state registration of securities

According to the SEC, which of the following communications may not be considered a form of advertising? A form letter recommending a specific security to existing clients Instant messaging E-mail messages sent to less than 25 prospective clients A final prospectus

A final prospectus A final prospectus is not considered a form of advertising. However, any other means of communication sent to more than one person is defined as advertising. For advisers, advertising must be retained for 5 years. (89679)

Under the Uniform Securities Act, all of the following individuals meet the definition of an agent, EXCEPT: A person selling stocks that are listed on the NYSE A person advising clients about securities for compensation A person effecting securities transactions and not receiving commissions A person representing an insurance company in the sale of variable annuities

A person advising clients about securities for compensation An agent is an individual who represents a broker-dealer or an issuer in effecting securities transactions. The person in choice (b) is not an agent since she is providing advice and not effecting securities transactions. It is important to note that the type or amount of compensation received is not a factor in determining whether a person is an agent. (67586)

Registration by coordination would most likely be used to register what type of offering? A new issue of mutual fund shares An initial public offering A new issue of shares listed on Nasdaq An intrastate offering

An initial public offering Under normal circumstances, the method of registration most often used by the new issuers of securities is registration by coordination. Mutual funds are federal covered securities. All listed securities, such as Nasdaq securities, are also federal covered and, therefore, exempt from registration with the states. Intrastate offerings are commonly registered by qualification. (89680)

Under the Uniform Securities Act, registration by coordination becomes effective: If no stop order is in effect At the same time that the SEC registration becomes effective provided the registration statement has been filed with the Administrator for at least 10 days Provided a prospectus has been filed with the Administrator I and II only I and III only II and III only I, II, and III

I, II, and III When a security is in registration with the SEC under the Securities Act of 1933, that registration can be coordinated with the Administrator for state registration. A registration under coordination will automatically become effective at the same time the federal registration becomes effective, provided that no stop order is in effect, the registration statement has been on file with the Administrator for at least 10 days, and a statement of the minimum and maximum proposed offering prices and underwriting discounts has been on file for two business days. A prospectus meeting the requirements of the Securities Act of 1933 must also be filed with the Administrator. (62082)

Who would be required to register as an agent under the Uniform Securities Act? Anna, the CEO of Future Plastics Inc., who sells commercial paper with a 300-day maturity to the general public A life insurance salesperson who only sells general account products Eric, a New York-based salesperson, who sells debt obligations for the city of Dresden, Germany An administrative assistant at Stock-Mart Brokerage, who only accepts unsolicited orders when her boss is out to lunch I and II only I and III only II and IV only I, III, and IV only

I, III, and IV only An employee of an issuer selling exempt securities to the public would not be considered an agent. 300-day commercial paper is nonexempt, so Anna would be required to register as an agent. The life insurance salesperson is not selling securities (general account products are not securities), so he need not register. Only the securities of national foreign governments (with the exception of those issued by Canadian political subdivisions) are exempt. Dresden is a city in Germany, not a country, so Eric is working for a nonexempt issuer and would be required to register as an agent under the Act. (79478)

Under Regulation D of the Securities Act of 1933, accredited investors include: Accountants Insurance companies Any senior officer of a publicly traded company Individuals with a net worth of one million dollars or more I and II only II and IV only III only I, III, and IV only

II and IV only No single profession is specified in the definition of an accredited investor. Senior officers are included if they are senior officers of the issuer. Institutional investors, such as insurance companies, are specified in the regulation. A person with annual income of $200,000, or net worth of $1 million, is also considered accredited. (62066)

The limited registration provision available to Canadian broker-dealers conducting business in a state permits which of the following actions? The broker-dealer solicits all residents of a state The broker-dealer transacts business with existing clients who move to a state The broker-dealer transacts business with Canadian residents with whom the broker-dealer had an existing relationship The broker-dealer transacts business with accredited investors

The broker-dealer transacts business with Canadian residents with whom the broker-dealer had an existing relationship The provisions allowing Canadian broker-dealers to transact business in a state are limited. A broker-dealer may effect transactions with a person from Canada who is temporarily in the state if there was an existing broker-dealer-client relationship before the person entered the United States. (62441)

Under the Uniform Securities Act, which of the following actions is NOT exempt from state registration? The sale of securities by a sheriff An isolated nonissuer transaction Transactions in exchange-listed securities A Rule 147 offering

A Rule 147 offering Rule 147 covers intrastate offerings that are exempt from federal or SEC registration, but may be subject to state qualification. A transaction by a fiduciary such as an executor, sheriff, marshal, guardian, trustee in bankruptcy, and isolated nonissuer transactions are exempt under the Uniform Securities Act (USA). Any security listed on the New York Stock Exchange and securities listed on any other recognized national or regional exchanges are exempt from state registration. (62610)

Global Investments is a broker-dealer based in State A. It is currently registered as a broker-dealer is States B, C, and D. The firm is looking to expand its business to State E. Under the Uniform Securities Act, in which of the following situations would Global Investments NOT be required to register as a broker-dealer in State E? The firm transacts business only with other broker-dealers. The firm's sole business in State E is with four or fewer noninstitutional customers within a 12-month period. The firm's sole business in State E is limited to transactions in federal covered securities. The firm transacts business only with institutional investors. I and III only I and IV only II and III only II and IV only

I and IV only If a firm meets the definition of a broker-dealer, it is generally required to register in any state in which it effects transactions in securities. The term broker-dealer, however, does NOT include: Agents Issuers Banks, savings institutions, and trust companies (though banks, holding companies, or bank subsidiaries are not excluded from the definition) A person that has no place of business in the state AND only transacts business with issuers, other broker-dealers, financial institutions, or institutional buyers A person that has no place of business in the state AND is licensed where the person maintains its place of business and sells only to existing clients who are not residents of the state There is no de minimis exemption for broker-dealers with no place of business in a state and a limited number of noninstitutional clients. There is also no exemption based on the type of securities in which the broker-dealer transacts business in a state. (62527)

An individual forms a broker-dealer. Which of the following steps are required by the Administrator? File Form BD Submit a Consent to Service of Process Pay a filing fee Maintain a minimum amount of net capital I, II, and IV only II, III, and IV only I and IV only I, II, III, and IV

I, II, III, and IV All of the steps taken are required by the Administrator as part of the application for registration for a broker-dealer. (89682)

A soon-to-be-registered agent may take which of the following actions? Accept unsolicited orders Invite prospective clients to seminars Provide research reports to other agents for use with their clients Cold-call potential clients and provide quotes I and II II and III only I, II, and III only I, II, and IV only

II and III only A broker-dealer may not allow an unregistered individual to act as an agent unless the agent is exempt. The soon-to-be-registered agent in this scenario may not accept orders, solicited or unsolicited, be compensated based on sales, or cold-call clients. Inviting clients to seminars and providing research to other agents are not considered activities associated with an agent. (62821)

XYZ broker-dealer is located in State A, where it maintains its only office. Under the Uniform Securities Act, XYZ would NOT meet the definition of a broker-dealer in State B if it: Sells securities to an investment club located in State B Conducts business only with financial institutions in State B Has entered into a transaction with a resident of State A who is in State B temporarily I and II only I and III only II only II and III only

II and III only A person who has no place of business in a state and effects transactions only with institutional investors is not considered a broker-dealer in that state. Investment clubs do not qualify as institutional investors. A person who has no place of business in the state, but is licensed as a broker-dealer where the person maintains an office, may conduct securities business with existing clients who are in another state temporarily. (62021)

Under the Uniform Securities Act, the sale of limited partnership interests to a bank is exempt from: The antifraud provisions The registration requirements The filing requirement for advertisements I only II only II and III only I, II, and III

II and III only Any sale of securities to an institution (e.g., a bank) is considered an exempt transaction under the USA. This exempts the securities from registration and any related advertising from being filed with the Administrator. However, no person, security, or transaction is exempt from the antifraud provisions of the Uniform Securities Act. (67655)

Under the Uniform Securities Act, which of the following choices would fall under the definition of an agent? A trust company, bank, or savings institution A sales assistant authorized to accept client orders Any person other than a broker-dealer who acts on behalf of a broker-dealer or issuer in effecting sales or purchases of securities II only III only II and III only I, II, and III

II and III only Anyone transacting securities business (i.e., accepting orders) on behalf of a broker-dealer or issuer is generally considered an agent. This would include sales assistants who take client orders, as well as registered representatives. A trust company, bank, or savings institution would not be included. (62009)

Under the Uniform Securities Act, an institutional investor: Has a minimum of $1.5 million invested in securities Has a minimum of $100 million under management Is designated by rule or order of the Administrator Is any financial institution

Is designated by rule or order of the Administrator Under Sec. 201(c) of the USA, an institutional investor is designated by rule or order of the Administrator. (62781)

A broker-dealer that is structured as a partnership is being acquired by a publicly traded corporation. The directors of the corporation acquiring the partnership would: Automatically be registered as agents Automatically be registered as a principal Need the broker-dealer to register them as agents Be exempt since they are executives of the company and not selling securities

Need the broker-dealer to register them as agents Persons such as sole proprietors, officers, partners, and directors of a broker-dealer are typically registered as agents when the broker-dealer initially files Form BD. Once the broker-dealer is established, the broker-dealer must initiate the registration process and register the appropriate individuals as agents (75895)

Sharpshooter Investments (a broker-dealer) has submitted its registration paperwork to the state Administrator. According to the Uniform Securities Act, its registration will become effective at: Noon on the 10th day after filing Noon on the 20th day after filing Noon on the 30th day after filing Midnight on the 30th day after filing

Noon on the 30th day after filing Assuming a broker-dealer applicant has submitted all required documentation, its registration becomes effective at noon on the 30th day after filing with the state. The Administrator does have the power to grant an earlier effective date, and may defer the effective date until the 30th day after the filing of any amendment to the initial application. (62657)

An agent solicits the purchase of MPH, Inc, a nonexempt, unregistered security. The agent requests the client sign a document, acknowledging the security's status. The document also includes an exculpatory provision absolving the agent and the broker-dealer from any liability or wrongdoing. The waiver the client signed is: Acceptable Acceptable with the Administrator's approval Null and void Subject to civil liability and criminal penalty

Null and void Agents must not solicit nonexempt, unregistered securities nor should they request a client sign documents absolving the agent or broker-dealer from wrongdoing. Such statements are sometimes called exculpatory clauses and are prohibited. These documents would be null and void under the Uniform Securities Act. (62936)

Which of the following securities may have their registration denied or revoked by the Administrator Securities issued by a nonprofit organization Municipal bonds Stock issued by a bank that is chartered in a different state U.S. Treasury bonds

Securities issued by a nonprofit organization Generally, states are not permitted to revoke an exemption that has been granted under the Securities Act of 1933. However, nonprofit securities (choice a), exchange-listed securities, and investment contracts for employee-benefits plans may be denied registration by the state Administrator. (67570)

An initial public offering (IPO) is being sold in one state only and is not being submitted for registration with the SEC under the Securities Act of 1933. According to the provisions of the Uniform Securities Act, what method of registration would be used for this offering? Notification Coordination Subordination Qualification

Qualification The notification and coordination methods of state registration may only be used when the issuer also files a federal registration statement under the Securities Act of 1933. The qualification method of registration may be used in any state for any issuer that is not seeking federal registration. (67700)

The Uniform Securities Act prohibits: Soliciting orders for unregistered nonexempt securities Maintaining discretionary accounts Charging extraordinary commissions on certain transactions All of the above

Soliciting orders for unregistered nonexempt securities Soliciting orders for unregistered, nonexempt securities is prohibited by the Uniform Securities Act. The Act permits broker-dealers to maintain discretionary accounts for customers and to charge fees for services performed in customer accounts. (62961)

According to the Uniform Securities Act, which of the following statements best describes what it means for a security to be registered? The securities and issuer have received Administrator approval The information filed with the Administrator has been reviewed by the government and deemed both accurate and acceptable The security may be legally offered or sold in the state The company's financial condition and business practices are considered sound

The security may be legally offered or sold in the state The Administrator does not rule on the accuracy or adequacy of any filing, nor does the government offer decisions on the investment merit or financial condition of an issuer. Essentially, when regulators grant a registration, it allows for the lawful offering and sale of securities within their jurisdiction. (67646)

Which of the following would most likely be registered with the state Administrator? A municipal revenue bond A mutual fund An NYSE-listed company's common stock A distribution of an interest in a mining or real estate venture

A distribution of an interest in a mining or real estate venture Interests in mining or real estate ventures are examples of partnership offerings. General and limited partnerships are often registered with the Administrator in the state in which they are offered. Municipal bonds are not subject to registration requirements since they are categorized as exempt securities under the Uniform Securities Act. Also, mutual fund shares and securities listed on the NYSE are federal covered securities, since these issues are only required to be registered with the SEC. (67527)

Under the Uniform Securities Act, which of the following statements is NOT TRUE concerning the state registration of an agent? An agent may only sell securities that have been properly registered in a state or qualify for an exemption from registration An agent's registration to sell securities in a given state expires at the end of the broker-dealer's fiscal year An agent may only solicit business in a state if both the agent and broker-dealer are registered in that state If an agent leaves a broker-dealer to go to another broker-dealer, the agent and both broker-dealers must notify the Administrator of the change

An agent's registration to sell securities in a given state expires at the end of the broker-dealer's fiscal year The licenses of all agent, broker-dealer, investment adviser, and investment adviser representatives expire on December 31 each year and must be renewed in order to be effective. Renewal is accomplished by the payment of a filing fee. (62046)

According to the USA, which of the following securities are exempt from registration? Bonds issued by a government-regulated common carrier Common stock of a Canadian mining company Common stock of a financial subsidiary of an insurance company An offering by a UIT that invests in the stocks of banks and savings and loan associations

Bonds issued by a government-regulated common carrier Exempt securities include those that are issued by a U.S. federal, state, or local government, a railroad, a common carrier, a public utility, or a holding company that is subject to specified regulations. Insurance companies may also issue securities that are exempt from registration, but their subsidiaries may not. Bank securities are also exempt; however, an offering of an investment company (e.g., a UIT) that invests in bank securities must be registered. (67744)

Broker-dealers are required to keep a copy of all orders, EXCEPT: Not-held orders Cancelled orders Orders to subscribe to a rights offering Market orders

Orders to subscribe to a rights offering A broker-dealer is required to maintain a copy of all orders, except those that subscribe to a rights offering, as they are sent directly to the issuer by the shareholder. (62816)

What information is not included on the application for registration of a broker-dealer? Whether the broker-dealer is a partnership or corporation The types of businesses in which the broker-dealer intends to be engaged The names and addresses of the agents the broker-dealer intends to register The broker-dealer's current financial condition

The names and addresses of the agents the broker-dealer intends to register The names and addresses of the agents the broker-dealer intends to register are not required. The qualifications and history of any partner, officer, director, or controlling person are required. (62440)

According to the Uniform Securities Act, which of the following statements is NOT TRUE concerning private placements? The offer may not be made to more than 10 persons in that state during any 12-month period The offer may not be made to more than 35 persons in that state during any 12-month period The offer may be made to any number of institutional investors during any 12-month period Commissions may not be paid if the buyers are noninstitutional customers

The offer may not be made to more than 35 persons in that state during any 12-month period Under the Uniform Securities Act, any transaction involving no more than 10 persons (there is no limit on institutional accounts) is considered an exempt transaction known as a private placement, if the following conditions are met. The seller believes that all the noninstitutional buyers are purchasing for investment purposes only. No commission or other remuneration is paid for soliciting noninstitutional buyers. Choice (b) refers to a condition for private placements under Regulation D of the Securities Act of 1933. (62376)

Who would NOT be exempt from the definition of agent under the Uniform Securities Act? A NYC official who sells investment-grade GO bonds to the public A finance V.P. of a major appliance manufacturer who sells AAA bonds to the public A finance officer of a biotech company who sells IPO stock to his company's investment banker A clerk processing 401(k) distributions for former coworkers

A finance V.P. of a major appliance manufacturer who sells AAA bonds to the public Sometimes employees of an issuer selling securities may be considered agents. Generally, an employee of an issuer selling stock to the public would be considered an agent under the USA. Exemptions occur when the employee sells exempt securities, such as municipal debt, or is involved in an exempt transaction, such as a sale of securities to an investment banker during an underwriting. Employees who simply process financial transactions for coworkers are exempt unless they receive additional compensation for these activities. (62889)

Included in the definition of agent under the Uniform Securities Act is a salesperson of a broker-dealer selling a: Private placement Stock to a qualified investment buyer New York State GO bonds to the public All of the above

All of the above Salespersons of broker-dealers effecting securities transactions are considered agents. This designation holds true even if the securities being sold are exempt or the purchaser involved in the transaction is a qualified institution. (62519)

Under the Uniform Securities Act, which of the following would NOT be considered a broker- dealer? An issuer A lawyer An accountant An engineer

An issuer Under the Uniform Securities Act, agents, issuers, and banks are excluded from the broker-dealer definition. An exclusion is also available to broker-dealers who have no place of business in a state and only deal with institutional investors in that state. Although professionals who provide incidental advice, such as lawyers, accountants, teachers, and engineers, are specifically excluded from the definition of an investment adviser, these same professionals are not given the same exclusion from the broker-dealer definition. (67526)

Which of the following statements is/are TRUE regarding the registration of securities under the Uniform Securities Act? A security is considered registered for one year from the effective date of its registration statement. Once the registration statement is declared effective by the Administrator, the security is considered to be registered as long as the issuer files quarterly and annual financial statements. If the registration statement for a security is declared effective by the Administrator of one state, it is also effective in any state in which an identical registration statement has been filed. The filing of a registration statement may be done by a person other than the issuer. II only I and IV only I, III, and IV only II, III, and IV only

I and IV only A registration statement is effective for one year from its effective date. A registration statement may be filed by the issuer, a registered broker-dealer, or any other person on whose behalf the offering is to be made. The other statements are not true. (62972)

Section 15 of the Securities Exchange Act of 1934 regulates: Exchange-listed securities transactions Broker-dealer registration The sale of equity securities by insiders The delivery of prospectuses for nonexempt securities

Broker-dealer registration Section 15 of the Securities Exchange Act of 1934 requires broker-dealers to register with the SEC. (62957)

In which of the following situations does the registration of a broker-dealer result in an Administrator automatically registering an individual of the firm as an agent? The individual is an attorney who represents the firm The individual is a director of the broker-dealer and is actively engaged in the business of the firm The individual is an agent of the broker-dealer and is registered in another state The individual had been previously employed by the broker-dealer

The individual is a director of the broker-dealer and is actively engaged in the business of the firm The registration of a broker-dealer in a state will automatically constitute the registration of an individual as an agent if this person is actively engaged in the business of the firm and is a partner, director, officer, or occupies a similar status. (89676)

An agent who is registered in State A contacts an individual in State B. The individual agrees to buy a security through the agent. The broker-dealer is registered in State B, but not the agent. The agent MAY: Sell the security if it is registered in State B and the agent's registration is pending in State B Sell the security as long as the agent's principal is registered in the state Sell the security if it is exempt Not sell the security

Not sell the security In order to sell a security in a state, the broker-dealer and the agent must be registered in that state. (62017)

Frank, Sarah, and Peter are the founders of DoMore Trading Brokerage, a broker-dealer registered in all 50 states. Sarah is the CFO and has no securities or sales supervision responsibilities. Frank and Peter are responsible for running the day-to-day sales operation. After conducting business for two years, Sarah now wants to become involved in the securities aspect of the business. She must: Do nothing since she is already registered as an agent as one of the founders and her registration as an agent was automatic Do nothing since the firm is federally covered because it does business in multiple states and she is exempt from registration Register as an agent in each state in which she will conduct business Register only if she will be selling securities, but is exempt from registration if she is acting exclusively in a supervisory capacity

Register as an agent in each state in which she will conduct business Sarah must register. Since she was not involved in the securities aspect of the business when the firm registered as a broker-dealer, she was not registered as an agent. (Frank and Peter would have been registered as agents.) (62976)

Which of the following nonissuer transactions would be exempt from registration under the Uniform Securities Act? The issuer is operating an Internet business and has not had a profit since going public The issuer is operating as a blank-check company that is investing in profitable companies The issuer is operating as a blind-pool company that is investing in companies that have been in business for at least two years The issuer is operating a company whose primary business is to engage in mergers and acquisitions

The issuer is operating an Internet business and has not had a profit since going public Under the USA, a nonissuer transaction may be exempt from registration if the issuer is engaged in business, whether or not the company is profitable. The USA specifically states that this exemption is not available if the issuer operates a blank-check, blind-pool, or shell company whose primary business plan is to engage in a merger or business combination. The answer here is not suggesting that a transaction in a security of an unprofitable company is exempt from registration; however, the other choices are definitely not considered exempt transactions. (62510)

An agent misrepresents the risks associated with U.S. Treasury bills, notes, and bonds. Under the Uniform Securities Act, which of the following statements would BEST describe the consequences? This is viewed as unethical There are potential civil liabilities and the client may sue for damages U.S. Treasuries are subject to federal jurisdiction and, therefore, any liabilities incurred because of the misrepresentation of risk would be handled through federal courts and the SEC, not through states under the Uniform Securities Act Since these are exempt securities and not subject to credit risk, there is no potential misrepresentation of risk

There are potential civil liabilities and the client may sue for damages Misrepresenting the investment risks of a security could lead to civil liabilities, as clients have the right to sue to recover their losses. U.S. Treasury bills, bonds, and notes are securities and the fact that they are exempt securities is irrelevant if misrepresentations are made. Choice (a) is a true statement; however, it is fraudulent rather than unethical. (62011)

Which of the following choices would NOT meet the definition of an exempt transaction? A transaction by a trustee involved in a bankruptcy An unsolicited nonissuer transaction with a retail investor Transactions between an issuer and retail investors A transaction executed by a bona fide pledgee

Transactions between an issuer and retail investors Any transactions by trustees involved in a bankruptcy--sheriffs, marshals, guardians, and other fiduciaries are considered exempt transactions. Unsolicited nonissuer transactions whether with retail or institutional investors and transactions executed by a bona fide pledgee are also considered exempt transactions. However, transactions between issuers and retail investors are not exempt from registration. A transaction between an issuer and underwriter would be an exempt transaction. (62396)

According to the Uniform Securities Act, which of the following choices would meet the definition of a broker-dealer in State A? The trust department of the Merchants Bank located in State A Woodwyle Incorporated, a broker-dealer located in State B that conducts transactions for a customer who has moved to State A A person located in State A, who is in the business of providing advice relating to securities An agent located in State A, who effects securities transactions for his own account or the account of others

Woodwyle Incorporated, a broker-dealer located in State B that conducts transactions for a customer who has moved to State A Woodwyle is defined as a broker-dealer and must be registered in the state to conduct business with existing customers who have moved to the state. An agent not registered in the state has 60 days to obtain registration in the state, provided the broker-dealer is registered in the state, the agent is registered in at least one state, and is not disqualified from registration in the state. (62958)

Kevin is an agent of CMP Broker-Dealers. Kevin is currently registered in five states. CMP is registered in ten states. Kevin only transacts business with institutional clients. Due to recent mergers, some of Kevin's clients will be relocating to North Carolina and CMP now wants to open a new office there. Kevin will not be moving from his current office in Missouri, a state in which both Kevin and CMP are registered. Under the USA: Both Kevin and CMP need to be registered in North Carolina CMP needs to be registered in North Carolina, but Kevin does not Neither Kevin nor CMP needs to be registered in North Carolina Only Kevin needs to be registered in North Carolina

Both Kevin and CMP need to be registered in North Carolina Under the USA, the term broker-dealer does NOT include any person that does not have a place of business in the state AND only transacts business with issuers, other broker-dealers, financial institutions, or institutional buyers. Since CMP is opening an office in North Carolina, the firm would need to be registered in that state regardless of the clients it sells securities to or conducts business with. Since the broker-dealer will be registered in North Carolina, any agent of that broker-dealer effecting transactions in that state would also need to be registered. (79475)

An agent of a broker-dealer publishes a Web page that discusses the benefits of dollar cost averaging and why investors should invest with long-term goals in mind. If a customer in a state where the agent is not registered reads the Web site, which of the following legends must be on the Web site in order to take advantage of the safe harbor rule and not register in the state? The agent will only conduct business in the state if registered or exempted. Follow-ups will be handled only by agents who are registered or exempt. Internet advertising is exempt from state regulation and subject to SEC review. The rule number of the safe harbor being used is disclosed. I and II only I, II, and IV only III only IV only

I and II only According to NASAA's interpretive order concerning broker-dealers, investment advisers, broker-dealer agents, and investment adviser representatives, for the general dissemination of information on products and services, when advertising on the Internet an agent must include a legend in which it is clearly stated that (1) A broker-dealer agent or investment adviser representative in question may transact business in the state only if first registered, excluded, or exempted from state registration requirements. (2) Follow-up, or individualized responses to persons in this state by a broker-dealer agent or investment adviser representative that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made absent compliance with state registration requirements, or an applicable exemption or exclusion. The SEC is not the only entity that regulates Internet advertising, and there is no requirement to disclose rule numbers. (63014)

All the following descriptions would meet the definition of agent under the Uniform Securities Act, EXCEPT: A sales representative of a broker-dealer who sells only securities covered under a federal exemption An assistant to a sales agent who takes orders when the agent is not available A subsidiary of a bank, registered as a broker-dealer that sells nonexempt securities to the public A broker-dealer that sells only exempt securities within the state I and II only I and IV only II and IV only III and IV only

I and II only A sales agent of a broker-dealer is by definition an agent. It does not matter whether the securities are covered under a federal exemption or not. If administrative personnel are authorized to take orders, they are agents. By definition, an agent is an individual and not a firm. Choices (III) and (IV) are both firms and not individuals. (62975)

Under an underwriting agreement, the syndicate will be given warrants as part of its compensation package. The warrants can be exercised anytime in the next two years. Under the Uniform Securities Act, which TWO of the following statements are TRUE regarding the issuer of this stock? The issuer must register the stock or distribute it under an exemption before the warrants can be issued. The issuer may distribute the warrants when the registration statement for the stock is filed. The issuer is subject to state reporting requirements until the warrants expire. The issuer is subject to state reporting requirements only until the stock distribution is completed. I and II I and III II and III II and IV

I and III The Uniform Securities Act states that there is always an offer of the stock called for by the conversion privilege of the warrants; therefore, the stock must be registered or sold under an exemption before the warrants are issued. As long as the conversion privilege is in effect, the offer is being made and the issuer is subject to state reporting requirements. (62520)

A mutual fund is planning to issue 10 million Class B shares. Five hundred thousand shares will be offered in the state of Rhode Island. Under the Uniform Securities Act, the Administrator of Rhode Island will require the fund to: Register the shares in Rhode Island Include a prospectus with its registration Pay a registration fee Sign a Consent to Service of Process I and II only III and IV only I, II, and III only I, II, III, and IV

III and IV only Mutual funds are federal covered securities and, therefore, a state may not require registration or regulate any offering document. Except for securities that are listed on one of the exchanges (such as the NYSE or Nasdaq), the state may charge a registration fee even though the securities are not registered. The state may also require issuers to file a notice of sale and sign a Consent to Service of Process. (62508)

David is the owner of a private company that manufactures diamond engagement rings and markets them to companies in the U.S. His firm needs to raise capital so it can expand its Internet operations. David has decided to avoid hiring an investment bank to raise capital and wants to hire salespeople to contact investors in State A to sell securities of his company. Under the USA, which of the following statements is TRUE? If the firm issues investment-grade corporate debt, the salespersons would not meet the definition of agent If the firm issues commercial paper in denominations of $75,000 with a maturity of three months, the salespersons would not meet the definition of agent If the firm only sells the securities to institutional investors, the salespersons would meet the definition of agent If the firm only sells the securities to fiduciaries, the salespersons would meet the definition of agent

If the firm issues commercial paper in denominations of $75,000 with a maturity of three months, the salespersons would not meet the definition of agent Under the Uniform Securities Act, agent means any individual (other than a broker-dealer) who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. Excluded from the definition is an individual who represents an issuer in effecting transactions in certain exempt securities or who represents an issuer in exempt transactions. If you represent an issuer and sell commercial paper in denominations of at least $50,000 that matures within nine months of the date of issuance, you are exempt from the definition of agent. There is no specific exemption if you represent an issuer and sell corporate debt or equity securities. If you represent an issuer and sell securities to institutional investors or fiduciaries, you would not meet the definition of agent. (79477)

An agent would like to leave his firm, create his own broker-dealer, and do business as a sole proprietor. This would be allowed: Without registering as a broker-dealer as long as the agent hires a qualified custodian to hold client assets Without registering as a broker-dealer as long as he limits his clients to qualified institutional investors or family members If the agent registers with the SEC as a broker-dealer, passes a principal's exam, and posts a $100,000 surety bond with his state Administrator If the agent registers with the Administrator as a broker-dealer and fulfills any additional requirements imposed by the USA

Individuals are not allowed to simply leave their firm and begin transacting business independently as a broker-dealer. They must be affiliated with a broker-dealer or issuer. In this case, the agent must first create and register as a broker-dealer and fulfill whatever conditions are required in his state. The firm may also be required to register with the SEC and join FINRA. The agent would also need to become a registered principal. However, a surety bond might not be required, which is the reason that choice (c) is incorrect. (89685) If the agent registers with the Administrator as a broker-dealer and fulfills any additional requirements imposed by the USA

Zack is employed at Indiana Trust Company, which is a federally chartered bank. His boss, the CFO of the company, asks him to help sell the bank's securities to some potential institutional clients and a few retail investors who do not have accounts with the bank. Under the USA, Zack would: Avoid meeting the definition of an agent if he sells the securities only to institutional investors Meet the definition of an agent if he sells the securities to any retail investors Meet the definition of an agent since he is selling the bank's securities to individuals who do not have an account with the bank Not meet the definition of an agent under any circumstances

Not meet the definition of an agent under any circumstances Under the Uniform Securities Act, agent means any individual (other than a broker-dealer) who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. Excluded from the definition is an individual who represents an issuer in effecting transactions in certain exempt securities or who represents an issuer in exempt transactions. Since Zack is representing an issuer and selling a certain type of exempt security (securities issued by a federally chartered bank), he would not meet the definition of agent under any circumstances (whether selling to institutional and/or retail investors). (79479)

According to NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, when may a broker-dealer exercise discretion in a customer account? When the customer has been with the firm for more than three years Only after the firm has received the customer's written consent If the account is new, verbal consent is allowed for the first 10 days provided the customer is in the process of mailing written authority If the customer is traveling or on vacation and cannot be reached, only when a branch manager provides approval

Only after the firm has received the customer's written consent Broker-dealers cannot exercise written discretion without the customer's written consent. Not-held orders are the one exception for broker-dealers. With not-held orders, a brokerage firm may determine the time and price of execution without a client's written authority. Investment advisers (but not broker-dealers) may accept verbal authority from a client, but only for up to 10 days. (67573)

Under the Uniform Securities Act, all of the following meet the definition of an agent, EXCEPT an individual who: Works for a broker-dealer and sells exchange-listed securities Effects transactions in registered securities with the public Represents a broker-dealer in effecting securities transactions, but does not earn commissions Represents an issuer in effecting exempt transactions

Represents an issuer in effecting exempt transactions Without exception, an individual who represents a broker-dealer in effecting securities transactions is considered an agent. Also, if an individual represents an issuer and receives compensation for selling securities that have been subject to registration, she is an agent. However, in choice (d), since the individual is representing an issuer in an exempt transaction, she is not considered an agent. Remember, if an individual represents a broker-dealer in effecting securities transactions, she must always register as an agent, even if she is involved in executing exempt transactions. To determine if an individual qualifies for an exception as an agent, determine who the individual represents -- a broker-dealer or issuer. Exceptions are available for individuals who represent an issuer, but not if representing a broker-dealer. (67718)

A broker-dealer is registered in every state, but its only office is located in State X. The Administrator in State X sends a notice to the broker-dealer's compliance department indicating that it is going to audit the books and records of the firm. Does the Administrator in State X have the authority to audit the firm? No, broker-dealers may only be audited by the SEC Yes, because the Administrator has authority over every broker-dealer Yes, because the broker-dealer is registered in State X No, because the broker-dealer has no place of business in State X

Yes, because the broker-dealer is registered in State X Administrators have jurisdiction or authority over all securities professionals who are registered in their state or who offer, sell, or hold themselves out to potential clients in their state. Since the broker dealer is registered in State X, the Administrator in State X has the ability to audit and subpoena its books and records and to compel testimony. (67651)