requested that his wife call the agent. The agent refuses because the wife does not have trading authorization, and she complains vigorously to his manager.
Lawful
Unlawful or lawful? A registered agent borrows $10,000 from a credit union that is one of her best customers.
Lawful
Unlawful or lawful? An agent receives an order for the purchase of an obscure foreign security. The agent informs the client that the commissions and charges on this purchase will be much higher than those of domestic securities.
Lawful