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Under the Uniform Securities Act, the definition of sale includes I. bona fide gifts of securities II. giving a security as a bonus with any purchase III. exercising a right to convert 1 security into another IV. preliminary agreements between issuers and underwriters
II. giving a security as a bonus with any purchase III. exercising a right to convert 1 security into another
Which of the following statements regarding an investment adviser is NOT correct?
An investment adviser whose only clients in this state are insurance companies located in the same city as her office is not an investment adviser under the Uniform Securities Act. The exemption for institutional clients exists only when the adviser does not have an office in the state. Once an investment adviser would be required to register in 15 or more states, the prohibition against registering with the SEC with less than $100 million in AUM is removed. An investment adviser with no office in the state who limits communications to five or fewer investors would fall under the de minimis exception and is not required to register. Federal covered advisers doing business in a state can be compelled to file copies of anything submitted to the SEC.
Long Range Planning (LRP) is a federal covered investment adviser doing business in all 50 states. Fred Fergus is an IAR with LRP and splits his time between an office in State A and State D. Fred has retail clients as follows: I. 16 clients in State A II. 12 clients in State B III. 6 clients in State C IV. 4 clients in State D Fred would have to register as an IAR in:
States A and D. In the Investment Advisers Act of 1940, it states that "no law of any State requiring the registration, licensing, or qualification as an investment adviser or supervised person of an investment adviser shall apply to any person that is registered under section 203 as an investment adviser, or that is a supervised person of such person, except that a State may license, register, or otherwise qualify any investment adviser representative who has a place of business located within that State." Therefore, when employed by a federal covered adviser, the only time that state registration is required is when the individual functioning as an IAR has a place of business in the state. Had this been an IAR with a state covered adviser, registration in all of the states would have been required (the de minimis would not cover State D because there is a place of business there).
An agent registered with a broker-dealer in the state has had his license enjoined. This means
the individual is prohibited from acting as an agent pending the results of a hearing Only a court of competent jurisdiction may issue an injunction. The Administrator applies to the court and, if the injunction is granted, the agent is effectively blocked from the business until the issue is decided in a hearing.
Which of the following individuals would be most likely to be willing to sell securities for the benefit of the issuer without receiving any compensation based upon those sales?
A member of the issuer's board of directors
Which of the following transactions would be exempt from the advertising and sales literature filing requirements of the Uniform Securities Act?
A retired customer calls an agent and enters an order to purchase 1,000 shares of a low-priced stock traded on the Nasdaq Stock Market Any unsolicited transaction, regardless of the nature of the security, is exempt. Private placements are limited to 10 offers, not purchasers. No payment is made on preorganization certificates so there can't be any compensation.
Which of the following falls under the Uniform Securities Act's definition of "agent"?
An analyst for a broker-dealer who maintains a limited retail customer base to devote most of her time to research. Regardless of the primary function of a broker-dealer employee, if the employee engages in sales activity, that employee must be registered as an agent.
The Uniform Securities Act has provisions for agent registration and termination. Which of the following statements apply to withdrawals?
If the Administrator commences an action against the agent prior to the effective date of the withdrawal, the withdrawal will be delayed until completion of the action. Normal withdrawal is on the 30th day after filing. However, the Administrator may delay withdrawal pending completion of any action against the registrant. Once terminated, the Administrator retains jurisdiction over the former registrant for a period of one year.
Myra Johnson is an investment adviser representative with a federal covered investment adviser. Her former college roommate, and very close friend, has approached Myra about opening an account where the two of them can share in the profits and losses. In order to be in compliance with the USA
Myra must inform her friend that this may not be done Unlike agents of broker-dealers, IAs and their representatives can never share in the profits and losses of an account with a customer
The Uniform Securities Act excludes which of the following persons from the definition of broker-dealer?
One who has no office in the state and deals exclusively with other broker-dealers and investment companies in this state An issuer of securities who hires agents to distribute its new issue of stock
An agent representing a broker-dealer in State P has a retail customer who moves to State S from State P. The agent and the brokerdealer now have one customer in State S. To continue to do business with this customer, which of the following is TRUE?
The agent and broker-dealer must register in State S. Unlike investment advisers, there is no de minimis exemption for broker dealers.
If information filed with the Administrator by a broker-dealer as part of its registration changes in a material way, the registrant must
When material information changes, the registrant must promptly amend or update the information regardless of the renewal date. The requirement to amend a registration applies to investment advisers, broker-dealers, and securities. However, the Uniform Securities Act does not define the term "promptly".
Capital Asset Planning (CAP) is an investment adviser registered in states A, B, and C. CAP has no place of business in state D. The registration provisions of the Uniform Securities Act would not apply to CAP in state D if it confined their advisory business in state D to all of these EXCEPT
individuals qualifying as accredited investors Investment advisers without a place of business in the state are not required to register in the state if their only clients are other investment advisers, broker-dealers, and institutional clients. Although it is true that the term accredited investor includes institutions where the exemption would apply, unless the choice limited itself to those, it also includes retail (individual) investors meeting certain financial standards. As the case of this question, the exemption does not apply.
Under the Uniform Securities Act, an investment adviser with an office in a state
must register its investment adviser representatives who work in that office with the Administrator even if the investment adviser is federal covered
An investor who resides in New York reads a newspaper ad for advisory services in a newspaper published in New Jersey. More than 80% of the newspaper's circulation is in the state of New York. According to the Uniform Securities Act, an offer has been made in
neither New Jersey nor New York An offer is not made when a newspaper is circulated but not published in the state, or if it is published in the state but has more than two-thirds of its circulation outside of the state.
Under the Uniform Securities Act, a person who owns a business providing advice on commodity futures contracts as well as limiting its securities advice to those issued or guaranteed by the U.S. government is
not required to register as an investment adviser in the state This question is referring to a federal covered adviser. The futures contracts are not securities, but, of course, the U.S. government securities are. However, the Investment Advisers Act of 1940 specifically excludes from the definition of "investment adviser" a person whose securities advice is confined to securities issued or guaranteed by the Treasury. The fact that this person is excluded under the Investment Advisers Act of 1940 makes that person federal covered under the NSMIA and not subject to state regulation as an investment adviser.
All of the following statements are consistent with the Uniform Securities Act EXCEPT
state Administrators do not require consent to service of process to be submitted with notice filings for covered securities The Administrator will require the filing of a consent to service of process with any securities registration. Notice filing is the state registration procedure followed by federal covered securities. Any security may be registered by qualification, and coordination is the simultaneous registration with the SEC and the states.
An individual representing the issuer in the sale of that issuer's securities to the public would have to register if
the issuer is a federal credit union
According to the Uniform Securities Act, a consent to service of process must accompany which of the following?
Agent's registration application Broker-dealer's initial registration application
Which of the following meets the definition of an agent as described in the Uniform Securities Act?
An individual employed by a broker-dealer accepting unsolicited orders from existing customers to purchase exempt securities An agent is an individual employed by either a broker-dealer or an issuer who is compensated for selling securities to the public. Whether the orders are solicited or unsolicited, whether the securities are exempt or nonexempt, those who deal with the broker dealer's customers are considered agents.
Which of the following transactions would NOT be exempt from the sales literature and advertising filing requirements of the Uniform Securities Act?
An individual employed by a broker-dealer calls a client to encourage her to purchase U.S. Treasury bonds. When an individual calls noninstitutional clients to purchase shares in publicly traded securities, the transaction does not qualify as exempt under the USA, even if the securities themselves are exempt. Sales to investment companies and unsolicited orders are exempt transactions, while fixed annuities are not securities.
You are a registered agent with Goldmen Sax, a well-respected broker-dealer. In order to help you purchase a home, your mother, who happens to be one of your clients, offers to lend you the down payment. A legal document is drawn up whereby your mother is granted a 2nd lien on the home and the interest charged on the loan complies with IRS regulations. Under the Uniform Securities Act
this loan is prohibited Even though it sounds strange, no agent may borrow money from any client unless the client is either affiliated with the broker-dealer or is in the lending business.
Under the USA, a private placement is considered an exempt transaction when directed
to no more than 10 noninstitutional persons in 12 consecutive months
All of the following securities are exempt from state registration EXCEPT securities issued by a registered investment company bonds issued by the Republic of Argentina municipal bonds unsolicited orders
Be careful. Unsolicited orders are exempt transactions, the others are exempt securities.Furthermore, the choice, unsolicited orders, is the only one that is not a security, exempt or not.
Which two of the following statements regarding customer accounts are correct?
Margin account agreements must be signed promptly after the first trade in the account. The option account agreement must be returned by the client within 15 days of the account being approved.
Registration as an agent under the Uniform Securities Act would be required of which of the following?
The secretary of a licensed agent who contacts the agent's clients with market suggestions when the agent is on vacation An officer of a broker-dealer whose only responsibility is performing suitability review of transactions based upon recommendations to clients Registration as an agent is required for any employee of a broker-dealer who takes an active role in selling or supervising those who sell. An agent's secretary who merely furnishes existing clients with quotes would not have to register. Broker-dealers are not agents and those who represent issuers in exempt transactions are excluded from the definition.
Typical fees of broker-dealers that should be part of the fee disclosure document would include all of the following EXCEPT
commissions Commissions, markups and markdowns, and advisory fees are not part of the fee disclosure document. They are disclosed in other material.
A broker-dealer with no place of business in the state would not be exempt from registration if his only clients in the state were
individuals meeting the accredited investor standard A broker-dealer with no place of business in the state does not have to register if its only clients in the state are institutions, the issuers of the security involved in the transaction, or other broker-dealers.
Registered agents employed with a broker-dealer registered in State A regularly mail sales material to 4 clients in State B. The State A broker-dealer
must be registered in State A must be registered in State B The firm would be required to be registered in both State A and State B and is required to be registered only in the state to which it directs mail and not states from which mail is received. No de minimis exemption similar to the one for investment advisers is available for broker-dealers.
An agent is registered with XYZ Discount Brokers, a wholly owned subsidiary of the XYZ Bank Holding Company. The holding company also owns XYZ Capital Markets, a full service broker-dealer. Under the provisions of the Uniform Securities Act, this agent would be permitted to split commissions
with an agent employed by XYZ Capital Markets Agents are only permitted to split commission with other agents registered with their broker-dealer or affiliated broker-dealers under common control. Since XYZ Capital Markets is an affiliated firm, sharing commissions with their agents would be permitted.
