Registration and Licensing Quiz 1
True or False: A surety bond MUST be in the form of cash
False
True or False: After an investment adviser submits a U-4 registration application for a newly hired salesperson, the application becomes effective 30 days or sooner
True
True or False: If a broker-dealer "buys out" another broker-dealer, or an investment adviser "buys out" another investment advisory firm, there is no additional fee required at that time.
True
True or False: If a commission is paid, then that individual would be defined as an agent
True
*The registration of a broker-dealer may be revoked for which of the following reasons? I The firm does not maintain required records II The firm does not file financial reports with the Administrator III The firm does not file advertising with the Administrator IV The firm does not file customer complaints with the Administrator A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV
C
Which of the following are generally required to be included in the State registration application of a broker-dealer or investment adviser? I Consent to service of process II Business history of applicant III Fingerprints of the officers IV Books and records of the broker-dealer used by the applicant A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV
C
*Which statements are TRUE regarding the post-registration requirements of the Uniform Securities Act? I Agents of broker-dealers are subject to post-registration requirements II Agents of broker-dealers are not subject to post-registration requirements III Agents of investment advisers are subject to post-registration requirements IV Agents of investment advisers are not subject to post-registration requirements A. I and III B. I and IV C. II and III D. II and IV
D
A broker-dealer in State A has a customer who lives in State A, whose account is managed by an agent who is registered in State A. The customer moves to State B, a State where the broker-dealer is registered but the agent is not. In order to continue doing business with the customer in State B, the agent: A. is not required to be registered in State B B. must notify State A C. must notify State B D. must register in State B
D
True or False: NASAA rules for IAs apply to State-registered (those advisers with less than $100 million of assets under management) and Federally registered advisers
False
Under the Uniform Securities Act, the registration application of an investment adviser must include: A. a listing of the adviser's customers and their financial holdings B. a copy of the adviser's policies and procedures manual C. the adviser's financial condition and business history D. a copy of the adviser's Code of Ethics
C
Surety bond coverage can be required by the Administrator as a condition of registration for all of the following EXCEPT: A. broker-dealers B. investment advisers C. agents D. issuers
D
True or False: Agents do not need to renew their registrations on December 31 of each year, unless renewed
False
*If an agent changes his place of employment from one broker-dealer to another, the registration must be transferred: A. immediately B. within 10 days C. within 30 days D. within 90 days
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
*Which one of the following items would be included in the computation of an investment adviser's net capital? A. Sofa in the investment adviser's office B. Business reputation (goodwill) of the investment adviser C. Copyright held by the investment adviser for a finance book D. Franchise right held by the investment adviser
A
Which statements are TRUE regarding licenses held by broker-dealers and agents? I If a broker-dealer's license is suspended, all of its agents' licenses are suspended II If an agent's license is suspended, the broker-dealer's license is suspended III If the broker-dealer's license is suspended, its agents may become associated with another broker-dealer A. I only B. I and III C. II and III D. I, II, III
B
Under NASAA rules, the Form ADV filed with the State must be: I updated quarterly II updated annually III sent to customers if the update is material IV sent to other investment advisers if the update is material A. I and III B. I and IV C. II and III D. II and IV
C
Under the provisions of the Uniform Securities Act, all of the following statements are true EXCEPT: A. an investment adviser with no place of business in the State, need not register in that State if it is only dealing with insurance companies B. 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 C. if a broker-dealer is registered with the Financial Industry Regulatory Authority, then it is also registered in that State D. if a broker-dealer has its registration revoked, then the registration of its agents will also be revoked
C
The Administrator is empowered to inspect the books and records of a registrant: A. that are physically located in that State, but it cannot inspect books and records located in other States B. only if a court of law in the State issues an order compelling the registrant to provide access to its books and records C. only during regular business hours at a location and time agreed to by the registrant D. in any location where the registrant maintains records, either inside or outside that State
D
True or False: A sofa/automobile can be included in an institution's net capitol
True
*Which statements are TRUE about registration as an agent? I Registration becomes invalid if the agent terminates employment with the broker-dealer II Registration is valid immediately after passing the Uniform Securities Exam III Registration is valid until December 31st of that year A. I only B. I and II C. I and III D. II and III
C
*When an investment adviser files a registration application in a State, which of the following is automatically registered at the same time? A. Individuals employed by the investment adviser as representatives B. Individuals employed by the adviser to perform clerical or ministerial duties C. Individuals who are officers or partners of the investment adviser that will act as representatives D. Shareholders of the investment adviser that will act as representatives
C
True or False: An allegation of unethical business practice is enough for the administrator to summarily cancel a broker-dealer's registration
False
True or False: An individual that has not yet become registered as an agent of a broker dealer is allowed to perform clerical duties along with accepting unsolicited orders from customers
False
True or False: Post registration requirements apply to books, records, etc AND agents of investment advisors/broker dealers
False
True or False: There IS a requirement in the uniform securities act for a broker dealer to file customer complaints with the administrator
False
*An agent of a broker-dealer wishes to withdraw his registration. If there is a customer complaint, the Administrator: A. retains jurisdiction over the resigned agent for a period of 1 year B. retains jurisdiction over the resigned agent for a period of 3 years C. retains jurisdiction over the resigned agent for a period of 5 years D. has no authority over the agent as the agent is no longer employed by the broker-dealer
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
Two companies, Company A and Company B, are involved in a securities offering. Company B is selling its stock. Company A's employees help sell the shares. Company A receives commissions from Company B and pays the commissions to its staff. Therefore, the employees of Company A are: A. agents of a broker-dealer B. their own broker-dealer C. independent contractors D. agents of an issuer
A
Under the Uniform Securities Act, which of the following persons must register as a broker-dealer in a state? I A firm with a place of business in the state that has clients in the state II A firm with no place of business in the state that has no more than 25 clients in the state in 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. II only C. II, III, IV D. I, II, III, IV
A
Which statements are TRUE about the applicability of record keeping 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
What is a surety bond?
An asset the administrator can seize and use in the event the advisor violates any laws
Administrators can require minimum Net Capital and Net Worth for registration of: I Agents II Broker-Dealers III Investment Advisers IV Issuers A. I only B. II and III C. III and IV D. I, II, III, IV
B
An adviser with $13,000,000 of assets under management has its main offices in Illinois and branch offices in Wisconsin, Indiana, and Missouri. Which statement is TRUE regarding registration of the adviser? A. The adviser must register only in Illinois B. The adviser must register in Illinois, Wisconsin, Indiana, and Missouri C. The adviser must register with the SEC D. The adviser must register with the SEC and the States of Illinois, Wisconsin, Indiana, and Missouri
B
An individual represents a broker-dealer in a State selling fee-based brokerage accounts as an independent contractor. This individual is not an employee of the broker-dealer. Which statement is TRUE regarding registration of the independent contractor and the broker-dealer in the State? A. The broker-dealer must register in the State but the independent contractor is excluded from registration because he is not an employee of the broker-dealer B. The broker-dealer must register in the State and the independent contractor must register in the State as an agent of the broker-dealer C. The independent contractor must register as an agent of the broker-dealer in the State but the broker-dealer is excluded from registration in the State D. Neither the broker-dealer nor the independent contractor are required to register in the State because the account is fee-based and not commission based
B
If the Administrator summarily suspends a registration of an agent, all of the following statements are true EXCEPT: A. the Administrator must notify the agent promptly that the order has been entered B. the Administrator must obtain a court order prior to issuing its own order C. an opportunity for a hearing must be given within 15 days of written request D. the individual is prohibited from acting as an agent in that State
B
The amount of surety bond coverage that is typically posted by a broker-dealer for initial registration in a state is: A. $1,000 B. $10,000 C. $25,000 D. $100,000
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 register as an Investment Adviser Representative in a state, which form is filed? A. U-2 B. U-4 C. U-6 D. U-8
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
*A Registered Investment Adviser is one that is registered with (the): A. FINRA B. NASAA C. SEC D. MSRB
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
A Registered Investment Adviser (RIA) headquartered and registered in State X gives advice only to insurance companies, pension plans and investment companies. The RIA has no office in any other State. The adviser does business in State Y and receives a letter from the Securities Commissioner of State Y which explains that State Y believes that the adviser is required to be registered there, along with a questionnaire to be completed and returned to State Y. Which statement is TRUE? A. The RIA will be required to be registered in State Y because it is doing investment advisory business there B. The RIA will be required to be registered in State Y because it is not a Federal Covered Adviser C. The RIA will not be required to be registered in State Y because it has no office there and it only deals with professional investors D. The RIA will not be required to be registered in State Y because it can only be required to be registered in one State and it is already registered in State X
C
An Investment Adviser has just submitted a U-4 registration application for a newly hired salesperson to be registered as an Investment Adviser Representative of the firm. This individual can start soliciting potential clients: A. immediately because the U-4 application has been filed with the State B. once the appropriate licensing test has been passed C. once the State Administrator approves the application D. once the appropriate licensing fee has been paid
C
An application for a registered investment adviser can be denied in a State because a person associated with the adviser was: I convicted of a securities misdemeanor 7 years ago II convicted of a felony 15 years ago III denied registration by another State administrator within the past 3 years IV convicted of a traffic misdemeanor 8 years ago A. I and II B. III and IV C. I and III D. II and IV
C
An investment adviser has determined that it can register as a federal covered adviser. This means that the adviser: I solicits clients on behalf of other investment advisers II currently operates in at least 15 States III has at least $25,000,000 of assets under management IV provides financial planning to customers for compensation as a regular business A. I and III B. I and IV C. II and III D. II and IV
C
*If a representative that transacts business in a State terminates employment with an investment adviser, notice must be given to the Administrator by the: A. Investment Adviser only B. Investment Adviser Representative only C. both the Investment Adviser and the Investment Adviser Representative D. Investment Adviser, but if the representative learns that the adviser has not given notice, the representative must do so
D
*The Administrator will summarily cancel a broker-dealer's registration for all of the following reasons EXCEPT the licensee: A. is no longer in existence B. has ceased to do business as a broker-dealer C. has been adjudicated as mentally incompetent D. is the subject of a complaint alleging an unethical business practice
D
An individual who represents an issuer in the sale of that issuer's securities and who earns a commission on each transaction would be defined as an "agent" under the Uniform Securities Act if that individual represents the issuer: A. in sales of specified exempt securities B. effecting exempt transactions C. in sales of covered securities D. effecting sales of securities to employees of the issuer
D
Under the Uniform Securities Act, all of the following measures must be taken to ensure the integrity of data stored electronically EXCEPT: A. the records must be preserved in a non-rewritable format B. the records must be preserved in a non-erasable format C. a separate copy of the records must be stored in a different location from the original records D. the records must be encrypted using an algorithm approved by FIPS
D
Under the provisions of the Uniform Securities Act, a "person" includes: I A parent that is acting as custodian II An adult couple III Municipality IV Corporation A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV
D
Which of the following are excluded from the definition of an agent? A. Individuals who represent issuers in trades of specified exempt securities B. Individuals who represent issuers in exempt transactions C. Individuals who represent issuers selling securities to the issuer's employees where no commissions are paid. D. All of the above
D
Which of the following is NOT defined as correspondence? A. Written letter to a client B. E-mail C. Instant message D. Group e-mail
D
Which of the following items would be included in the computation of an individual agent's net capitol? A. Sofa in the investment adviser's office B. Business reputation (goodwill) of the investment adviser C. Copyright held by the investment adviser for a finance book D. Any tangible assets
D
True or False: Encryption is also required along with storing data in a storage medium that's non-re writable and non-erasable, along with keeping a separate duplicate copy in another location
False
True or False: If a broker-dealer "takes over" another firm, for example a firm in trouble, then there IS an additional fee required from the successor firm.
False
True or False: If a person is compensated for selling shares, they are not automatically considered to be broker dealers
False
True or False: If an agent resigns from a broker-dealer, both the agent and the broker-dealer must notify the Administrator promptly of the withdrawal. The withdrawal does not become effective for 60 days.
False
True or False: If an individual works for any of the exclusions from the definition of an agent, then that individual would still be defined as an agent
False
True or False: There IS a surety bond requirement for issuers to register their securities in a state
False
True or False: When an agent leaves a firm, their registration becomes invalid
True
True or False: A federally covered adviser is one with at least 100k of assets and operates in at least 15 states
True
True or False: A surety bond can be required as a condition of registration for the State registration of broker-dealers, their agents, and investment advisers who take custody.
True
True or False: If a rep of a federally covered adviser terminates employment, only THEY are required to submit a notice with Administrator
True
True or False: In order to ensure the integrity of electronically stored data, the storage medium must be non-rewritable and non-erasable. A separate duplicate copy must be retained in another location.
True
True or False: Like federally covered advisers, mid-level advisers can also register with the SEC as to not have to register in each individual state
True
True or False: Mid-size advisers can still operate in at least 15 states
True
