S66 quizzes pt 4 (7/27)

According to the Uniform Securities Act, which of the following circumstances may NOT result in a prison sentence?

The adviser proves that he had no prior knowledge of the rule or order violated.

Form ADV-E

The form is completed by an investment adviser who maintains custody of customer funds and/or securities. The form is submitted by the independent public accountant who examines the funds and/or securities in the custody of an investment adviser.

Exempt from federal registration

equipment trust certificates issued by a regulated common carrier

SEC pay to pay rule

The rule allows covered employees to make contributions of up to $350 per official or candidate per election in which they can vote, or $150 for other elections

Advisory contract considered assigned

f an advisory firm is formed as a partnership and there is a change in the majority of partners, this is considered to be an involuntary assignment to the new partnership.

One way in which an investment adviser acting in the capacity of an agent in a transaction with a client differs from a broker-dealer performing the same task is that the investment adviser

shall obtain client consent before completion of the transaction

An individual may NOT act as an agent for more than one broker-dealer unless

the Administrator, by rule or order, authorizes such employment

An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients

when informed by the investment adviser that the representative's registration is effective

Under the NASAA Model Rule on financial requirements for investment advisers, unless an exception exists, investment advisers who have discretionary powers but NOT custody of customer funds are usually required to have a net worth in the amount of

$10k

Under the Insider Trading and Securities Fraud Enforcement Act of 1988, a person who has violated the prohibition against insider trading is liable for a civil penalty of

3 times the amount of the profit gained or loss avoided on the transaction

How long to respond to recision letter?

30 days

What do you attach a consent to service of process to?

An agent's initial registration application

Client specifies all three A's

Asset, amount, action that gives the authority to the securities professional to act on the client's behalf and place the trade. Nothing is required in writing because no discretion has been used

A state-registered investment adviser suddenly incurs a liability that materially affects its net worth, causing it to drop below the required minimum

The​ ​investment adviser must notify the Administrator​ by the close of business on the following business day​.

Discretionary definition

account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades

Is tombstone part of prospectus?

No

Who can IA lend money to

Only those affiliated with the firm

Performance fees

Performance fees may be charged, regardless of the client's age, to anyone with a net worth in excess of $2.2 million or with at least $1.1 million under management with the firm.

Examples of sale of securities

Redemption of mutual funds shares worth $10,000 Disposition of stock for which cash consideration is received

Does prospectus need to be in writing?

Yes

Private fund

an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940, but for section 3(c)(1) or 3(c)(7) of that act. a venture capital fund. a hedge fund.

Who can file a registration statement?

by an issuer itself, a broker-dealer, or any other person on whose behalf the offering is to be made.

A state-registered investment adviser with discretionary authority over client accounts discovered on Monday, that the firm's net worth is below the required amount. He must notify the administrator and then file a report no later than the

close of business Tuesday, close of business Wednesday

Exclusion from definition of BD

confine trading to financial institutions or other broker-dealers Advisers who deal exclusively with broker-dealers, insurance companies, or registered investment companies Advisers who have no more than 5 clients in that state in a 12-month period As long as a broker-dealer does not have an office in the state, it is possible to qualify for exclusion from the definition

When fees are automatically withdrawn from the client's account

custody of client funds can be presumed

The first of the federal securities acts was the Securities Act of 1933. This act requires persons selling a new offering to their clients to

deliver an effective (final) prospectus no later than with confirmation of the sale

Impersonal investment advice

investment advisory services provided by means of written material or oral statements that do not purport to meet the objectives or needs of specific individuals or accounts

What is form ADV pt 2 filed with

it is filed through the IARD system

Under IA-1092, an investment adviser

makes advice his regular activity is compensated directly or indirectly for advice

How much performance must be shown if in ad

minimum 1 year

BD registerred in more than one state

must be registered with the SEC because they are dealing in interstate commerce. Unlike investment advisers, BDs register with both the SEC and the states (unless it is an intrastate BD)

Does investment advisor contract need to disclose whether or not the contract grants discretionary authority

no but form ADV does

Private placement

offering made to no more than 10 noninstitutional investors in a 12-month period.

In order to be in compliance with the rules, an investment adviser would have to disclose that the firm was acting in a principal capacity when

purchasing shares directly from advisory clients

Under the Uniform Securities Act, the recordkeeping requirements established by the Administrator for out-of-state investment advisers wishing to register in his state are subject to the limitations of

the requirements set by the Administrator of the adviser's home state

Under the Uniform Securities Act, an offer and sale does NOT exist if it is

the result of a class vote by stockholders regarding a merger or consolidation a bona fide pledge or loan an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares a gift of nonassessable securities

Exception to disclosure of the relationship between an investment adviser and a solicitor

the solicitations are for impersonal advisory services only

A preorganizational subscription is an exempt transaction if

there are no more than 10 subscribers and no commissions are paid, either directly or indirectly

Under the Investment Advisers Act of 1940, cash referral fees may be paid by an investment adviser to a promoter for soliciting for new accounts

when a written agreement providing certain disclosures has been entered into between the investment adviser and the third party if the compensation exceeds $1,000 over a 12-month period.