Series 63 Registration and Licensing Missed Quiz ?s

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. The Administrator can only establish recordkeeping rules that are the same as those set by the SEC NSMIA made clear that Federal law has supremacy over State law regarding net capital rules, custody rules, margin rules, financial responsibility rules and recordkeeping rules. Since the SEC sets recordkeeping rules for broker-dealers, the State Administrator can only create rules that agree with those created by the SEC.

Who is responsible for filing a U-5 Form with IARD when an investment adviser representative is terminated and associates with another advisory firm? A. The investment adviser that is the former employer is responsible B. The investment adviser that is the new employer is responsible C. The Investment adviser representative is responsible D. No one is responsible for notifying IARD when the investment adviser representative is terminated

A. The investment adviser that is the former employer is responsible The U-5 is a securities industry termination form that is filed by the former employer, terminating that individual's registration. If that individual associates with another advisory firm, the new employer reactivates that person's registration by filing a U-4 with IARD. The employee does not notify in this case because he or she does not have direct access to the CRD or IARD database. The Form U-5 is filed by the former employer on the terminated employee's behalf.

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. effects sales of advisory services for an Investment Adviser NASAA states that an "investment adviser representative" that must be registered is a person who: -makes recommendations or otherwise renders advice regarding securities; -manages accounts or portfolios of clients; -determines which recommendation or advice regarding securities should be given; -solicits, offers or negotiates for the sale of, or sells, investment advisory services; or -supervises employees who perform any of the foregoing

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. retains jurisdiction over the resigned agent for a period of 1 year If there is a customer complaint, the Administrator retains jurisdiction over the agent for a period of 1 year from the withdrawal date. 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 30 days.

Under the Uniform Securities Act of 1956, as amended, an issuer is defined as any person: A. engaged in the sale of new issue offerings to the public B. who issues or proposes to issue a security. C. engaged in the sale of non-exempt securities offerings to the public D. engaged in the sale of secondary offerings to the public

B. Under the Uniform Securities Act of 1956, as amended, an issuer is defined as any person who issues or proposes to issue a security. This is just a pure regurgitation of the definition.

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. An agent's license is effective only if that individual is associated with a broker-dealer. If the broker-dealer's license is revoked, all of its agents' licenses are revoked. However, those agents may associate with another broker-dealer, and can be licensed through the new firm. If an agent's license is revoked, it has no effect on the broker-dealer.

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. Part of NSMIA is that federal law has supremacy over state law when it comes to recordkeeping rules, capital requirements and custody rules. Since the SEC sets broker-dealer recordkeeping rules under the Securities Exchange Act of 1934, the State can only have a rule requiring that records be kept in conformity with the Act of 1934's requirements.

Which statements are TRUE regarding the post-registration requirements of the Uniform Securities Act? I Broker-dealers are subject to post-registration requirements II Broker-dealers are not subject to post-registration requirements III Agents of broker-dealers are subject to post-registration requirements IV Agents of broker-dealers are not subject to post-registration requirements A. I and III B. I and IV C. II and III D. II and IV

B. Post-registration requirements cover such things as maintaining books and records; making required filings with the Administrator; giving reports to customers; and filing advertising and sales literature with the State. These are requirements for both broker-dealers and investment advisers. This portion of the Uniform Securities Act does not apply to their agents, however.

An investment adviser with $11 million under management has its main office in New York and a branch office in Connecticut. Which statement is TRUE? A. The investment adviser must register in the State of New York only B. The investment adviser must register in both the State of New York and the State of Connecticut C. The investment adviser must register with the SEC only D. The investment adviser must register in both the State of New York and State of Connecticut and must register with the SEC

B. To be a Federal Covered adviser that registers with the SEC only, the adviser must have at least $100,000,000 of assets under management. This adviser has $11,000,000 of assets under management and is required to register at the State level only. The adviser must register in each State where it has a physical location; and in each State where it solicits advisory business.

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. Unlike Investment Advisers, who register either with the SEC or the State, Broker-Dealers are required to register with BOTH the SEC and in each State in which they have an office or solicit or conduct securities business. The form that is filed to register with the SEC is the Form BD (Broker-Dealer). The same form is filed in each State, along with the payment of a registration fee. The BD's balance sheet and computed Net Capital (liquid net worth) are filed with both the SEC and the State. The item that only the State can require (not the SEC) is the posting of a surety bond. A surety bond posted in the State is a dollar amount ($10,000 is the recommended amount stated in the Uniform Securities Act, but each State sets its own requirement) that the State can seize if it finds that the BD has violated State law.

An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer is defined as a(n): A. agent B. broker-dealer C. issuer D. investment adviser

B. broker-dealer If an agent of a broker-dealer engages in a securities transaction that is not known to the broker-dealer (a so-called "private securities transaction"), a prohibited practice has occurred. All securities transactions effected by agents must be known to the broker-dealer; must be recorded on the books of the broker-dealer; and must be supervised by the broker-dealer. If the agent performs a "private securities transaction" that is not known to the broker-dealer, then that agent has, himself, become a broker-dealer under this definition. As such, he would have to register in the State as a "statutory" broker-dealer before effecting such a transaction.

Which of the following persons is defined as an adviser in the State that is EXEMPT from registration in the State? A. Federal covered adviser B. Adviser with no place of business in the State that deals solely with insurance companies C. Adviser that publishes a general circulation newsletter about investing D. Professional who only gives incidental advice about securities

B. Adviser with no place of business in the State that deals solely with insurance companies This is a very picky question that sees if you know the difference between an exclusion and an exemption. Excluded from the definition of an investment adviser are investment adviser representatives; depository institutions; broker-dealers; professionals who only give incidental advice; publishers of general circulation periodicals that do not give investment advice about specific client situations; and federal covered advisers. Exempt from registration as an investment adviser (meaning these are defined as investment advisers but they do not have to register in the State) is any person with no place of business in the State whose only clients are other advisers; federal covered advisers; broker-dealers; deposit taking institutions; insurance companies; investment companies; employee benefit plans with assets of at least $1,000,000; and governmental agencies. Also exempt from registration as an investment adviser is any person that has no place of business in the State that has 5 or fewer clients in the State in the past 12 months.

A person who renders advice on variable annuities for a fee; and who then sells the annuities, charging a commission, MUST: I register as an investment adviser in that State II register as a broker-dealer in that State III register as an agent in that State A. I only B. I and II C. I and III D. None of the above

B. I and II A variable annuity is defined as a non-exempt security under the Uniform Securities Act. If advice is rendered for a fee about variable annuities, then registration as an investment adviser would be required. If a variable annuity is sold for a commission, then the firm must register as a broker-dealer as well.

Which of the following MUST notify the Administrator if an agent of a broker-dealer is terminated? I Agent II Ex-employer III FINRA IV SEC A. II only B. I and II only C. I, II, III D. I, II, III, IV

B. I and II only Under the Uniform Securities Act, when an agent associates with a broker-dealer; or terminates those activities that make him or her an agent; both the agent and the broker-dealer must notify the State Administrator promptly.

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. I and IV Under the NASAA model rule, advertisements, circulars, bulletins or other communications circulated by the adviser to 2 or more persons must be retained for 5 years. Such communications can recommend the purchase or sale of a specific security and if the communication does not state the reasons for the recommendation, a memo must be retained indicating the reasons for the recommendation.

If a representative that transacts business in a State terminates employment with a Federal covered adviser, notice must be given to the Administrator by the: A. Federal Covered Adviser B. Investment Adviser Representative C. both the Federal Covered Adviser and the Investment Adviser Representative D. neither the Federal Covered Adviser nor the Investment Adviser Representative

B. Investment Adviser Representative If a representative of a federal covered adviser that transacts business in a State terminates employment, it is the responsibility of the representative to notify the State promptly. Remember that in this case, the advisory firm is not registered with the State; only the representative is registered with the State. Thus, it cannot be the responsibility of the advisory firm to notify the State since it is not registered there. Only the registered representative must notify the State since only the representative is registered in the State.

An investment adviser representative quits her employment with a State-registered adviser so that she can move to another State. She learns that the advisory firm with which she was employed did not notify the Administrator of her termination. Which statement is TRUE? A. The IAR is not required to take any action B. The IAR is required to notify the Administrator of the termination C. The IAR must file a consent to service of process with the Administrator D. The IAR must publicly disseminate the fact that she is no longer associated with the advisory firm in the State

B. The IAR is required to notify the Administrator of the termination If a representative of an investment adviser terminates employment, the adviser must notify the Administrator promptly. If the representative learns that the adviser has not given notice, then the representative must do so promptly. Also note that this is different than the requirement for a federal covered adviser, where only the investment adviser representative must notify the State Administrator.

An agent of a broker-dealer is registered in a State and also is registered as an Investment Adviser operating as a sole proprietorship in the same State. The agent leaves the broker-dealer. Which statement is TRUE? A. The agent must associate with another broker-dealer within 30 days B. The agent leaving the broker-dealer will cause the State to withdraw the individual's license to be an agent of a broker-dealer but has no effect on the individual's license as an investment adviser C. The agent leaving the broker-dealer will have no effect on that individual's registration with either the broker-dealer or as an investment adviser D. The agent leaving the broker-dealer will cause the State to withdraw both the individual's license to be an agent of a broker-dealer and the individual's license as an investment adviser

B. The agent leaving the broker-dealer will cause the State to withdraw the individual's license to be an agent of a broker-dealer but has no effect on the individual's license as an investment adviser Investment adviser registration in a State is separate and apart from broker-dealer registration. If an agent of a broker-dealer leaves the employ of the firm, the agent's registration will be withdrawn within 30 days of notice by the State Administrator. However, this has no effect on that individual's registration as an investment adviser in the State.

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 o

C. Included in a State registration application are the names, addresses and background of the officers of the investment adviser, and these individuals become registered as investment adviser representatives when the investment adviser entity becomes registered in the State. To register its employees, the investment adviser must file a separate registration application on behalf of each employee to be registered. There is no requirement to register clerical employees. While there is no requirement to register a shareholder of an investment adviser, a shareholder that will act as a representative would also need to be separately registered.

Under the Uniform Securities Act, all of the following are defined as an investment adviser EXCEPT a(n): A. broker-dealer firm that charges for investment advice B. publisher of a stock market newsletter that makes recommendations based upon the specific investment situation of each specific client C. accountant who recommends types of investments to his clients as part of his accounting services D. research firm that sells an analysis of secu

C. Professionals such as accountants and lawyers who give investment advice as an incidental part of their normal practice are excluded from the definition of investment adviser. A broker-dealer can also be registered as an investment adviser and can charge for this advice through its "investment adviser subsidiary." A stock market newsletter that makes recommendations based upon the specific situation of each client is defined as an investment adviser. Please note that if the newsletter gives general recommendations, then it would not be defined as an investment adviser.

Under the Uniform Securities Act, all of the following are defined as an investment adviser EXCEPT a(n): A. broker-dealer firm that charges for investment advice B. publisher of a stock market newsletter that makes recommendations based upon the specific investment situation of each specific client C. accountant who recommends types of investments to his clients as part of his accounting services D. research firm that sells an analysis of securities to each customer as part of an individualized financial plan

C. Professionals such as accountants and lawyers who give investment advice as an incidental part of their normal practice are excluded from the definition of investment adviser. A broker-dealer can also be registered as an investment adviser and can charge for this advice through its "investment adviser subsidiary." A stock market newsletter that makes recommendations based upon the specific situation of each client is defined as an investment adviser. Please note that if the newsletter gives general recommendations, then it would not be defined as an investment adviser.

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. State Blue Sky laws actually pre-date the Federal securities acts, and require registration of securities offered in each State (unless an exemption is available). In addition, Blue Sky laws require the registration of broker-dealers, investment advisers, and their agents in each State (unless an exemption is available).

All of the following are defined as investment adviser representatives under the Uniform Securities Act EXCEPT a(n): A. majority partner in an advisory partnership B. minority partner in an advisory partnership C. employee of an advisory firm who performs ministerial functions relating to portfolio selection D. employee of an advisory firm wh

C. The Uniform Securities Act defines an investment adviser representative as an officer or employee of the firm that performs research, makes recommendations, manages portfolios or sells advisory services. Employees that perform clerical or ministerial functions are excluded from the definition.

Under NASAA, investment advisers must update their ADV filing made with the State: I yearly, within 90 days of calendar year end II yearly, within 90 days of fiscal year end III within 30 days of any significant material change IV within 90 days of any significant material change A. I and III B. I and IV Correct Answer C. II and III D. II and IV

C. Under NASAA rules, investment advisers must update their Form ADV (State registration form) annually, within 90 days of fiscal year end, to reflect current and accurate information and must send the updated Form ADV to its clients within 120 days of year end if there is a material change. In addition, if there is a significant material change in the ADV information that occurs during the year, the filing must be amended within 30 days. The Form ADV is stored in the IARD (Investment Adviser Registration Depository) system. It is used to register both State registered advisers and Federal covered advisers, and to send notice filings to States by Federal covered advisers. Also note that while the annual updating amendment required for both Federal covered and State registered advisers must be filed within 90 days of fiscal year end for either; the filing rule for an "other-then-year" end material change notification is "promptly" under SEC rules for Federal covered advisers; while NASAA requires that it be filed within 30 days for State registered advisers.

Which of the following individuals employed by a Federal Covered Adviser would be required to register in the State? A. An individual employed by the adviser to write research reports distributed to customers B. An individual whose clients consist of 8 mutual funds and 8 individuals, 5 of whom are officers of the adviser C. An individual whose clients consist of 5 mutual funds and 8 individuals D. An individual whose clients consists of 15 mutual funds and 3 individuals

C. An individual whose clients consist of 5 mutual funds and 8 individuals Remember that there is no Federal registration of the representatives of Federal Covered Advisers - only the Adviser registers with the SEC. The representatives of Federal Covered Advisers still must register in the State where they are physically located; and in any State where they solicit advisory business. However, if the adviser has no office in the State and its only customers are institutions (such as mutual funds), then the agents do not have to register in that State; and if the adviser has no office in the State, and it effects business with 5 or fewer clients in the State, it does not have to register under the "de minimis" exemption. When counting clients under the "de minimis" exemption, clients that are officers of the adviser itself, are excluded. So in Choices B, C, and D, the number of mutual fund clients is irrelevant. If the adviser has more than 5 clients in the State, it would have to register. Choice B has 8 individual clients, 5 of whom are officers of the adviser, so there really are only 3 individual clients here. Choice C, with 8 individual clients, is the one that must register.

Under the Uniform Securities Act, an investment adviser may be formed as which of the following? I Corporation II Partnership III Association IV Broker-dealer A. I and II B. III and IV C. I, II, III D. I, II, III, IV

C. I, II, III Investment advisers (and broker-dealers) can be formed as any legal operating entity, such as a corporation, partnership, sole proprietorship, association, etc. Investment advisers cannot be formed as broker-dealers; nor can broker-dealers be formed as investment advisers. Each is a legally separate entity, and each is regulated separately.

Which statements are TRUE regarding the statute of limitations imposed under the Uniform Securities Act for actions that will cause denial of registration by the Administrator? I The statute of limitations for conviction of securities-related offenses that occurred in the U.S. is 5 years II The statute of limitations for conviction of securities-related offenses that occurred in the U.S. is 10 years III The statute of limitations for conviction of securities-related offenses that occurred in a foreign jurisdiction is 5 years IV The statute of limitations for conviction of securities-related offenses that occurred in a foreign jurisdiction is 10 years A. I and III B. I and IV C. II and III D. II and IV

C. II and III The Uniform Securities Act sets a 10 year statute of limitations for securities related violations as a cause for denial of registration. This is based on violations of U.S. law. It also includes a provision regarding violations of the law of a foreign jurisdiction. In this case, it sets a 5 year statute of limitations. (Why? - Who knows!)

To be registered as an agent in a State, the Administrator can require which of the following? I Minimum Net Capital II Minimum Surety Bond Coverage III Minimum grade on a qualification examination IV Payment of filing fees A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV

C. II, III, IV To register as an agent in a State, the Administrator can require the passing of a qualification examination; the payment of filing fees; and the posting of a surety bond. The minimum Net Capital (or Net Worth) requirements are only imposed for registration as a broker-dealer or investment adviser.

A brokerage firm was founded 5 years ago by 3 partners - John, Joe and Mary. John and Joe supervise sales and trading; while Mary is responsible for the firm's back-office operations and financial reporting. The firm has been very successful and operates in all 50 States. John dies suddenly and Mary assumes his responsibilities. Which statement is TRUE? A. Mary is not required to register as an agent in each State because she was registered when the Form BD was filed B. Mary is not required to register as an agent in each State because the broker-dealer is federal covered C. Mary must register as an agent in each of the 50 States D. Mary is not required to register as an agent because she is only supervising sales and not actually selling securities herself

C. Mary must register as an agent in each of the 50 States This question gets at a "fine" point in the law. The partners that are named in a registration application in each State become automatically registered as agents (once they pass the appropriate exam, e.g., 63/65/66) - but these are only partners that have sales or trading responsibilities. While Mary is included in the registration application, because she does not deal with the investing public, she would have had her automatic registration "turned off" and was not required to take the 63/65/66 exam. (It would be nice if the question mentioned this, but it doesn't and this is typical of exam-type questions.) If she takes a sales supervision job, then she becomes an agent and now must be registered in each State and must pass the appropriate exam! So this is really a question about who must take the 63/65/66 exams!

A federal covered registered investment adviser completes a notice filing with the State on October 1st. This will: A. expire on October 1st of the following year B. not expire because it is not a registration filing C. expire on December 31st of the current year D. expire on January 1st of the following year

C. expire on December 31st of the current year All registration and notice filings made in a State, whether by a broker-dealer, agent, investment adviser or investment adviser representative, expire on December 31st unless renewed (which requires the payment of an annual renewal fee, which is what the States are really looking for!).

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. Audio tap The Uniform Securities Act states that any records that must be retained must be kept in compliance with SEC rules on recordkeeping. The SEC updated its recordkeeping rules to allow electronic recordkeeping (but paper records, as well as microfilms or microfiches, are still permitted). Electronic storage is permitted on computer disks, computer tapes, or any other digital storage medium. Audio tape is NOT an electronic storage medium

Which term is NOT defined under the Uniform Securities Act? A. Investment Adviser B. Investment Adviser Representative C. Broker-Dealer D. Broker-Dealer Representative

D. Broker-Dealer Representative The Uniform Securities Act defines a "broker-dealer;" it defines an "agent" of a broker-dealer (which is a representative, but this is the federal name, not the State name); it defines an "investment adviser;" and it defines an "investment adviser representative" (the agent of an investment adviser). Note the inconsistency here!

All of the following may be required by the Administrator to maintain registration EXCEPT: A. Filing financial reports with the Administrator B. Filing of renewal fees with the Administrator C. Filing of sales literature with the Administrator D. Filing of a renewal consent to service of process with the Administrator

D. Filing of a renewal consent to service of process with the Administrator. Consent to service of process is only filed with initial registration applications; it is not required for renewals. The Administrator can require the filing of financial reports, sales literature, and the payment of renewal fees.

An agent registered under the Uniform Securities Act has his registration revoked by the Administrator. The Administrator may NOT revoke any future applications of the person to be a(n): A. Broker-Dealer B. Agent C. Investment Adviser D. Financial and Operations Principal

D. Financial and Operations Principal The State Administrator only registers broker-dealers, investment advisers, agents and securities issues in the State. Thus, if an agent has his or her registration revoked, the Administrator can deny any future registration applications of this person to be a broker-dealer, investment adviser; or agent in that State. FINRA registers officers of member firms as General Principals; and chief accountants at member firms as "Financial and Operations Principals." This is a Federal registration under the Securities Exchange Act of 1934 and has no bearing on State law.

The Administrator is empowered to deny, revoke or suspend the registration of any person who: I is insolvent II has failed to properly supervise employees III has been suspended by an Administrator of another State in the past 10 years IV has been convicted of embezzlement within the past 10 years A. I and II only B. III and IV only C. II and IV only D. I, II, III, IV

D. I, II, III, IV The State Administrator is empowered to deny, revoke or suspend the registration of an agent, broker-dealer, or investment adviser, for any of the reasons listed, such as if that person is insolvent; has failed to properly supervise employees; has been suspended by an Administrator of another State in the past 10 years; or has been convicted of a misdemeanor involving securities or monies; or any felony; within the past 10 years.

The Uniform Securities Act covers: I Registration of securities in each State II Registration of broker-dealers in each State III Registration of investment advisers in each State IV Registration of agents of broker-dealers and investment advisers in each State A. I and II B. III and IV C. II, III, IV D. I, II, III, IV

D. I, II, III, IV The Uniform Securities Act, as adopted in each State, covers the registration of broker-dealers and their agents; investment advisers and their agents; and securities that are sold in the State.

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. I, II, III, IV This one comes down to 1 simple fact. Because the broker-dealer has a place of business in State A, it must register in State A. End of story.

Under NASAA recordkeeping rules, advisers must retain records for no less than: I 3 years II 5 years III with the first 1 year's records kept in the principal office of the adviser IV with the first 2 years' records kept in the principal office of the adviser A. I and III B. I and IV C. II and III D. II and IV

D. II and IV Advisers must retain records for 5 years under NASAA rules (note that this differs from SEC rules for broker-dealer records, most of which must be retained for 3 years). The first 2 years' worth of records must be kept at the adviser's principal office, where it is available for inspection.

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. II and IV Post-registration requirements cover such things as maintaining books and records; making required filings with the Administrator; giving reports to customers; and filing advertising and sales literature with the State. These are requirements for both broker-dealers and investment advisers. This portion of the Uniform Securities Act does not apply to their agents, however.

Which statements are TRUE regarding the Administrator's right to inspect a broker-dealer's books and records? I Records of the broker-dealer can only be inspected by the Administrator in the State of registration II Records of the broker-dealer can be inspected in any State by the Administrator of the State in which the broker-dealer is registered III Inspections by the Administrator must be scheduled in advance with the broker-dealer IV Inspections by the Administrator can be made without prior notice given to the broker-dealer A. I and III B. I and IV C. II and III D. II and IV

D. II and IV The Administrator has the right to inspect books and records of an investment adviser or broker-dealer if either is doing business in that State. The Administrator can inspect these records in any location and in any State, without giving advance notice.

Which one of the following items would be included in the computation of an individual investment adviser's net capital? A. Copyright owned by the adviser B. Franchise right owned by the adviser C. Home furnishings owned by the adviser D. Securities owned by the adviser

D. Securities owned by the adviser Net capital is really the adviser's "liquid net worth." It is liquid assets minus all liabilities. For an adviser that is an individual, excluded from assets that count in net capital are any non-liquid assets, including deferred charges, goodwill, franchise rights, organizational expenses, patents, copyrights, home, home furnishings, automobiles and any other personal items that cannot be readily converted to cash. Basically, this means that the only assets that count in the computation for an individual adviser are cash, accounts receivable and marketable securities positions. Note, however, that if the adviser is a partnership or corporation, the computation is permitted to include automobiles and furnishings used in the adviser's business. Why State law permits this is anyone's guess, but this point should be known for the exam!

An agent registered in the State of New York has been referred to new potential clients in the State of Florida, where the agent is not registered. These clients are dual American-Brazilian citizens, who spend most of their time in Brazil. The agent files a registration application in the State of Florida and also files a registration in Brazil to sell securities there. The Brazilian securities regulator denies the registration. This action on the part of the Brazilian regulator: A. cannot affect the registration of the agent in the State of New York B. cannot affect the registration of the agent in the States of New York and Florida C. can cause the Administrator of the State of Florida to deny the registration application but cannot affect the agent's registration in the State of New York because he is already registered there D. can cause the Administrator of the State of Florida to deny the registration application and can cause the Administrator of the State of New York to suspend or revoke the agent's registration

D. can cause the Administrator of the State of Florida to deny the registration application and can cause the Administrator of the State of New York to suspend or revoke the agent's registration The Uniform Securities Act permits the Administrator to deny registration to an applicant or to revoke the registration of an agent based on actions taken by another securities or banking regulator, including foreign regulators.

All of the following are true about registration of agents under the Uniform Securities Act EXCEPT: A. a non-resident agent can solicit business in another State only if both the agent and broker-dealer are registered in that State B. an agent can only sell securities that have been registered in a State, or that are exempt from registration C. if an agent resigns and affiliates with another broker-dealer, the agent, old broker-dealer and new broker-dealer must notify the Administrator D. if a broker-dealer's registration in a State is revoked, it has no effect on the agent's registration

D. if a broker-dealer's registration in a State is revoked, it has no effect on the agent's registration If a broker-dealer's registration is revoked in a State, then the agent(s) registration(s) are revoked as well. On the other hand, if an agent's registration is revoked, it has no effect on the broker-dealer's registration. Non-resident broker-dealers and agents that solicit in another State must be registered in that State. Agents can only sell securities that are either registered, or that are exempt from registration, in a State. If an agent resigns, and affiliates with another broker-dealer, the agent, old broker-dealer and the new broker-dealer, must all notify the Administrator.

Which of the following statements are TRUE? I The Administrator may suspend or revoke a registration for the sole reason that it is "in the public good" II If a broker-dealer registration is suspended, the agent's license is suspended III If an agent's license is suspended, the broker-dealer's license is suspended IV Broker-dealers, but not agents, may have their registration revoked for failing to supervise subordinates A. I and II only B. I and IV only C. II and III only D. II and IV only

If a broker-dealer's registration is suspended, the agent's registration through that broker-dealer ceases to be effective. However, if an agent's registration is suspended, it has no effect on the broker-dealer's registration. The Administrator may revoke a registration if it is in the public good and the person has violated some aspect of the Act. Registration cannot be revoked solely because it is in the public good. Broker-dealers can have their registration revoked for failing to supervise subordinates. This does not apply to agents, since they have no supervisory capacity.