Unit 2- State Regulation Under the Uniform Securities Act (USA)

Which of the following statements are TRUE? I. The Uniform Securities Act is not the actual law of any state or territory of the United States. II. The National Securities Markets Improvement Act of 1996 requires states and the federal government to have identical registration requirements. III. The state securities Administrator has responsibility for the enforcement and administration of a state's securities law. A) I and III. B) I and II. C) II and III. D) I, II and III.

A) I and III. The Uniform Securities Act is not the actual law of any state or territory. Rather, it is model legislation that states use as a guide in drafting their own securities laws. Those laws give the responsibility to the state Administrator for enforcement and administration of those laws. The NSMIA's purpose is to eliminate dual registration, not to require identical laws.

Under the USA, the definition of person includes which of the following? An unincorporated investment club. An individual who buys and sells securities only for his own account. Associations and partnerships whether or not they issue certificates. The U.S. government. A) II and III. B) III and IV. C) I, II, III and IV. D) I and II.

An unincorporated investment club, an individual who buys and sells securities for his own account, associations, and partnerships (whether or not they issue certificates), and the U.S. government are specifically listed as persons in the act. On the exam, minor children, deceased individuals, and mentally incompetent individuals are the only choices that are not persons under the act.

As defined in the Uniform Securities Act, the term person would include: a limited partnership. a political subdivision. an unincorporated association. the executor of an estate for a deceased individual. A) II and III. B) I, II, III and IV. C) I, II and III. D) I and IV.

B) I, II, III and IV. All of these would be included in the USA's definition of person. Not included are a minor, a deceased person, or someone judged mentally incompetent.

Under the Uniform Securities Act, the term person would include: a minor who has a valid U.S. passport. a political subdivision. an unincorporated association. an inter vivos trust. A) III and IV. B) II, III and IV. C) I and II. D) II and III.

B) II, III and IV. The term person has an extremely broad definition. It is best to remember the three things that are not persons: minors, individuals who have been judged incompetent, and deceased individuals.

A discussion referring to blue-sky laws would include all of the following EXCEPT: A) a state securities law that grants state securities Administrators the power to deny or revoke a broker/dealer's or an agent's registration within its state. B) the Securities Act of 1933 and Securities Exchange Act of 1934. C) state laws that are designed to protect the public against fraud in securities sales within a state. D) forms requiring issuers selling securities in the state to comply with state securities laws.

B) the Securities Act of 1933 and Securities Exchange Act of 1934. Blue-sky laws are state securities laws. The Securities Act of 1933 and the Securities Exchange Act of 1934 are federal securities laws.

What is the official designation of the person or agency that enforces the USA in each state? A) Registrar. B) Issuer. C) Administrator. D) Transfer agent.

C) Administrator. *The USA specifies that a state's securities Administrator has the authority to enforce the act in that state. A transfer agent is the person or corporation responsible for recording the names and holdings of registered security owners.

Which of the following is responsible for the administration of the USA in a state? A) Executive department. B) Securities and Exchange Commission. C) The Administrator. D) State judiciary system.

C) The Administrator. *On this exam, the chief state regulator is the Administrator. The Securities and Exchange Commission is the federal agency, not state agency, that oversees and regulates securities on a national level.

Under the Uniform Securities Act (USA), a person is best defined as a(n): A) adult human being. B) party that is subject to federal income tax. C) individual or entity considered able to enter into an enforceable contract. D) human being.

C) individual or entity considered able to enter into an enforceable contract. According to the Uniform Securities Act (USA), a person is a competent adult individual or an entity that is able to enter into an enforceable contract. For example, the American Red Cross is a person (legal entity), although as a charitable organization, it is not subject to federal income tax.

Blue-sky laws pertain to all of the following EXCEPT the: A) regulation of securities transactions in a state. B) registration of securities salespeople in a state. C) regulation of securities trading in other countries. D) registration of securities within a state.

C) regulation of securities trading in other countries. Blue-sky (Uniform Securities Act) laws refer to state securities regulation in the state. Blue-sky laws require new securities to be registered with the state and regulate trading of securities in a state.

Which of the following is NOT a person as defined by the Uniform Securities Act? A) XYZ Dry Cleaners, Inc., whose shareholders all work on the premises and also offer financial advice to customers who request it. B) A small unincorporated investment club. C) Guelph, a small city outside of Toronto, Ontario, that maintains an investment account at a brokerage house to invest surplus funds. D) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.

D) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm. *Under the Uniform Securities Act, the term "person" has a specific meaning. "Person" refers to an individual, corporation, association, joint-stock company, trust, unincorporated organization, government, or political subdivision of a government. A minor child, is not a person legally capable of entering into contracts. Adults must open custodial accounts on behalf of minor children.

Which of the following would meet the USA's definition of "person"? An individual. An unincorporated association. A political subdivision. A) I and III. B) II and III. C) I and II. D) I, II and III.

D) I, II and III. The USA's definition of person is extremely broad. Just remember the three non-persons: minors, those who are deceased, and those declared mentally incompetent.

The Securities Act of 1933 covers all of the following EXCEPT A) liabilities for misleading filings B) prospectus requirements C) full and fair disclosure D) blue-sky laws

D) blue-sky laws The purpose of the Securities Act of 1933 is to provide investors with full disclosure about a new securities issue. The act is federal in scope, whereas blue-sky laws refer to state securities regulations.

Who is not considered a person under the USA?

minor children, deceased individuals, and mentally incompetent individuals are the only choices that are not persons under the act