Series 65 Exam Questions

A business incorporated in State A, with its principal place of business in that state, would like to take advantage of the intrastate offering exemption found in the Securities Act of 1933. Which of the following would be most appropriate? A. Rule 147 B. Rule 501 C. Rule 506(b) D. Rule 506(c)

A. (The intrastate offering exemption is found in Rule 147)

WME is an investment adviser registered in State X, the location of its only offices. During the past 12 months, WME has directed investment advice to 6 individual clients in State Y. This means that WME A. is required to register in State Y because it has exceeded the de minimis limit. B. is not required to register in State Y because it is within the de minimis limit. C. does not need to register in State Y if that state has a reciprocal licensing arrangement with State X. D. would be required to register in State Y as soon as advice was directed to a single client.

A. (What is the de minimis exemption? It is available to an investment adviser who does not maintain a place of business in the state and limits its business to 5 or fewer retail clients who are legal residents in the state during the preceding 12 months.

When an investment adviser representative's permanent residence address changes, updates must be made to the information on file with the regulatory bodies. The proper procedure to be followed is A. File a Form U4 within 30 days B. File a Form U4 within 45 days C. File a Form U5 within 30 days D. File a Form U5 within 45 days

A. (amendments are made to the Form U4 and must be filed within 30 days. Form U5 is for terminations)

Which of the following would an Adminstrator consider to be a substantial prepayment of fees? A. $500 covering the next 6 months B. $800 covering the entire contract year C. $800 covering the next calendar quarter D. $5000 covering the next month

B. (NASAA state law defines a substantial prepayment of fees to be more than $500, 6 or more months in advance)

Under the Uniform Securities Act, which of the following persons is responsible for proving that a securities issue is exempt from registration? A. Underwriter B. The person requesting the exemption C. State Administrator D. There is no need to prove eligibility for an exemption

B. (The burden of proof for claiming eligibility for an exemption falls to the person claiming the exemption)

Which of the following individuals would be defined as an Investment Adviser Representative? A. Melinda, one of the firm's research analysts, who has no contact with public clients B. Johnny, an employee who makes cold calls soliciting for new advisory clients C. Mel, who prepares client account statements D. Jane, who is the firm's VP of HR services

B. (one of the functions making a supervised person an IAR is soliciting for new business)

Mammon Money Managers(MMM) has its principal office in State A and is also registered in States B,C, and D. MMM exercises discretion in client accounts. As a result, MMM would have to meet the net worth or bonding requirements of A. the SEC B. State A C. the state with the highest requirement D. each state

B. (only state where the principal office is)

When an investment adviser registers in a new state, who of the following is automatically registered as IARs? A. Any employee who is functioning as an IAR in at least one state B. Officers, partners, and directors of the firm who are functioning as IARs C. Clerical employees stuffing the envelopes with research reports D. Any employee who will be soliciting clients for the adviser

B. (the "automatic registration" provision applies to those officers, partners and directors of the IA who are already IARs in at least one state)

If a prospective client wanted to know what type of investment strategies are employed by an investment advisor, that information would be found in the adviser's A. Form ADV Part 1A B. Form ADV Part 1B C. Form ADV Part 2A C. Form ADV Part 2B

C

Under the Uniform Securities Act, which of the following would be considered an agent? A. An Individual who is employed by a small community bank for the purpose of selling stock in the bank. B. A broker-dealer with a place of business in the state with an extensive retail clientele C. An individual whose broker-dealer is registered in the state, but her only clients are institutions D. An individual with no place of business in the state dealing with more than 5 existing clients who are vacationing in the state.

C.

The City of Chicago issues bones for the maintenance of local recreational facilities. Purchasers have two choices: they can purchase the bonds directly from the city from Regina Stith (an employee of the city responsible for selling the bonds), or they can purchase them from Gary Thompson (an employee of FASC). Neither Stith nor Thompson charges a commission, although FASC is remunerated with an underwriting fee. It would be correct to stat that A. Stith and Thompson must be registered as agents. B. Stith must be registered as an agent, but Thompson is excluded. C. Thompson must be registered as an agent, but Stith is excluded. D. Thompson and Stith are excluded from the definition of agent

C. (Any individual selling securities while representing a registered broker-dealer is always defined as an agent, even the when the securities are exempt from registration)

Which of the following are exempt transactions? I. A nonissuer transaction with a bank in a Nasdaq traded security II. An unsolicited request from an existing client to purchase a nonexempt security III. The sale of an unregistered security in a private, nonpublicly advertised transaction to 10 noninstitutional purchasers over a period not exceeding 12 months IV. The sale of unlisted securites by a trustee in bankruptcy A. I and II B. I, II, and III C. I, II, and IV D. I, II, III, IV

C. (Choice III is not an exempt transaction because the private placement exemption is limited to 10 offerees, no purchasers)

Which of the following securities is NOT exempt from the registration and sales literature filing requirements of the USA? A. Shares of investment companies registered under the Investment Company Act of 1940 B. Shares sold on the Nasdaq stock market C. AAA rated promissory notes of $100,000 that mature in 300 days D. Bonds issued by Saskatchewan, Canada

C. (To be exempt, promissory notes cannot have a maturity beyond 270 days.)

Which group of instruments is NOT composed of securities? A. Stock, treasury stock, rights, warrants, and transferable shares B. Voting trust certificates and interests in oil and gas drilling programs C. Commodity futures contracts and fixed payment life insurance contracts D. Options on securities and interests in multilevel distributorship

C. (part of the 6 that are not securities)

Under the Uniform Securities Act(USA), which of the following is NOT required to register as an investment adviser representative A. A director of a state-registered investment advisory firm who determines specific recommendations for clients B. An associate in an SEC -registered investment advisory firm who has a place of business in the state and manages the account of only one individual client C. A clerk employed by a state-registered investment advisory firm D. A vice president of a state-registered investment advisory firm who supervises employees who solicit clients for the firm.

C. (specifically included in the definition are directors, officers, partners, associates, and employees of state-registered advisers who carry out investment advisory or solicitation functions of who supervise those functions)

An investment adviser registered in State G is obligated to maintain certain books and records as specified by the Uniform Securities Act. Which of the following statements regarding adviser recordkeeping is NOT true? A. Records originally created on computer may be stored in electronic media B. Records are subject to surprise audits by the State G Administrator C. Written records may be reduced to microfilm D. Records must be kept for 6 years

D. (5 years not 6 years)

All of the following describe exempt transactions EXCEPT A. ABC, a broker-dealer, purchases securities from XYZ corporation as part of an underwriting commitment B. First National Bank sells its entire publicly traded bond portfolio to Amalgamated National Bank C. Amalgamated National Bank sells its publicly traded bond portfolio to ABC insurance company D. Joan Smith, an employee of Amalgamated National Bank, buys securities recommended by her agent at ABC Brokerage Corporation

D. (The purchase of securities from a broker-dealer by an employee of a bank is a nonexempt transaction)

Which of the following securities is NOT exempt from the registration and advertising requirements of the USA? A. Shares of Commonwealth Edison, a regulated public utility holding company B. Securities issued by the nonprofit Carnegee Endowment for Peace C. Securities issued by a bank that is a member of the Federal Reserve System D. Variable annuity contracts issued by Metrodential Insurance Company, licensed to do business in the state

D. (Variable annuities are nonexempt, which means they are covered by the act and have to register)

Which of the following is defined as a security under the Uniform Securities Act? A. A guaranteed, lump-sum payment to a beneficiary under a modified endowment policy B. Fixed, guaranteed payments made for life or for a specified period under an annuity contract C. Commodity futures contracts D. An investment contract

D. (an investment contracts are defined as a security under the Uniform Securities Act)

Which of the following individuals would be required to register with the Administrator of the state? A. Walter, who represents a state-registered adviser, has no place of business in the state, and only serves existing clients who vacation in the state. B. May, who represents a covered adviser, has no place of business in the state and has 38 clients who reside in the state. C. Aliza, who represents a state-registered adviser, has no place of business in the state and had fewer than 6 individual clients who were residents of the state during the past 12 months. D. Joe, who represents a covered adviser, has a place of business in the state and had 4 retail clients who were residents of the state during the past 12 months.

D. (even though he represents a federal covered adviser, once an IAR maintains a place of business in a state, Joe must register in that state regardless of the number of clients)

Zack is an IAR with UIA, an investment adviser registered in State W. Zack has accepted an employment offer from, ERA, an investment adviser also registered in State W. What are the notification requirements to the State W Administrator? A. Zack is the only person who notifies the administrator B. UIA is the the only person who notifies the administrator C. ERA is the only person who notifies the administrator D. UIA and ERA notify the administrator

D. (in the state, the IA firm does the notification, so in this case both IA firms need to notify the administrator)

All of the following securities are exempt from the registration provisions of the Uniform Securities Act EXCEPT A. an issue of a savings and loan association authorized to conduct business in the state B. a US treasury bill maturing in 52 weeks C. a bond issued by a company that has common stock listed on the NYSE D. common stock listed on the Vancouver Stock Exchange(VSE)

D. (no exemption from registration is granted to securities listed on the VSE)

Which of the following statements about accredited investors is TRUE? A. Taxpayers who report an income in excess of $200,000 on a joint return in each of the last two years and who reasonably expect the same for the current year are included in the definition B. An officer, director or greater than 10% shareholder of any company listed on the NYSE would be considered an accredited investor for purposes of acquiring a private placement your firm is selling C. The term includes an employee benefit plan with assets in excess of $2 million. D. Purchases of securities by accredited investors do not count toward the 35 investor limitation found in Rule 506(b) of Regulation D

D. (one of the benefits of this term is that these investors do not count in the numerical limitation placed on private placements made under Rule 506(b). )

An IAR representing a state-registered investment adviser would NOT qualify for de minimis exemption in a state if, over a 12-month period, she had A. 5 retail clients B. 5 or fewer retail clients C. fewer than 6 retail clients D. 6 or fewer retail clients

D. (the maximum is 5 retail clients in a 12-month period)

Under the Investment Advisers Act of 1940, all of the following are true regarding adviser recordkeeping EXCEPT A. The IA must keep records of transactions made for its own account as well as the account of investment adviser representatives to lessen the likelihood of scalping B. computer-generated records may be stored in that format C. client account records must be maintained, including a list of recommendations made D. records must be maintained for a period of 2 years from the end of the fiscal year in which the last entry was made

D. (the records must be kept for 5 years)

If an IA registers with the state in November, when does the registration come up for renewal?

December 31st of that same year