63 Missed

All of the following are examples of market manipulation EXCEPT: A. disseminating rumors B. churning C. painting the tape D. wash trades

B

Under the Uniform Securities Act, which persons are EXCLUDED from the definition of an investment adviser? A person who gives advice about: I U.S. Government bonds II Agency bonds III Municipal bonds IV Corporate bonds A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

A

If an issuer offers a Federal Covered security in a State, the State Administrator may require the issuer to: I register the issue in the State II pay a filing fee in the State III file documents relating to the issue in the State A. I only B. II only C. II and III D. I, II, III

C

A broker-dealer is a syndicate member in a best efforts underwriting of ABC Common stock. The issue is oversubscribed. The broker-dealer may allocate sales of the issue to: I employees of the issuer II employees of the broker-dealer III officers of the issuer IV officers of the broker-dealer A. I and III B. I and IV C. II and III D. II and IV

A

A broker-dealer is required to initially register with: A. the SEC B. FINRA C. the state administrator D. the Governor of the state

A

Which records MUST be retained in a state-registered investment adviser's principal office? I Customer securities positions II Correspondence with customers III Investment adviser's bank statements IV Records of customer purchase and sales orders A. I and III B. I and IV C. II and III D. II and IV

B

A customer buys 1,000 shares of XYZZ stock in a margin account and pays the required 50% margin on settlement date. The customer requests that the broker-dealer transfer the securities into the customer's name and ship them to his home address. Which statement is TRUE? A. This request cannot be honored because the securities must be paid for, in full, to process a transfer and ship request B. This request cannot be honored because all customer securities must be held in a depository C. This request cannot be honored unless the customer makes it in writing D. This request should be honored as given

A

A person who renders investment advice relating solely about municipal securities is: A. defined as an investment adviser and must register under the Act B. exempted from the definition of an investment adviser, and is not required to register under the Act C. defined as a broker-dealer and must register under the Act D. defined as an agent and is required to register under the Act

A

A registered representative would ask a potential client which of the following when doing a suitability determination? A. "With the funds that you have available, is it better for you to buy a new car or put the funds into an IRA?" B. "Do you need to set aside funds to take a vacation this year? If this is the case, you will have less to invest." C. "Do you want me to select the investments in the account? If so, you must sign a power of attorney giving me discretion." D. "Do you own your own home and if so, do you have adequate homeowner's insurance?"

A

A registered securities agent solicits a customer to buy mutual fund shares. The customer buys 200 shares, sending a check made out to the fund's custodian bank to the agent. The agent does not record the trade on the books of the broker-dealer. Under the Uniform Securities Act, this action is: A. a prohibited business practice B. allowed, since the transaction is recorded on the books of the mutual fund C. allowed, since mutual funds are exempt from the requirement to record all transactions on the books of the broker-dealer D. allowed as long as no commission is taken on the trade

A

A registration statement which has been filed for a security: I is effective for 1 year II remains in effect if the issuer cancels the sale of the issue III remains in effect if a "stop" order is issued by the Administrator A. I only B. I and II C. II and III D. I, II, III

A

A research report on an issuer CANNOT be published by the underwriter of that issuer's securities for the time period encompassing: I 10 days following the effective date for an initial public offering II 20 days following the effective date for an initial public offering III 3 days following the effective date for a secondary offering IV 5 days following the effective date for a secondary offering A. I and III B. I and IV C. II and III D. II and IV

A

A written customer complaint is received by mail that the firm resolves to the customer's satisfaction. Which statement is TRUE regarding keeping this record? A. A copy of the original complaint along with its resolution must be retained in the file of the agent by the broker-dealer B. A copy of the original complaint along with its resolution must be retained at the firm's supervisory office C. A copy of the original complaint along with its resolution must be retained by the State Administrator D. There is no requirement to retain a copy of the complaint because it was resolved to the customer's satisfaction

A

All of the following persons are excluded from the definition of a broker-dealer or are exempt from registration as a broker-dealer under the Uniform Securities Act, EXCEPT a firm: A. with an office in the State that effects trades exclusively with other broker-dealers B. with no office in the State that effects trades exclusively with trust companies and other financial institutions C. with no office in a State with a broker-dealer "de minimis" exemption that has a few clients in the State in the preceding 12 months D. with an office in that State that is a trust company that deals with the public

A

An Investment Adviser falls below the minimum net capital required by the State on Monday. The IA must notify the Administrator no later than: A. Tuesday of that week B. Wednesday of that week C. Thursday of that week D. 10 business days after the event

A

An agent of a broker-dealer puts up a website that promotes the benefits of dollar cost averaging, including the caveat that it is suitable for investors only if they can maintain their periodic payments regardless of economic conditions and that it requires a long-term investment time horizon. If the website is viewed by an individual in another State where both the broker-dealer and agent are not registered, which of the following disclosures are required on the site in order not to be in violation of the Uniform Securities Act in that State? I "The broker-dealer or agent may only transact business in the State if registered in the State or if exempted or excluded from registration" II "Follow ups or individualized responses to persons in the State that involve either effecting or attempting to effect transactions in securities will not be made absent compliance with State registration requirements or an applicable exemption or exclusion" III "The services being offered do not represent an offer to sell securities or a solicitation of an offer to buy the securities in the State unless the subject securities are registered or are subject to an applicable exclusion" IV "The Securities and Exchange Commission has not approved, nor has it disapproved of offering made in this advertisement" A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

A

An elderly customer has a stroke and is hospitalized, where he falls into a coma. The customer's adult son calls the agent and tells him that he wants to sell some securities out of his father's account to pay for the ongoing hospital bills. The representative should: A. do nothing B. go to the hospital and get the father's signed permission to sell the securities C. follow the son's instructions but remit the proceeds of the sale directly to the hospital to pay the medical bills D. follow the son's instructions as given

A

An investment adviser has determined that ABCD stock would be an appropriate investment for his client, but only if the price falls from the current level of $50 per share to $35 per share. What MUST the adviser do prior to placing an order to buy ABCD stock for the client's account? A. Obtain verbal authority for that specific transaction B. Obtain verbal authority to exercise discretion over the account C. Obtain verbal authority to exercise discretion only over price and time of execution in the account D. Secure an appointment as trustee over the account to formalize the fiduciary relationship

A

An investment adviser representative has worked with a client and his spouse for 10 years and has an excellent relationship with the couple. The representative has been notified that the husband is unconscious and is in the hospital. The account has several open orders that have not yet been executed. What can the representative do regarding the disposition of these orders? A. Instructions can be taken from the customer's spouse B. Instructions can be taken from the customer's attorney C. Instructions can be taken from any relative of the customer that has knowledge of the customer's financial dealings D. Instructions regarding these open orders can be accepted from the customer's tax accountant

A

Criminal violations of the Uniform Securities Act are punishable by: I $5,000 fine II $10,000 fine III 3 years in jail IV 5 years in jail A. I and III B. I and IV C. II and III D. II and IV

A

Delivery of a prospectus is required if a: I new issue of corporate bonds is being offered to the public II trade in a corporate bond takes place in the secondary market III new issue of government bonds is being offered to the public IV trade of a government bond takes place in the secondary market A. I only B. I and II C. I and III D. I, II, III, IV

A

If a representative that transacts business in a State terminates employment with a federal covered adviser: A. notice must be given to the Administrator by the representative only B. notice must be given to the Administrator by the federal covered adviser only C. notice must be given to the Administrator by both the federal covered adviser and the representative D. no notice is required to be given to the Administrator

A

If the Administrator believes that there has been a violation of the Uniform Securities Act, the Administrator is empowered, by order or decree, after providing the opportunity for a hearing, to: I revoke the registration of an investment adviser in that State II bar an investment adviser from operating within that State III require the posting of a larger surety bond in order for the investment adviser to remain in business in that State A. I and II B. II and III C. I only D. I, II, III

A

Investment adviser representatives that have a place of business in the State: I must register with the State if they are affiliated with a federal covered adviser II are not required to register with the State if they are affiliated with a Federal covered adviser III must register with the State if they are affiliated with an investment adviser that is registered with the State IV are not required to register with the State if they are affiliated with an investment adviser that is registered with the State A. I and III B. I and IV C. II and III D. II and IV

A

The president of a bank wishes to sell the subordinated debentures of that bank to individual investors. Under the provisions of the Uniform Securities Act, the president: A. is excluded from the definition of an agent B. must register as an agent of the issuer to do so C. must register as a broker-dealer to do so D. may sell the issue, but cannot receive a commission on the sale unless he or she becomes registered

A

The provision(s) of the Uniform Securities Act that apply(ies) to persons who effect isolated non-issuer transactions on their own behalf, is (are): I Anti-Fraud provisions II Securities registration provisions III Broker-dealer registration provisions A. I only B. III only C. I, II, III D. None of the above

A

To ensure the integrity of electronically stored data, the record must be: A. non-rewritable B. non-duplicable C. non-transferable D. non-negotiable

A

To satisfy the requirements of the NASAA brochure delivery rule, customers who wish to buy advisory services must receive a copy of the brochure: A. at least 48 hours prior to entering into an advisory contract B. at, or prior to, entering into an advisory contract C. within 48 hours of entering into an advisory contract D. within 10 days of entering into an advisory contract

A

Under NASAA rules, each Registered Investment Adviser must establish, implement and maintain a Business Continuity and Succession Plan that: A. is based on the investment adviser's business model including the size of the firm, types of services provided, and number of business locations B. ensures that key management personnel have been familiarized with the policies and procedures to be followed in the event of a significant business interruption C. designates the investment adviser's independent outside accountant as the person to take responsibility in the event of a significant business interruption D. announces to the public in local newspapers and on the internet the fact that a significant business interruption has occurred

A

Under NASAA rules, investment advisers must annually: A. update the Form ADV disclosure document and send it to existing customers if there is a material change B. compute the total fees charged to each customer and disclose them in writing C. send customers account statements, if the adviser takes custody, or intends to take custody, of client assets D. update customer account profiles and suitability information and change investment allocations accordingly

A

Under the Uniform Securities Act, a "natural person" includes a(n): A. agent B. investment adviser C. broker-dealer D. issuer

A

Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser EXCEPT: A. issuers B. lawyers C. accountants D. teachers

A

Under the Uniform Securities Act, the omission of material facts when offering or selling a security can result in: I Civil liability II Criminal liability III Criminal penalties A. I only B. II only C. II and III only D. I, II, III

A

Under the Uniform Securities Act, which of the following would be required to register as an investment adviser representative? A person who: A. effects sales of advisory services for an Investment Adviser B. renders advice about the advisability of investing in securities C. handles the books and records of the Investment Adviser D. registers Investment Adviser Representatives in the State

A

In most States, persons convicted of fraudulent actions involving an offer of securities may be: I fined $1,000 II fined $5,000 III imprisoned for 3 years IV imprisoned for 5 years

C

Under the provisions of the Uniform Securities Act of 1956, as amended, the maximum penalty that the State Administrator can impose against a broker-dealer that sells an unregistered non-exempt security in the State is compelling the broker-dealer to: A. buy back the security at original cost B. buy back the security at current market value C. buy back the security at original cost plus pay treble damages D. buy back the security at current market value plus pay treble damages

A

When a broker-dealer application becomes effective in a State, who is NOT required to separately register? A. Directors of the broker-dealer B. Salespersons of the broker-dealer C. Supervisors of salespersons of the broker-dealer D. Managing directors that oversee marketing of broker-dealer services

A

Which Act can be used to coordinate a securities registration filing under the provisions of the Uniform Securities Act? A. Securities Act of 1933 B. Securities Exchange Act of 1934 C. Securities Investor Protection Act of 1970 D. Securities Exchange Act Amendments of 1988

A

Which of the following are defined as an "agent" under the Uniform Securities Act? An individual who represents: I ACME Broker-Dealer effecting trades in preferred stocks II the City of New York selling the City's general obligation bonds to New York residents III ACCO Broker-Dealer effecting trades in private placements exempted under Regulation D IV the Federal Reserve effecting trades of U.S. Government securities in its open market operations A. I and III B. II and IV C. I, II, III D. I, II, III, IV

A

Which statement is FALSE regarding the powers of the State Administrator over a new investment adviser opening an office in that State? The Administrator: A. cannot audit a new investment adviser if the Securities and Exchange Commission has audited that investment adviser within the preceding 6 months B. can inspect the office of an investment adviser in that State, even if the investment adviser's headquarters are located in another State C. can require that additional records be kept by the investment adviser D. can require that a larger surety bond be posted due to the nature of the investment adviser's business

A

Which statement is TRUE regarding the State Administrator's authority to establish recordkeeping rules for broker-dealers? A. The Administrator can only establish recordkeeping rules that are the same as those set by the SEC B. The Administrator cannot establish recordkeeping rules for broker-dealers C. The Administrator has the power to set recordkeeping rules if it is in the public interest D. The Administrator can neither establish nor enforce recordkeeping requirements for broker-dealers

A

Which statements are TRUE about the applicability of recordkeeping rules to investment advisers? I SEC recordkeeping rules apply to Federal Covered advisers II SEC recordkeeping rules do not apply to Federal Covered advisers III NASAA recordkeeping rules apply to State-registered advisers IV NASAA recordkeeping rules do not apply to State-registered advisers A. I and III B. I and IV C. II and III D. II and IV

A

A registered agent that oversees discretionary accounts for many clients has been trading the accounts with increasing frequency. It is unlikely that the agent would be accused of "churning" these accounts if: A. each transaction is approved by the branch manager promptly B. these are wrap accounts charging a flat annual fee C. the transactions are suitable for the customers D. the securities being traded are exempt

B

A registration application in a State filed by an Investment Adviser becomes effective: A. on a date so determined by the Administrator B. at noon, the 30th day after the application is filed C. at noon, the 45th day after the application is filed D. at noon, the 60th day after the application is filed

B

A customer that buys a non-exempt new issue must be delivered a prospectus at, or prior to, the time of: A. being solicited to purchase the new issue B. entering into the contract to purchase the new issue C. completion of the purchase of the new issue D. settlement of the purchase of the new issue

B

A federally registered investment adviser makes a subsequent material change to its manner of business operations. This event: A. is not required to be reported to the Administrator of each State where the adviser does business B. must be reported promptly to the Administrator of each State where the adviser does business C. must be reported within 30 days to the Administrator each State in which the adviser does business D. must be reported to the Administrator when the adviser files its annual ADV Part 2 update with the State

B

All of the following actions are violations of the Uniform Securities Act EXCEPT: A. deliberately failing to follow a customer's instructions B. actively soliciting orders for unregistered exempt securities C. making an untrue statement of material fact D. omitting a material fact because there was not enough time to cover all items in a presentation

B

A Federal Covered Adviser discovers a material error in its Form ADV. When must Form ADV be amended with the State to correct the error? A. There is no requirement to amend the filing in the State because the investment adviser is Federal covered B. Within 30 days C. Within 60 days D. Within 90 days

B

A bank in a State is making an offering of its own securities, which are exempt, to the public. Which of the following would NOT be required to be registered as an agent in the State? A. An employee of a broker-dealer who is offering the securities to the public B. An employee of the bank who is offering the securities to the public C. An employee of a broker-dealer who is offering the securities only to institutional investors D. All of the choices above are not required to be registered

B

A broker-dealer that is not registered in a State sells non-exempt securities in non-exempt transactions to customers located in that State. That State's Administrator will: A. require that the securities be registered in the State and that the broker-dealer register in that State B. require the broker-dealer to make an offer of rescission to each purchaser in that State C. require that a notice filing be made in the State along with the payment of a filing fee D. institute an action in a court of law alleging criminal activities on the part of the broker-dealer

B

A customer may be charged a higher than normal commission in a transaction that is difficult for the broker to execute: A. under no circumstances B. if the additional charge is disclosed to the customer prior to the placement of the order C. if the additional charge is disclosed to the customer no later than on the trade confirmation D. at the discretion of the broker-dealer

B

All of the following are unethical practices under NASAA rules EXCEPT an: A. agent makes a blanket recommendation of the same security to all of his clients on a regular basis B. agent's assistant accepts a sell order from a customer without notifying the agent C. agent effects trades in customer discretionary accounts that are excessive in size, but not in frequency D. agent accepts a buy order in a customer account from another person that does not have a power of attorney from the customer

B

All of the following statements are true about registration of investment advisers EXCEPT: A. an adviser with no office in the State that limits its clientele to insurance and investment companies is exempt from registration B. an adviser that only renders advice on municipal securities is exempt C. broker-dealers can act as investment advisers without registering as such if any advice given is solely incidental to the business of the broker-dealer D. investment advisers must register with the State

B

An Administrator is allowed to start a suspension or revocation action against a registered broker-dealer: I on the basis of facts known at the time of the initial registration II after one year has elapsed from the time a broker-dealer withdraws from registration III on the basis of a conviction for violating the Securities Exchange Act of 1934 IV on the basis of a suspension order being entered by the Administrator of another State A. I and II B. III and IV C. I, III, IV D. I, II, III, IV

B

An Investment Adviser Representative who lives and works in a northern suburb of Chicago, Illinois is registered in the State of Illinois. The IAR moves to Kenosha, Wisconsin. The IAR will now commute to work in the office in Illinois. Which statement is TRUE? A. The IAR is required to register in the State of Wisconsin B. The IAR is not required to register in the State of Wisconsin C. The IAR must de-register in the State of Illinois D. The IAR must both register in the State of Wisconsin and de-register in the State of Illinois

B

An Investment Adviser has adopted an external Business Succession Plan. Who is responsible for servicing the IA's client accounts if the managing director of the Investment Adviser suddenly dies? A. Another Investment Adviser Representative currently in the firm B. Another Investment Advisory Firm to which investment management has been transferred C. The custodian bank that holds client funds and securities positions D. An immediate family member of the deceased managing director

B

An agent of a broker-dealer works on weekends building racing cars. The side business is so successful that the agent's customers wish to invest in the venture. The agent incorporates his racing car building business and sells each of his racing car buyers a 1% interest. Which statement is TRUE? A. The agent has violated State law because the offering is not exempt in the State B. The agent has violated State law because the securities sales must be approved in writing, in advance, by the broker-dealer C. The agent has not violated State law because a 1% interest sold to each investor qualifies for a "de minimis" exemption D. The agent has not violated State law because private securities transactions are exempt

B

An individual holding a CFP designation can get a waiver from taking the: A. Series 63 examination B. Series 65 examination C. Series 66 examination D. Either the Series 65 or 66 examination

B

An investment adviser is looking to offer advisory services to new clients. Which statement is TRUE regarding delivery of Form ADV Parts 2A and 2B? A. They must be delivered only if the individual becomes a client of the investment adviser B. They must be delivered regardless of whether the individual becomes a client of the investment adviser C. They must be delivered only upon written request of the individual that is considering becoming a client D. They must be delivered only upon receiving a check for the initial investment amount from the client

B

An investment adviser is ready to open an account for a new customer. In the advisory contract, the adviser has included a clause that the customer has 48 hours to rescind the contract. The adviser gives the customer the brochure, takes payment from the customer, but forgets to have the customer sign the contract. Which statement is TRUE under NASAA rules? A. Even though the customer did not sign the contract, he or she still has 48 hours to rescind the contract B. Even though the customer did not sign the contract, he or she has 5 business days to rescind the contract C. The contract is null and void D. The contract is binding and the customer cannot rescind the contract

B

An investment adviser representative has a customer that has been telling all of his friends that "My adviser has been great - for each of the last 3 years, my portfolio grew by 20%." Which statement is TRUE? A. The customer has committed an unethical practice under NASAA rules because giving testimonials is prohibited B. The investment adviser representative can ask the customer for the names of those friends and solicit their business C. The investment adviser representative can use the customer statement in an advertisement to solicit new business D. The investment adviser representative cannot make use of this statement because of the restrictions imposed by the "tipper-tippee" doctrine

B

An investment adviser would be permitted to charge a 2% fee to clients based on all of the following EXCEPT: A. average assets under management over the calendar year B. increase in assets under management over the calendar year C. highest value of assets over the calendar year D. assets under management at the end of the year

B

FINRA suspends an associated person for a rule violation. Which statement is TRUE? A. The individual will only be suspended in the State where the agent is physically located B. The individual will be suspended in each State in which he or she is registered under the Uniform Securities Act C. The individual will only be suspended in a given State if the Administrator of that State takes action D. The individual will only be suspended in the State if the violation of FINRA rules is also a violation of the Uniform Securities Act

B

If a registered investment adviser that takes custody of client funds or securities wishes to send account statements directly to clients, the investment adviser MUST: A. send account statements monthly B. be audited annually on a surprise basis C. receive approval from the Administrator D. be a federal covered adviser with at least $100 million of assets under management

B

If a sole proprietor wishes to register with the State as an Investment Adviser, which of the following documents are required? I Financial statement of the sole proprietor II Income statement of the sole proprietor III An auditor's opinion that the document filed is true and current IV An affirmation made by the sole proprietor that the document filed is true and current A. I and III B. I and IV C. II and III D. II and IV

B

In order for a "church" bond issue to be exempt, the Administrator: A. must approve of the issue before it is offered to any resident of that State B. must not disallow the exemption within a stated time period after a Notice Filing is made C. can require that the issue only be offered to congregants of that church D. can require that the issue be registered in the State by Coordination

B

John is a registered agent with ABC Brokerage, a registered securities broker-dealer in the State. Mike is a registered agent of XYZ Insurance Brokerage, a registered insurance agency in the State. John is not registered with the State to sell insurance and Mike is not registered with the State to sell securities. Mike verbally agrees with John that Mike will tell his insurance clients to do their securities trades with John, for which John will pay Mike 25% of the commission charged to the customer. This is a violation known as: A. selling away B. splitting commissions C. sharing in a customer account D. engaging in an unregistered activity

B

Limited partnership shares are sold to a bank. Under the provisions of the Uniform Securities Act of 1956, as amended, this transaction is subject to: I advertising filing requirements with the Administrator II anti-fraud provisions as promulgated in the Act III payment of filing fees with the State A. I and III only B. II only C. II and III only D. I, II, III

B

NASAA Model Rule 502 (c) applies to: I State registered advisers in its entirety II State Covered advisers only to the extent that the conduct is fraudulent or deceptive III Federal Covered advisers in its entirety IV Federal Covered advisers only to the extent that the conduct is fraudulent or deceptive A. I and III B. I and IV C. II and III D. II and IV

B

Regarding Internet Communications, the State Administrator: A. can require filing of the content of the current web page only B. can require filing of all content that has ever appeared on the website C. can require filing of the content that has appeared during the current calendar year only D. cannot require the filing of web pages

B

Robert is an agent registered in the State of New York, with most of his clients living in the Buffalo area. He has a client who has inherited stock of a Canadian bank listed on the Toronto Stock Exchange and the client wishes to sell these securities to his relatives in Toronto. Which statement is TRUE about this transaction under the provisions of the Uniform Securities Act? A. There is no requirement for the securities involved to be registered in the State because they are being sold to a relative B. There is no requirement for the securities involved to be registered in the State because the transaction is exempt C. There is no requirement for the securities involved to be registered in the State because the securities are exempt D. The securities must be registered in the State

B

The Administrator will deny an agent's registration application if the applicant was: A. convicted of a driving misdemeanor 5 years ago B. convicted of a drug felony 10 years ago C. arrested for an insider trading violation for which a trial date has been set D. sued under the Federal Securities Acts for manipulation of Pink Sheet stocks

B

The primary responsibility of the State Administrator is to: A. establish the requirements for registration of broker-dealers, investment advisers, and their agents, in the State B. enforce the anti-fraud provisions of the Uniform Securities Act in the State C. define the exemptions and exclusions that are available from registration in the State D. opine on the legality of securities offerings by issuers that are registered in the State

B

The statute of limitations on civil suits arising from alleged violations of the Uniform Securities Act is: A. 1 year of discovery B. 2 years of discovery C. 3 years of discovery D. 5 years of discovery

B

To register a successor firm with the State Administrator for the unexpired portion of the current license year, which statement is NOT true? A. The predecessor firm must have ceased business operations and can only conduct winding down transactions B. The successor firm must continue business operations through the end of that license year C. The successor firm must file a Form BD or ADV amendment with the Administrator D. The filing becomes effective on the date designated by the licensee

B

To use Registration by Coordination, an issuer must file a registration statement with the: A. Administrator of another State B. Securities and Exchange Commission C. Both of the above D. Neither of the above

B

To use Registration by Coordination, an issuer must file a registration statement with the: I Securities and Exchange Commission II Administrator of another State III Administrator of that State A. I only B. I and III C. II and III D. I, II, III

B

Transactions that violate the Uniform Securities Act are voidable at the option of the: A. Issuer B. Purchaser C. Seller D. Administrat

B

Under NASAA recordkeeping rules for investment advisers, any advertisement, circular or other communication must be retained: I if it is circulated to 2 or more persons II if it is circulated to 10 or more persons III for a minimum of 3 years IV for a minimum of 5 years A. I and III B. I and IV C. II and III D. II and IV

B

Under NASAA recordkeeping rules for investment advisers, any advertisement, circular or other communication: I must be retained if it is circulated to 2 or more persons II must be retained if it is circulated to 5 or more persons III cannot recommend the purchase or sale of a specific security IV can recommend the purchase or sale of a specific security and if it does not state the reasons for the recommendation, a memo must be retained indicating the reasons for the recommendation A. I and III B. I and IV C. II and III D. II and IV

B

Under Uniform State Law, an agent is permitted to sell securities for more than 1 broker-dealer: A. only if the types of securities offered by each broker-dealer are mutually exclusive B. only if the agent is separately registered with each broker-dealer C. only if one broker-dealer solely offers exempt securities and the other broker-dealer solely offers non-exempt securities D. under no circumstances

B

Under the Uniform Securities Act, a person who violates the provisions of the Act can be subject to: I Criminal Penalties II Civil Penalties III Administrative Censure IV Administrative Suspension A. I and III B. I and IV C. II and III D. II and IV

B

Under the Uniform Securities Act, an agent's registration can be denied, suspended or revoked for all of the following reasons EXCEPT the: A. application is incomplete B. applicant was convicted of a securities misdemeanor 15 years ago C. application included misleading statements D. applicant lacks experience, and has not qualified by either training or demonstrating knowledge

B

Under the Uniform Securities Act, an investment adviser who has no place of business in a State is exempt from registration if the: I firm's clients consist solely of institutional investors in the State II firm has no more than 5 clients other than financial or institutional investors within a 12 month period III firm's advice relates solely to municipal securities A. I only B. I and II C. II and III D. I, II, III

B

Under the Uniform Securities Act, which individual is defined as an "agent"? A. A principal of a broker-dealer B. A secretary who takes customer orders C. A clerk who solely performs clerical functions D. A silent partner of a broker-dealer

B

Under the Uniform Securities Act, which statements are TRUE regarding investment advisers that take custody of customer funds? I The administrator must give written approval before an adviser can take custody of customer funds II The administrator can require a higher surety bond for advisers that take custody of customer funds III Statements of account must be sent to customers whose assets are held in custody at least quarterly A. I and II only B. II and III only C. I and III only D. I, II, III

B

Under the provisions of the Uniform Securities Act, all of the following persons with no office in the State are NOT required to register in a State as an investment adviser EXCEPT: A. an adviser that renders advice solely to banks in the State B. an adviser managing less than $100,000,000 of assets held by State residents C. an adviser that renders advice to no more than 5 clients in the State within a 12 month period D. an adviser that renders advice to employee benefit plans in the State with assets of at least $1,000,000

B

Under the provisions of the Uniform Securities Act, required records for broker-dealers must be kept in accordance with the provisions of the: A. Securities Act of 1933 B. Securities Exchange Act of 1934 C. Investment Advisers Act of 1940 D. Uniform Securities Act as adopted in that State

B

Under the provisions of the Uniform Securities Act, the determinant of whether an investment adviser can take custody of client funds is whether the RIA: A. is named as the trustee of a client trust account B. has taken out a surety bond C. has a signed power of attorney D. has at least $25 million of assets

B

Under the provisions of the Uniform Securities Act, which statements are TRUE? I An investment adviser with a place of business in the State, need not register in that State if it is only dealing with insurance companies II A broker-dealer with no place of business in the State, need not register in that State if it is only dealing with insurance companies III If a broker-dealer is registered with the Financial Industry Regulatory Authority, then it is also registered in that State IV If a broker-dealer has its registration revoked, then the registration of its agents will also be revoked A. I and III B. II and IV C. I, II, IV D. I, II, III, IV

B

What item could a State Administrator require a broker-dealer operating as a sole proprietor to file with the State that would not be required to be filed with the SEC? A. Balance Sheet B. Surety Bond C. Statement of Net Capital D. Form BD

B

Which individual is defined as an agent under the Uniform Securities Act? A. An individual representing a broker-dealer who takes phone messages from clients that wish to purchase or sell listed stocks B. An individual representing a broker-dealer who takes unsolicited orders for partnership units C. An individual representing an investment adviser who provides advice to clients about investing in securities D. An individual who works for an issuer selling that issuer's stock to the issuer's employees

B

Which of the following is prohibited in a margin account? A. Buying stocks without making full payment B. Selling short securities that cannot be borrowed by settlement C. Buying and selling the same security on the same day D. Depositing fully paid securities as collateral to buy other marginable securities

B

Which of the following persons is EXCLUDED from registration, or is EXEMPT from registration, as a broker-dealer in a state? I A firm with a place of business in the state that has no clients in the state II A firm with no place of business in the state that has 25 clients in the state over the preceding 12 months III A firm with no place of business in the state that deals exclusively with issuers IV A firm with no place of business in the state that deals exclusively with financial institutions A. I and II only B. III and IV C. II only D. I, II, III, IV

B

Which person would be required to register as a broker-dealer in a State? A. A person with no place of business in the State who conducts securities transactions with the issuer of non-exempt securities B. A person with no place of business in the State who represents an issuer in the sale of exempt securities to non-institutional customers for compensation C. A person with no place of business in the State who represents an issuer in the sale of non-exempt securities to the issuer's employees without receiving compensation D. A person with no place of business in a State who conducts securities transactions with financial institutions in the State for compensation

B

Which statement is TRUE about registering a marketing officer of an Investment Adviser as an Investment Adviser Representative (IAR) with the State? A. The marketing officer of an Investment Adviser is not registered as an IAR B. The marketing officer of an Investment Adviser will be automatically registered when the Investment Adviser registration is filed in the State C. The marketing officer of an Investment Adviser is only required to register if the firm is a Federal Covered Adviser D. The marketing officer of an IAR must file a registration application that is independent of the Investment Adviser registration application

B

Which statement is TRUE regarding advisory fees under NASAA rules? A. Advisory fees must be tied to account performance so that the adviser's fee will decline if the customer's assets under management fall in value B. Advisory fees must be competitive with those charged by other advisers that provide similar services and cannot be unreasonable C. Advisory fees are determined by free market competition among advisory firms and are not subject to NASAA rules D. Advisory fees for investment advisers that are also registered as broker-dealers in the State are determined by the FINRA 5% Policy

B

Which statements are TRUE about lending money to a customer? I A broker-dealer can lend money to a customer as long as it complies with the provisions of Regulation T II An investment adviser can lend money to a customer as long as it complies with the provisions of Regulation T III A broker-dealer cannot lend money to a customer IV An investment adviser cannot lend money to a customer A. I and III B. I and IV C. II and III D. II and IV

B

In order to revoke a registration, the Administrator must do all of the following EXCEPT: A. find that the action is in the public interest B. cite a cause for the action found in the Uniform Securities Act C. obtain a court order revoking registration D. provide an opportunity for the aggrieved person to have the order reviewed

C

Misstatements of material fact in a securities registration are violations of the Act for which of the following persons? I Issuer II Directors of the issuer III Underwriter IV Agents of the underwriter A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C

All of the following information is required for an investment adviser representative to register in a State EXCEPT: A. work history B. residential history C. legal actions taken against the employee D. misdemeanor convictions involving securities occurring within the past 10 years

C

All of the following persons are defined as federal covered advisers EXCEPT: A. advisers with $100,000,000 or more of assets under management B. advisers to investment companies C. advisers to sophisticated investors D. advisers not subject to State regulation

C

An "offer" or "offer to sell" would include which of the following? I A sale of a security II An offer of a security III An offer of an interest in a security IV The solicitation of an offer to buy a security A. I only B. II and III C. II, III, IV D. I, II, III, IV

C

A Certified Public Accountant offers clients financial planning services, for which a separate fee is charged. Which statement is TRUE? A. The accountant is not required to register as an investment adviser in the State because he has an independently conferred professional accreditation B. The accountant is not required to register as an investment adviser because he is already registered with the State as a CPA C. The accountant must register in the State as an Investment Adviser D. The accountant must register in the State as an Investment Adviser Representative

C

A Registered Investment Adviser and a Broker-Dealer are owned by the same parent company. The RIA has received information from the BD's research department that it is about to change its rating of DEF Corporation from Neutral to Negative. The RIA sells its holding of DEF Corporation and then has its IARs call its list of clients to advise them that they may want to consider selling the security. The RIA has engaged in: A. selling away B. backing away C. front running D. shadowing

C

A client of a RIA dies. His attorney calls the RIA and instructs him to sell 500 shares of ABC at the market and deposit the proceeds to the client's checking account. The RIA should: A. accept the trade verbally and follow the attorney's instructions B. get a copy of a power of attorney that authorizes the attorney to act on behalf of the client C. get a copy of the client's will to see what is allowed and what is not allowed D. require the attorney to send the instructions in writing either by e-mail or fax

C

A customer account that has a high level of trading activity, accompanied by high commission costs and inferior investment performance is permitted under the Uniform Securities Act: A. if the trades were unsolicited B. if the customer authorizes each trade in writing prior to execution C. if the trades are consistent with the customer's investment objectives and needs D. under no circumstances

C

A customer contacts an agent of a broker-dealer, asking for an investment that has no risk. The agent recommends the purchase of Treasury notes or bonds, stating that these are "riskless" securities. Which statement is CORRECT regarding this recommendation? A. The agent has not violated the Uniform Securities Act because Treasury securities are free from risk of default of either payment of interest or principal B. The agent has not violated the Uniform Securities Act because Treasury securities are free from interest rate or market risk C. The agent has acted unethically because Treasury securities that are not a short term maturity have interest rate risk D. The agent has acted unethically because there are no securities that are completely free of risk

C

A customer of a broker-dealer is extremely satisfied with her investment returns. She calls her agent, who made the recommendations that did so well, and tells him: "Just to say thank you, next year, you get to keep 10% of any investment gains in my account." Which statement is TRUE? A. This is only permitted if a written contract is signed by the customer and the agent B. This is only permitted if the agent is also registered as an investment adviser representative in the State C. This is not permitted because the agent is sharing in a customer account D. This is not permitted because the agent earns commissions on the recommended trades

C

A representative is making a presentation to a married couple, ages 77 and 81, about their need for continuing income as the expected life spans of the general population have increased. The representative is strongly recommending that the couple buy an equity indexed annuity (EIA). Which statements made by the representative would be misleading and fraudulent? I "EIAs guarantee a minimum rate of return that is equal to the Standard and Poor's 500 Index" II "I do not earn any commissions when I sell you an EIA" III "EIAs are tax qualified, allowing you to reduce your taxable income by deducting any contribution that you make" IV "EIAs provide a minimum guaranteed rate of return that is guaranteed by the issuing insurance company" A. I and III B. I and II C. I, II, III D. I, II, III, IV

C

A surety bond requirement for registration of a broker-dealer: A. protects each customer against loss of principal in the event of the failure of the broker-dealer B. can be met by using the broker-dealer's existing fidelity bond coverage C. can be used by any person who has an enforceable legal claim against the broker-dealer D. can be met by giving the State a lien on the broker-dealer's real property in lieu of posting cash, securities, or an indemnity policy

C

A trainee that has not yet been registered as an agent of a broker-dealer would: A. be permitted to accept unsolicited orders from customers B. be permitted to make "cold calls" to prospective customers C. be permitted to report completed trades to customers D. not be permitted to have any contact with either existing or prospective customers

C

ABC Corporation has its common stock listed on the New York Stock Exchange. Which of the following ABC issues is (are) EXEMPT from State registration? I ABC preferred stock II ABC Convertible debentures III Warrants to buy ABC common stock IV Limited partnership units where ABC is the general partner in the venture A. II only B. I and III C. I, II, III D. I, II, III, IV

C

All of the following are EXCLUDED from the definition of an investment adviser under the Uniform Securities Act EXCEPT a(n): A. federal covered adviser B. broker-dealer C. adviser with no place of business in the State whose only clients are broker-dealers D. investment adviser representative

C

All of the following are federal covered securities EXCEPT: A. NYSE listed issues B. NASDAQ listed issues C. SEC registered issues D. Registered investment company issues

C

An IAR associated with a State-registered adviser receives correspondence from his uncle about the uncle's securities account that the IAR handles. Under the Uniform Securities Act, this letter is considered: A. the private property of the IAR and can be disposed of as the IAR sees fit B. the private property of the IAR but must be kept on file for 2 years C. a record of the investment adviser, subject to examination by the Administrator D. a record of the investment adviser, but is not subject to examination by the Administrator

C

An Investment Adviser is set up as a sole proprietorship. The owner has hired an Investment Adviser Representative (IAR) to market the firm to potential clients. The most important consideration in the firm's Business Continuity and Succession Plan would be: A. the identification of the business model of the Investment Adviser including size of the firm, types of services provided, and the number of locations B. making provision for the Investment Adviser Representative to notify the clients of the Investment Adviser in the event of business interruption caused by the owner's death or unexpected permanent incapacitation C. making provision for the IAR to contact clients to get their permission to assign advisory contracts to a 3rd party in the event that the owner dies or is unexpectedly unavailable D. providing for an appropriate emergency contact person when the investment adviser representative is away on vacation

C

An agent has heard from a good friend that "ACME Fund has taken a large position in ABC stock." Based on this, the agent calls all of her customers with the recommendation that ABC stock be purchased immediately. This action is: A. permitted without restriction B. permitted only if the agent files a disclosure form with the Administrator C. prohibited, since this recommendation was made based upon a rumor D. prohibited, since this recommendation was made based upon inside information

C

An agent's registration becomes effective: A. immediately when filed in the State B. 10 days after filing in the State C. 30 days after filing in the State D. 90 days after filing in the State

C

An investment adviser in State A has an investment adviser representative who gives advice to his client, a bank, in State B. When would the investment adviser representative (IAR) be required to be registered in State B? A. The investment adviser representative would never be required to register in State B because the investment adviser representative is already registered in State A B. The investment adviser representative would have to register in State B when the firm has 3 other clients in State B C. The investment adviser representative would have to register in State B when the investment adviser opens an office in State B D. The investment adviser representative would have to register in State B if he or she has 3 clients in State A and 3 clients in State B

C

An investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under NASAA rules, the investment adviser: I is deemed to have taken custody of the customer's funds II has not taken custody of the customer's funds III must keep a record of the check received IV is not required to keep a record of the check received A. I and III B. I and IV C. II and III D. II and IV

C

An investment adviser may NOT be compensated with which of the following? A. Wrap fees charged to customers for all services rendered by the adviser B. Soft dollars paid by an executing broker to the adviser in return for trades sent to the broker by the adviser C. Bid-Ask spreads earned when position trades are executed D. Commissions paid to an affiliated broker-dealer on trades recommended by the adviser

C

An investment adviser representative has discretion over a customer account. Which of the following MUST be guaranteed to the customer? A. Best return B. Preservation of principal C. Custom tailored allocation D. Current income

C

An investment adviser that claims that it is a "fee only" adviser could be compensated based on: I a percentage of assets under management II a flat annual or hourly fee for all work performed for wealthy investors III 12b-1 fees paid by mutual funds IV a performance based fee for wealthy investors A. I, II, III B. III and IV C. I, II, IV D. I, II, III, IV

C

An investment adviser wishes to charge a "2 and 20" management fee, consisting of a management fee equal to 2% of annual average net assets and a performance fee equal to 20% of the asset appreciation. This fee arrangement is: A. prohibited under all circumstances B. permitted only if the clients are accredited investors as defined by Regulation D of the Securities Act of 1933 C. permitted only if the clients invest at least $1 million or have a net worth, exclusive of residence, of $2.1 million D. permitted only if each client is a general partner in the venture

C

Attaching any of the following to a prospectus delivered to a customer in connection with the purchase of a new non-exempt securities offering would be a violation of the Uniform Securities Act EXCEPT a(n): A. summary of the important points in the prospectus prepared by the broker-dealer offering the securities B. copy of the most recent advertisement published by the issuer in the mass media C. supplement that presents the issuer's most recent audited financial statements D. internal report prepared by the issuer that shows the next 12 months' sales projections

C

Filing of advertising with the Administrator is NOT required for: I U.S. Government securities II Municipal securities III Investment company securities IV Options Clearing Corporation securities A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C

If a complaint is received by a State Administrator alleging that a Federal covered adviser stole funds from a customer, the State Administrator can do all of the following EXCEPT: A. conduct an investigation B. issue a cease and desist order C. revoke the registration of the adviser D. refer the matter to the SEC

C

If an investment adviser is an individual, which of the following items would be included in the computation of adviser's net capital? A. Goodwill B. Automobile C. Accounts receivable D. Copyright

C

Regarding the Administrator's ability to inspect the books and records of a broker-dealer, which statement is TRUE? A. The Administrator can only inspect the books and records of a broker-dealer if a customer complaint has been filed against that firm B. Customer records held by the broker-dealer can only be inspected by the Administrator if a court so orders C. Broker-dealer records may be examined in any State in which the firm does business D. An examination cannot be conducted by the Administrator if it would duplicate an examination already conducted by a self-regulatory organization or the SEC

C

Registration of securities in a State by Filing becomes effective: A. when the filing with the State is completed B. 2 business days after the filing with the State is completed C. 5 business days after the filing with the State is completed D. when the Federal registration becomes effective

C

State registration of non-exempt securities is a requirement of the: A. Securities Act of 1933 B. Securities Exchange Act of 1934 C. Blue Sky Laws D. Uniform Transfer of Securities Act

C

The Administrator can deny a registration as an investment adviser representative if the individual: I is currently under suspension by FINRA II has been expelled by FINRA III was convicted of a disorderly conduct misdemeanor 8 years ago IV was convicted of theft 8 years ago A. I and III only B. II and IV only C. I, II and IV D. I, II, III, IV

C

The State Administrator is empowered to require the filing of advertising and sales literature relating to offers of which of the following? I U.S. Government securities II Municipal securities III Agency securities IV Equity securities A. I and III only B. II and IV only C. IV only D. I, II, III, IV

C

The fiduciary engaged in the administration of a trust finds that, under the directions of the trust document, there is a conflict of interest relating to a proposed investment. Under the provisions of the Prudent Investor Act, the fiduciary: A. should do nothing and permit the investment to be made B. is permitted to allow the investment as long as it is made in accordance with the Prudent Investor rule C. should ask the settlor of the trust to amend the trust document by express provision, expanding or restricting the provisions of the trust document for this investment D. should not permit the investment, otherwise the fiduciary is subject to liability for breach of fiduciary responsibility

C

Under NASAA rules, advertisement by investment advisers: I can contain testimonials II cannot contain testimonials III can show the performance of previous recommendations IV cannot show the performance of previous recommendations A. I and III B. I and IV C. II and III D. II and IV

C

Under the Uniform Securities Act, an investment adviser is prohibited from taking custody of a client's funds unless: A. the Administrator has issued a rule that permits such an action B. the investment adviser gives 10 days' advance notice to the Administrator of such an action C. in the absence of a rule prohibiting custody, the adviser gives the Administrator notice that it may take custody D. the investment adviser is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940

C

Under the Uniform Securities Act, an offering of a limited partnership made to a bank trust department is: I a transaction that is exempt from registration II exempt from the advertising filing rules III exempt from the anti-fraud rules A. I only B. II only C. I and II D. I, II, III

C

Under the Uniform Securities Act, the financial records of a broker-dealer must be retained for: A. 5 years, with the prior 2 years records readily accessible for audit B. any time period specified by the State Administrator C. the time period specified by the Securities Exchange Act of 1934 and if the record is not specified in the 1934 Act, then the time period specified by the Administrator D. the lesser of the time period specified by the State Administrator or the time period specified in the Securities Exchange Act of 1934

C

Under the Uniform Securities Act, which of the following persons are EXCLUDED from the definition of a "Broker-Dealer"? I An issuer of securities II An agent of an issuer of securities III An agent of a broker-dealer IV A person who has a place of business in the State that only effects securities transactions with institutions A. I and II only B. III only C. I, II, III D. I, II, III, IV

C

Under the Uniform Securities Act, which of the following would be defined as a "non-issuer" transaction? A. An initial public offering of common stock by a corporation B. The sale of open-end mutual fund shares C. The sale of a security effected on the New York Stock Exchange floor D. The sale of limited partnership interests in a private placement

C

When is a bank considered to be a broker-dealer? A. Never, because banks are excluded from the definition of a broker-dealer under the Uniform Securities Act B. If an assistant manager at the bank solicits a customer to obtain a mortgage from the bank, which the bank then sells to Fannie Mae, which packages the mortgage into a pass-through certificate C. If a teller of the bank, when assisting a customer that is making a deposit of a payroll check, offers the customer a money market mutual fund that is primarily invested in Treasury Bills D. If a customer service representative at a bank call center offers a bank certificate of deposit of a customer that asks about an investment that is FDIC-insured and that cannot lose value

C

When must a Registered Investment Adviser (RIA) send a notice of change in ownership? A. To each client, when the RIA changes its business form from a sole proprietorship to a partnership B. To the State Administrator, when the RIA changes its business form from a sole proprietorship to a partnership C. To each client, when the RIA changes its business form from a partnership to a sole proprietorship D. To the State Administrator, when the RIA changes its business form from a partnership to a sole proprietorship

C

Which of the following information MUST be included on a customer confirmation? I Whether the transaction was solicited or unsolicited II Whether a payment for order flow was made III The customer name and account number IV The price of execution A. I and II B. III and IV C. II, III, IV D. I, II, III, IV

C

Which of the following is (are) defined as a "broker-dealer" under the Uniform Securities Act? I A person who effects securities transactions for its own account II A person who effects securities transactions for the account(s) of others III An agent of a broker-dealer who effects securities transactions IV An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer A. II only B. I and II only C. I, II and IV only D. I, II, III, IV

C

Which of the following is NOT EXCLUDED from the definition of an "investment adviser"? A. Broker-dealer B. Trust company C. Insurance company D. Savings and loan

C

Which of the following is NOT a federal covered security? A. An offering made over-the-counter of $250,000,000 of 10% convertible debentures of ACME Corporation, a company whose common stock is listed on the American Stock Exchange (NYSE American) B. A private placement of $250,000,000 of debt backed by automobile finance company receivables sold to investment managers that are qualified purchasers C. An offering of $250,000,000 of General Obligation bonds by the City of New Orleans to the residents of Louisiana D. An offering of $250,000,000 of common shares of a mutual fund that will be offered to the general public

C

Which of the following is a (federal) covered security? A. Treasury bond B. Municipal bond C. Investment company share D. Penny stock

C

Which of the following items would be included in the computation of an investment adviser's net capital? I Business reputation II Furniture and fixtures III Automobiles IV Organizational expenses A. I and III B. I and IV C. II and III D. II and IV

C

Which of the following may be required to be filed with the Administrator? I Advertising II Sales Literature III Circulars IV Customer Complaints A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C

Which of the following must be included in an investment advisory contract under NASAA rules? I The fact that prepaid fees will not be returned if the contract is terminated early II The fact that assignment of the contract is only permitted with customer consent III Whether the contract grants discretionary authority to the adviser IV Disclosure that the fee for managing fixed income securities may be higher than for managing equity securities A. I and II only B. III and IV only C. I, II, III only D. I, II, III, IV

C

Which of the following orders would be performed in a discretionary account? A. A customer places an order to buy 100 shares of IBM at the best price available B. A customer places an order to sell 100 shares of KO at the market C. A customer places an order to buy 100 shares of any computer stock priced at under $40 D. A customer places an order to sell 100 shares of GE when it gets to a certain level or lower

C

Which of the following statements are TRUE about Registration by Filing? I The issuer must have minimum earnings levels for the 2 of the past 3 years II Copies of any offering materials must be included in the registration filing III The issuer must not have defaulted on any interest payments within the past year IV Registration becomes effective 10 business days after the filing is complete A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C

Which of the following statements are TRUE about an offer of rescission? I The offer can only be made prior to the institution of a lawsuit alleging a securities violation II An offer must be made to buy back the security at the original purchase price III The customer must be paid interest at the legal rate in the State, less any dividend or interest income received from that security IV The customer must sign a waiver of non-compliance to accept the offer A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

C

Which of the following would be required to register as an investment adviser in a State? A. A person with no office in the State that only renders investment advice to insurance companies for compensation B. A person who gives investment advice to charitable organizations on a "pro bono" basis C. A person who has no current advisory customers, but who is seeking clients by newspaper advertising D. A person who gives advice about investing in securities only as an incidental part of his accounting practice

C

Which statement is TRUE about a state-registered investment adviser's recordkeeping obligations? A. Only advisers that maintain custody of client funds are required to retain books and records that can be inspected by the Administrator B. An investment adviser that has offices in multiple States must keep records in accordance with the requirements set by the Administrator of each State where an office is located C. Advisers are required to retain records for at least 5 years from the end of the fiscal year during which the last entry of record was made D. Electronic records are permitted as long as hard copies are kept in a separate secure location

C

Which statement is TRUE regarding registration requirements under the Uniform Securities Act? A. Minimum net capital can be required for agents, broker-dealers and investment advisers B. Minimum net capital and a surety bond can be required for agents, broker-dealers and investment advisers C. Minimum net capital can be required for broker-dealers and investment advisers D. Minimum net capital and an examination can be required for agents, broker-dealers and investment advisers

C

Which statements are TRUE about the applicability of NASAA recordkeeping rules to investment advisers? I NASAA recordkeeping rules apply to Federal Covered advisers II NASAA recordkeeping rules do not apply to Federal Covered advisers III NASAA recordkeeping rules apply to State-registered advisers IV NASAA recordkeeping rules do not apply to State-registered advisers A. I and III B. I and IV C. II and III D. II and IV

C

Who does NOT have to be registered in the State as an agent of a broker-dealer? A. A secretary that answers the phone and who takes orders B. A trading assistant who only accepts unsolicited customer orders C. A director of the company that is not involved in sales D. An officer of the company that oversees the firm's marketing

C

A broker-dealer that has a place of business in State A would be required to register in State A if it: I sold securities to customers in State A II made an offer to sell securities to customers in State A III effects securities transactions solely with institutional investors in State A IV effects securities transactions solely with issuers in State A A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV

D

A customer has an individual account. Upon written request, the customer's account statements and confirmations may be sent to the: A. Agent B. Broker-dealer C. State Administrator D. None of the above

D

A NASDAQ listed issuer plans on offering 5,000,000 new shares in an "add on" offering that will be sold by its underwriters in all 50 States. Which statements are TRUE? I The security must be registered in each State II A notice filing and filing fee are required in each State III A prospectus must be filed in each State IV A consent to service of process must be filed in each State A. I and III B. I and IV C. II and III D. II and IV

D

A State Administrator can require that a new investment adviser who files a registration application in the State file: I Proposed advertising II An announcement of the application in 1 or more newspapers III Standardized form letters to be used for prospecting A. I only B. I and II only C. II and III only D. I, II, III

D

A broker-dealer is required to register with: A. the SEC B. FINRA C. the state where it is located or does business with the public and the SEC D. all of the above

D

A broker-dealer registered in States A and B has an agent that is registered in State A. The agent takes an unsolicited order from a customer in State B. The agent will have to register in State B if: A. this is an existing customer who resides in State A but is temporarily vacationing in State B B. the customer is the issuer of the securities involved in the transaction C. this is an isolated transaction D. the customer is an accredited investor

D

Under NASAA rules, which record is NOT required to be retained by an investment adviser? A. Written customer complaint received 4 years ago B. Advertising copy distributed to the public 2 years ago C. Trial balance of the investment adviser prepared 1 year ago D. Customer account statements prepared 6 years ago

D

A customer has previously signed a non-durable power of attorney giving his spouse power of attorney over his individual brokerage account. Which statements are TRUE? I The power of attorney continues upon the customer's death II The power of attorney ceases upon the customer's death III The power of attorney continues upon the customer's incapacitation IV The power of attorney ceases upon the customer's incapacitation A. I and III B. I and IV C. II and III D. II and IV

D

A registration application is considered to be "complete" when the proper documents: A. are sent to the Administrator B. and the filing fee are sent to the Administrator C. are received by the Administrator D. and the filing fee are received by the Administrator

D

A representative is making a presentation to a married couple, ages 75 and 77, about their need for continuing income as the expected life spans of the general population have increased. The representative is strongly recommending that the couple buy an equity indexed annuity (EIA). Which statement made by the representative would NOT be misleading and fraudulent? A. "EIAs guarantee a minimum rate of return that is equal to the Standard and Poor's 500 Index" B. "EIAs can be redeemed at any time without penalty if you have an emergency cash need" C. "EIAs are tax qualified, allowing you to reduce your taxable income by deducting any contribution that you make" D. "EIAs provide a minimum guaranteed rate of return that is guaranteed by the issuing insurance company"

D

A security is exempt from registration in a State if it is sold in a(n): A. issuer transaction B. non-issuer transaction C. isolated issuer transaction D. isolated non-issuer transaction

D

All of the following State-registered advisers must file an annual audited financial statement with the Administrator within 120 days of completion of a surprise audit EXCEPT an adviser that: A. accepts $500 or more of prepaid advisory fees, 6 months or more in advance of rendering services B. uses a qualified custodian to hold customer assets C. maintains custody of customer assets D. exercises discretion in customer accounts under a limited power of attorney

D

All of the following are EXCLUDED from the definition of an agent EXCEPT an individual who represents the issuer in the: A. sale of municipal securities to the public B. private placement of common stock C. sale of common stock to the issuer's employees D. sale of federal covered common stock to the public

D

All of the following are defined as investment advisers that are EXEMPT from registration in a State EXCEPT an adviser with no place of business in the State that: A. gives advice to no more than 5 clients in the State in the past 12 months B. gives advice solely to broker-dealers C. gives advice solely to registered investment companies D. distributes financial reports not based on specific client situations

D

All of the following media can be used to store data under Uniform State Law EXCEPT: A. Microfiche B. Digital storage C. CD-ROM D. Audio tape

D

An agent living in one State wishes to solicit business in another State. Which statements are TRUE? I The agent must be registered in the other State II The broker-dealer must be registered in the other State III If the agent is a partner of the broker-dealer, the agent does not have to register separately from the broker-dealer in that State A. I only B. II only C. I and II D. I, II, III

D

An agent recommends that a customer buy shares of ZIZI Mutual Fund. The fund has a sales charge of 7%. The first breakpoint occurs at the $10,000 level, where the sales charge is reduced to 5%. The fund offers a letter of intent provision. The customer gives the agent a check for $9,500 to invest in the fund, which the agent forwards promptly for investment in ZIZI shares. Which statement is TRUE? A. The agent has acted properly by forwarding the customer's check promptly B. The agent has acted properly because he does not have a fiduciary obligation to the customer C. The agent has acted unethically because he did not make the client aware of the upcoming breakpoint D. The agent has acted unethically because he did not make the client aware of the upcoming breakpoint and the letter of intent provision

D

An agent's license remains in effect: A. for 30 days B. for 2 years unless terminated earlier C. until canceled by the agent or revoked by the administrator D. for a period of time that may vary from State to State

D

An investment adviser is considered to "take custody" of funds or securities from a customer if it: A. exercises discretionary authority by placing trades of securities for that customer B. accepts a check from the customer made payable to the fund custodian to buy a mutual fund C. accepts commissions for effecting trades for that customer's account through an affiliated broker-dealer D. receives quarterly management fees from the custodian by direct deduction with client consent

D

An investment adviser is permitted to borrow money from which of the following clients? I An affiliated bank II An unaffiliated bank III An affiliated broker-dealer IV An unaffiliated broker-dealer A. I and II only B. II and IV only C. I and III only D. I, II, III, IV

D

An investment adviser representative (IAR) is opening an account for a new customer. The IAR tells the client that the firm uses a broker-dealer owned by the same parent company to effect any recommended transactions. The IAR gives the customer the Investor Brochure and tells the customer: "This document gives all the details of how our company is structured; how fees are assessed; and any potential conflicts of interest that the firm may have. Since I have already told you about this, reading the document is entirely optional on your part." Which statement is TRUE? A. Because the IAR disclosed the potential conflict of interest verbally to the customer, this obviates the client's need to read the investor brochure B. Because the customer did not receive the brochure prior to entering into the advisory contract with the firm, the contract is void C. This is permitted if the conversation with the customer is taped and retained for 3 years D. This is not acceptable, since the customer should read the brochure carefully prior to making an investment decision

D

An investment adviser representative manages a large portfolio for a wealthy customer, age 65. The portfolio contains a large holding of British securities and the adviser is worried that the British Pound may appreciate against the U.S. dollar. Which statement is TRUE regarding the use of currency futures to hedge against this risk? A. The Prudent Man Rule prohibits the use of futures contracts as investments B. Because futures contracts are inherently risky, their use would be in contravention of the Prudent Man Rule C. The Prudent Man Rule only applies to securities and not to futures, so the adviser cannot use them D. The Prudent Man Rule does not specify the types of investments that can be used, so futures could be suitable as a hedging instrument

D

An investment adviser representative wants to share in the gain and loss of a customer account. Under NASAA rules, this is: A. permitted if the IAR opens a joint account with the customer; contributes capital; and shares in proportion to the capital contributed B. permitted only if the IAR charges a lower advisory fee to the client C. permitted only if the Investment Adviser does not charge an advisory fee D. prohibited

D

An investment adviser representative who prepares financial plans for customers is also a registered life insurance agent in that State. If the agent recommends that a customer sell a mutual fund holding and use the proceeds to buy life insurance, all of the following should be disclosed to the customer EXCEPT the fact that the: A. recommendation to purchase life insurance is in no way connected to the services offered by the advisory firm B. agent will earn a commission on the life insurance purchased by the customer C. sale of the mutual funds may result in a taxable event to the customer D. recommendation to buy life insurance does not make the investment advice any less objective

D

An investment adviser that is a sole proprietor finds that its net worth (net capital) has fallen below the minimum requirement. What asset can an owner of the advisory firm contribute to bring the net worth back above the minimum requirement? A. A copyright on a book owned by the individual B. A couch from the owner's home C. An automobile owned by the individual D. A mutual fund position owned by the individual

D

An issuer has filed a registration statement in a State for a new issue of securities that is effective and sale of the issue has started. The issuer finds that there is great demand for the offering and wishes to increase the number of shares being issued. In order to do this, a(n): A. new registration statement must be filed with the State, if it is within 6 months of the date of sale B. amendment must be filed, as long as it is within 6 months of the date of sale C. amendment must be filed, as long as it is within 6 months of the date of sale along with the payment of a late registration fee only D. amendment must be filed, as long as it is within 6 months of the date of sale along with the payment of an additional filing fee and a late registration fee

D

Due to an overall market decline, an investment adviser that imposes a .50% annual management fee on its clients is under financial pressure. To meet its expenses, the adviser wishes to increase its management fee to .65% for any new clients; the existing clients will see no change to the management fee charged. In order to do so, the adviser must: I file an ADV Part 2A with the Administrator within 30 days II provide the amended ADV Part 2A or a brochure to its new clients III provide the amended ADV Part 2A or a brochure to its existing clients at year end A. I only B. I and II only C. II and III only D. I, II, III

D

If a broker-dealer with no office in a State with a de minimis exemption is not registered in a State, then it may effect: A. trades municipal bonds in that State with customers in that State B. trades in corporate bonds in that State with customers in that State C. a trade in a municipal bond in that State with a customer that has recently moved to that State D. an isolated trade in a corporate bond in that State with a customer in that State

D

If a registered investment adviser takes custody of client funds or securities and deposits them with a qualified custodian, which statement is NOT true? A. The customer must be notified promptly in writing of the qualified custodian's name, address and the manner in which the securities are held B. The customer must be sent, at least quarterly, an account statement identifying all positions held and all transactions in the account during that period C. All client funds and securities positions must be verified at least annually by a certified public accountant on a surprise basis D. A written discretionary authority must be obtained from each client for whom funds are being held in custody

D

If an adviser is suspicious about a customer's account activity and believes that there may be illegal activity, then the adviser: I must file a CTR report with FinCEN II must file an SAR report with FinCEN III in 15 days IV in 30 days A. I and III B. I and IV C. II and III D. II and IV

D

If an agent withdraws from employment from a broker-dealer, the withdrawal takes effect: A. promptly B. within 5 days C. within 10 days D. within 30 days

D

If an investment adviser puts its records on microfiche or electronic storage media, all of the following statements are true EXCEPT: A. the paper or hard copy form, as those records are kept in their original form, must be preserved and maintained for 5 years B. the duplicate copy of the record may be immediately reproduced in the medium chosen and must be preserved and maintained for 5 years C. the original record and duplicate copy of the record in the chosen medium must be stored in separate locations for 5 years D. the duplicate copy must be preserved in a format that is alterable, rewritable and erasable

D

In connection with the sale of an issue to a customer, the agent of a broker-dealer must disclose any material public facts about the issuer if: I by not disclosing the information, the presentation to the customer would be misleading in any material respect II the customer is not an employee or officer of the issuer and therefore is not in a position to have knowledge of these material public facts III the information was disclosed to the agent by the broker-dealer, regardless of the broker-dealer's policies and procedures covering disclosure of information to customers A. I only B. I and II C. II and III D. I, II, III

D

In order for an Internet Communication of a Broker-Dealer Agent NOT to be considered to be an offering of securities in a State, which statement is FALSE? A. The communication must be limited to general information about products and services offered B. The communication must state that the broker-dealer or agent must be registered in that State to offer securities or to effect securities transactions C. If the communication is created by an agent, the affiliation of the agent with a broker-dealer or investment adviser must appear prominently D. The Administrator retains responsibility for reviewing and approving the content of any Internet Communication

D

Misstatements of material fact in a securities registration are violations of the Act for all of the following persons EXCEPT: A. issuers B. directors of issuers C. underwriters D. agents

D

NASAA has the power to set record retention rules for a Federal Covered Adviser that cover which of the following records? I Communications to 2 or more persons II E-mails to clients III Trial balances IV General ledger A. I and II only B. III and IV only C. I and IV only D. None of the above

D

Regarding the Administrator's ability to inspect the books and records of a broker-dealer doing business in its State, which statement is TRUE? A. The Administrator can only inspect the books and records of a broker-dealer on a surprise basis with 1 day written notice to the broker-dealer B. The Administrator can only inspect the books and records of a broker-dealer on a surprise basis with a court order C. The Administrator can only inspect the books and records of an out-of-State broker dealer if it is concurrently inspecting the books and records of that broker-dealer in its State D. The Administrator can conduct an inspection of a broker-dealer's books and records in any State and at any time

D

Registration by Coordination can be stopped by the Administrator if it is in the public interest and the: A. applicant cannot show that the registration is not incomplete in any material respect B. applicant can show that the registration is incomplete in any material respect C. Administrator cannot show that the registration is not incomplete in any material respect D. Administrator can show that the registration is incomplete in any material respect

D

Registration by Coordination in a State would MOST likely be used for which securities offering? A. Mutual fund shares registered under the Investment Company Act of 1940 B. Secondary offering of a company that is NASDAQ listed C. An initial public offering made under a Rule 147 Intrastate exemption D. Initial public offering of an issue that will be listed in the OTCBB

D

Registration by Filing would NOT be permitted for which of the following reasons? I An Administrator in another State has issued a stop order relating to this issue II The issue is only going to be offered in one State III The Securities and Exchange Commission denies effectiveness to the Federal registration statement IV The Administrator has not received a copy of the latest prospectus A. I and III only B. II only C. I, II, III D. I, II, III, IV

D

Suits alleging criminal violations of the Uniform Securities Act must be brought within how many years of the occurrence of the alleged violation? A. 1 year B. 2 years C. 3 years D. 5 years

D

Surety bonds may be required by the State Administrator for the licensing of: I Agents II Broker-Dealers III Investment Advisers IV Investment Adviser Representatives A. I only B. I and IV only C. II and III only D. I, II, III only

D

The Administrator is empowered to petition a court of law to impose which of the following on an investment adviser for criminal violation of the Uniform Securities Act? I Restitution to persons affected by the violation II $5,000 fine per offense III Imprisonment for up to 3 years

D

The Administrator may require a new investment adviser who files a registration application in a State to: I Announce the opening of the advisory firm in the local newspapers II Pass an oral qualification examination III File with the Administrator any advertising or communications to be disseminated to the public A. I only B. II only C. II and III D. I, II, III

D

The Prudent Investor rule prohibits investments in: I Futures II Options III Speculative Stocks A. I only B. I and II C. II and III D. None of the above

D

The anti-fraud provisions of the Uniform Securities Act would apply to the sale in the State of: A. both fixed and variable annuities B. both whole life and variable life insurance policies C. variable annuities only D. both variable annuities and variable life insurance

D

The provisions of the Uniform Securities Act include: I Anti-fraud II Common law deceit III Registration of securities IV Registration of broker-dealers, investment advisers, and their agents A. I and II B. III and IV C. I and IV D. I, II, III, IV

D

To maintain registration as a broker-dealer or investment adviser, which of the following may be required to be filed with the Administrator? I Advertising II Sales Literature III Prospectuses IV Form Letters A. I only B. III only C. I and II only D. I, II, III, IV

D

Transactions made by all of the following persons are exempt under the Uniform Securities Act EXCEPT: A. Guardian B. Conservator C. Trustee in bankruptcy D. Custodian for a minor

D

Under NASAA rules for State-registered advisers, transactions must be recorded in customer account records no later than: I 5 business days II 10 business days III following the end of the month in which the transaction was effected IV following the end of the quarter in which the transaction was effected

D

Under NASAA rules, the Form ADV filed with the State must be updated: A. quarterly within 30 days of quarter end B. quarterly within 90 days of quarter end C. annually within 30 days of fiscal year end D. annually within 90 days of fiscal year end

D

Under NASAA rules, which of the following records must be retained for 5 years by a Federal Covered Adviser? A. Communications to 2 or more persons B. Order memoranda C. Canceled checks D. None of the above

D

Under the Prudent Investor Act, a trustee's investment and management decisions should be evaluated: I based on each individual transaction II based on the context of the portfolio as a whole III as part of the investment strategy of each single trust beneficiary IV as part of the overall investment strategy for all beneficiaries of the trust A. I and III B. I and IV C. II and III D. II and IV

D

Under the Uniform Securities Act, a representative's registration in a State: A. means that the State Administrator approves of the individual B. also registers that individual with the Securities and Exchange Commission C. also registers that individual in each State that has adopted the Uniform Securities Act D. is effective only as long as the investment adviser is registered in that State

D

Under the Uniform Securities Act, copies of order memoranda maintained by investment advisers must contain all of the following EXCEPT: A. person connected with the Investment Adviser who recommended the transaction to the client B. person who placed the order C. date of order entry D. time of order execution

D

Under the Uniform Securities Act, if an investment adviser wishes to take custody of customer funds or securities, it MUST: A. notify each customer of the location where the funds are held no later than on the first account statement sent to the customer B. submit to an annual audit conducted on a random basis by the Administrator C. perform a quarterly physical count of securities and funds held and reconciliation with the adviser's records D. hold the assets in either a bank or brokerage account where the adviser is the trustee acting for the benefit of the customer

D

Under the Uniform Securities Act, the Administrator can be the: I State Securities Commission II State Securities Commissioner III Secretary of State A. I only B. II only C. II or III D. I, II, or III

D

Under the provisions of the Prudent Investor Act, a Registered Investment Adviser should consider which of the following when investing and managing trust assets? I General economic conditions II Possible effects of inflation or deflation III Investment tax consequences IV Expected total return A. I and II only B. III and IV only C. I, II, III only D. I, II, III, IV

D

Which of the following information MUST be recorded on an executed order ticket? I Time of execution II Time of receipt III Account number IV Solicited or unsolicited A. I and II B. III and IV C. I, III, IV D. I, II, III, IV

D

Which of the following is EXEMPT from the requirement to register as an investment adviser in a State? A. Federal covered adviser B. Investment adviser representative C. Trust company D. Person with no place of business in the State who renders advice solely to Federal covered advisers

D

Which of the following must be included in an investment advisory contract under NASAA rules? I The formula for computing the advisory fee II The amount of prepaid fees to be returned if the contract is terminated early III Whether the contract grants discretionary authority to the adviser IV Disclosure that the fee for managing equity securities may be higher than for managing fixed income securities A. I and II only B. III and IV only C. I, II, III only D. I, II, III, IV

D

Which of the following securities is NOT exempt from the registration requirements of the Uniform Securities Act? A. U.S. Government Bonds B. Debentures of a New York Stock Exchange listed company C. Stock issued by a charitable corporation D. Limited Partnership Interests

D

Which statement CAN be made to a customer under the provisions of the Uniform Securities Act? A. "If you purchase 20 year 6% Treasury Bonds at par, you are guaranteed to earn a 6% yield on the investment" B. "You should buy ABCD common stock now at $20 per share because it will go up to $35 per share once it publishes its next quarterly earnings report" C. "This REIT pays a 4% dividend. Buying it now means that you will receive the next scheduled dividend payment that will be made in 1 week" D. "Your investment portfolio needs to be rebalanced - you have appreciated stocks that should be sold, with the proceeds invested in long term corporate bonds"

D

Which statement is TRUE about the delivery of a final prospectus to the purchaser of a non-exempt new issue security? A. No final prospectus delivery is required if the investor is a substantial investment adviser B. No final prospectus delivery is required if the customer received the preliminary prospectus and is provided with the final pricing amendment C. A final prospectus must be delivered, at, or prior to, confirmation of sale, to any person that gave an indication of interest D. A final prospectus must be delivered, at, or prior to, confirmation of sale, to any person who purchases the issue

D

Which statements regarding registration of a security in a State are FALSE? I Registration is effective for a time period of 1 year II Once registration is declared effective in a State, it is effective in any other State in which a registration statement is filed III A registration statement can be filed in a State by a person other than an issuer IV To maintain registration in a State quarterly and annual financial statements must be filed with the Administrator A. I and III B. I and IV C. II and III D. II and IV

D

f a registered investment adviser takes custody of client funds or securities and deposits them with a qualified custodian, which statement is NOT true? A. The customer must be notified promptly in writing of the qualified custodian's name, address and the manner in which the securities are held B. The customer must be sent, at least quarterly, an account statement identifying all positions held and all transactions in the account during that period C. All client funds and securities positions must be verified at least annually by a certified public accountant on a surprise basis D. A written annual statement must be sent to customers detailing where the client funds and securities are being kept

D