Series 63: Practice Questions 3
An instrument that permits legal documents served to the Administrator to have the same force as if served to an agent is called:
A Consent to Service of Process
Which of the following communications would be exempt from the sales literature and advertising filing requirements of the Uniform Securities Act?
A brochure on U.S. Treasury securities
An investment adviser's compensation could be based on:
A percentage of the value of the fund averaged over a prescribed period
Which of the following persons would NOT be considered an investment adviser representative under the Uniform Securities Act?
A person who assists clients and enters orders for securities transactions
Which TWO forms must an agent obtain from a client in order to purchase securities in a margin account?
A signed hypothecation agreement and A signed credit agreement
According to the Uniform Securities Act, who would be considered a broker-dealer in State B?
A sole proprietor located in State A who has several clients in State B
An Administrator who requires the posting of a bond may:
Accept cash Accept securities Use discretion as to whether the type of securities and the amount of the deposit are appropriate
Which of the following securities offerings would use registration by coordination?
An IPO that will be distributed in 12 states and not listed on any of the national exchanges
According to the Uniform Securities Act, which of the following investment advisers would be exempt from registration?
An adviser with no place of business in the state and fewer than six retail clients
Under the Uniform Securities Act, which of the following choices is NOT considered a security?
An equity-indexed annuity
Under the USA, which of the following transactions would NOT be considered exempt?
An unsolicited issuer transaction effected through a registered broker-dealer
What action may the state securities Administrator take without giving the registrant an opportunity for a hearing?
Cancel a registration
Under the Uniform Securities Act, a state Administrator may NOT:
Enjoin (prohibit) an investment adviser from participating in the securities business
According to the Uniform Securities Act, an entity can avoid meeting the definition of a broker-dealer if it:
Has no office in the state Only deals with institutional clients
Which of the following brochure delivery periods applies to investment advisers under the Uniform Securities Act?
If an ADV or brochure is not provided at least 48 hours prior to signing the contract, clients must be given five days to rescind without penalty
Under the Uniform Securities Act, a person who sells securities in violation of state securities law is civilly liable for which TWO of the following penalties?
Interest and attorney fees
Bonds may be required of all of the following entities, EXCEPT:
Investment advisers who do not have discretionary authority or custody of client funds or securities
Under the Uniform Securities Act, an institutional investor:
Is designated by rule or order of the Administrator
John is an agent who just opened an account for Mary, a new client. Unfortunately, Mary is very tight-lipped about her finances. She gives John very little information, saying only that she is a conservative investor whose objective is growth. What type of securities may John recommend for her account?
Mutual funds that meet her risk tolerance and investment objectives
A radio program is broadcast from a bank on the weekend. Which of the following actions would be prohibited by the Administrator?
Omitting the name of the broker-dealer in any 30-second ads during the show
In reviewing prices for a mutual fund, an investor notices that the fund has three listings, one for Class A shares, another for Class B shares, and a third for Class C shares. The distinctions among the three classes of shares would most likely reflect different:
Sales charges and 12b-1 fees
A broker-dealer is registered in State A. Which TWO of the following statements are TRUE regarding the examination of that broker-dealer's records by the Administrator of State A?
The Administrator may examine the broker-dealer's records even if they are located in State B and The Administrator may examine the broker-dealer's records with good reason
Which of the following documents must be filed with the state Administrator for registration of all broker-dealers, investment advisers, agents, and investment adviser representatives?
The Consent to Service of Process
Under the Uniform Securities Act, an investment adviser who has no place of business in a state is exempt from registration in that state if the adviser provides advice in which of the following situations?
The adviser had no more than five clients in that state within the last 12 months; The adviser provided advice only to investment companies in that state The adviser provided advice only to insurance companies in that state
An agent is concerned that many customers do not bother to read the prospectus before investing in a mutual fund. Under SEC rules, the agent may take which of the following actions to help his clients become better-educated investors?
The agent may give clients a summary prospectus
Which TWO of the following actions would fall under the jurisdiction of a state securities Administrator?
The purchase of options through the Internet by a state resident and The offer of securities by an out-of-state broker-dealer to a resident of the state
Monty has been following PQRS Company ever since Broker-Dealer B recommended the stock two months ago. Monty has been discussing with his agent, Vanessa, the possibility of buying the stock. It is obvious to Vanessa that Monty has been doing a lot of his own research on the company. However, she notes that he does not seem to be aware that the company has recently sold off one of its most successful divisions. Monty seems ready to enter a buy order for the stock. Which of the following statements is TRUE?
Vanessa must disclose the sale of the division since it is a material fact
An agent has willfully violated a provision of the Uniform Securities Act. If the agent can prove she had no prior knowledge of the rule violated, which of the following choices is the maximum penalty?
$5,000 fine; The maximum criminal penalty is a $5,000 fine and three years in prison. Under the Act, there can be no prison sentence imposed if the person can prove she had no prior knowledge of the rule
Z Best, a broker-dealer, has filed an application for registration with the Administrator of New York. Three years ago, the firm was suspended from trading on the London Stock Exchange, due to the activities of a rogue trader. The firm's clients were not affected in any way. Upon receipt of the application, the Administrator may:
Deny registration, as any action by a foreign securities regulator may result in a denial by the Administrator
Which of the following investors may be charged performance fees by investment advisers?
Qualified clients
An agent has been executing transactions that are not reflected on the books of the broker-dealer. This type of activity requires:
Registration by the agent as a broker-dealer
An agent receives a letter from an irate client. The letter is the fifth in the last six months and the language is abusive. The agent forwards it to his supervisor. The supervisor decides against a reply and discards the letter. In this instance, which of the following statements is TRUE?
The Uniform Securities Act requires that a response be made to all written complaints
KiddieLand is a company that operates several theme parks around the United States. Bertha would like to purchase one share of KiddieLand stock for her newborn niece. Her broker-dealer charges a specified minimum ticket charge for small orders. What information should be disclosed to Bertha?
The commission charged for this transaction could be unusually large as a percentage of the offering price
The Uniform Securities Act requires that an investment adviser deliver a written disclosure document to an advisory client or prospective advisory client. In which TWO of the following situations is the adviser NOT required to send this document to clients?
The firm advises only investment companies but does not send its brochure to them The firm sends a newsletter to subscription clients who pay an annual fee of $120
What information is not included on the registration application for a broker-dealer?
The names and addresses of the agents the broker-dealer intends to register
In which of the following situations will the registration of a broker-dealer automatically result in the person being registered as an agent with the Administrator?
The person is a director of the broker-dealer
According to the Uniform Securities Act, which of the following statements is/are NOT TRUE concerning a broker-dealer or investment adviser filing an application for registration as a successor firm?
The successor firm must be in existence prior to the filing of the application for registration and The successor firm must submit a filing fee with the application for registration
