chapter 5 series 63
Before taking any disciplinary action, with respect to a registration under the Uniform Securities Act, the Administrator must always
Find that the action is in the public interest. Cite a cause listed in the act.
Under the USA, a registered person has up to _____ days to appeal any disciplinary finding by the state Administrator.
60
Acting summarily means acting without prior notice. An Administrator who has grounds may postpone or suspend a registration by issuing a stop order. The registrant must be promptly notified of the action and of the opportunity for a hearing. The hearing must be held within
15 days of a written request, and the suspension will remain in effect until final disposition.
An agent unintentionally sells nonexempt securities that have not been registered. Under the Uniform Securities Act, the broker-dealer may write a letter and offer to buy back the security plus interest, minus any income received. The client gives up the right to bring action against the firm in court if he does not respond within how many days of receipt of the letter
30 days
The right of rescission under the Uniform Securities Act allows the customer
30 days to respond to a rescission letter from a broker-dealer offering to buy back securities sold illegally. If the customer does not accept or reject the offer, the customer waives his right to bring court action against the agent for the improper sale.
Any person aggrieved by a final order of the Administrator may obtain a review of the order in the appropriate court by filing in court, within
60 days after the entry of the order, a written petition appealing the order.
Any final order of the Administrator may be appealed within
60 days of the order.
Under which of the following circumstances would the Administrator of this state have jurisdiction
A letter was sent to a client in her state from an agent in another state. A mass mailing was made from another state to residents in her state. A television broadcast advertising a security was made from her state.
true about the authority of an Administrator
A cease and desist order may be issued prior to a hearing. A cease and desist order may be issued after a hearing.
The term sale includes
A contract of sale A contract to sell The disposition for value of an interest in a security A warrant (for common stock of the issuer) given with the purchase of a bond
the following statements describe the powers of the Administrator over the issuance of orders
A final order may be appealed in the appropriate court within 60 days of the order being issued. No final order may be issued without the opportunity for a hearing.
the following involves an offer or sale
A gift of an assessable security
Under the Uniform Securities Act, the following are defined as sales
A gift of an assessable stock A security given as a bonus for purchasing a bond
The Uniform Securities Act defined many terms. Among them is the term sale. Which of the following would be included in the definition of sale
A gift of assessable stock An investor exercising preemptive rights previously received directly from the issuer
Under the Uniform Securities Act, the following is an offer or a sale
A gift of stock given as a bonus with a purchase of a parcel of real estate
DMF Securities, a registered broker-dealer, is advertising securities through direct mail. ______ is considered an offer to sell securities in this state
A prospective client located in the state receives, at his home address, a direct letter offering securities for sale.
the following statements best describes rights of rescission under the Uniform Securities Act
An investor who believes he has been wronged in conjunction with a violation of the Uniform Securities Act may be entitled to restore his former financial condition as if the transaction had not occurred.
The definition of offer (offer to sell) includes
An attempt to dispose of a security for value A solicitation of an offer to buy an interest in a security for value An offer to dispose of a security for value
What is the difference between an offer and a sale?
An offer is the attempt to sell and a sale is a binding contract to transfer a security for value.
the following accurately describes a cease and desist order as authorized by the Uniform Securities Act?
An order by the Administrator demanding a person to refrain from a practice of business believed by that Administrator to be unfair
Because an assessable stock may require a payment made by the recipient, the gift is
considered a sale
Under the Uniform Securities Act, which of the following concerning the withdrawal of an agent's registration is true
Absent any disciplinary proceedings, withdrawal is effective 30 days after application. At the Administrator's discretion, disciplinary proceedings may delay effectiveness of a withdrawal application indefinitely. Disciplinary proceedings may be taken against an agent after the agent's withdrawal is effective.
A customer living in one state receives a phone call from an agent in another state. A transaction between the two occurs in a third state. According to the Uniform Securities Act, under whose jurisdiction does the transaction fall
Administrators of all three states involved
While the Administrator has great power, the Uniform Securities Act does place some limitations on the office.
An Administrator in State A may only enforce subpoenas from State B if the alleged violation would be a violation of State A's statutes. An Administrator may, by order, deny the registration of a securities professional who has been convicted of any felony within the past 10 years. In conducting an investigation, an Administrator can compel the testimony of witnesses. Investigations of serious violations do not have to be public hearings; there can be public or private hearings.
A sale is a
contract or transaction for value
Under the Uniform Securities Act, the Administrator is required to provide the following in a disciplinary proceeding
Appropriate prior notice Opportunity for a hearing Written findings of fact and conclusions of law
Anyone who violates the antifraud registration requirements of the act is liable for
criminal penalties. administrative sanctions, even for exempt securities. civil liabilities. injunctions.
Nobody Walks Motor Company, a licensed automobile dealer, is running a promotion offering a $1,000 corporate bond at no additional cost to anyone who purchases a new car over the weekend. Under the Uniform Securities Act, in order to make this offer
Nobody Walks Motor Company must be registered as a broker-dealer in the state.
Under the Uniform Securities Act, which of the following negates a client's right to a civil suit for damages suffered from improper investment advice
The advice that is the subject of the suit was given more than three years ago.
Which of the following would subject an agent to a denial of registration
Failure to pay the filing fees
Under the Uniform Securities Act, which of the following statements regarding investigations conducted by the Administrator are true
Investigations may be conducted across state lines. The Administrator may obtain a court order to have a receiver appointed over a violator's assets.
Whenever it appears to the Administrator that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of the Uniform Securities Act or any rule or order, he may, at his discretion, bring either or both of the following remedies:
Issue a cease and desist order, with or without a prior hearing against the person or persons engaged in the prohibited activities, directing them to cease and desist from further illegal activity. Bring an action in the appropriate court to enjoin the acts or practices to enforce compliance with this act or any rule or order hereunder. Upon a proper showing, a permanent or temporary injunction will be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. In addition, upon a proper showing by the Administrator, the court may enter an order of rescission, restitution, or disgorgement directed to any person who has engaged in any act constituting a violation of any provision of this act or any rule or order hereunder.
Securities professionals, other than investment adviser representatives, may be required to post a surety bond. That requirement is not placed upon
Issuers of securities.
the following statements regarding a cease and desist order are true
It is an order to stop a specified activity immediately. If the registered agent continues to violate the statute, the registered agent may become the subject of a court-issued injunction. It may be issued by the state Administrator.
In which of the following circumstances has John, an agent of AAA Securities Corporation, made an offer as defined in the Uniform Securities Act?
John calls a long-standing client, Brenda, to indicate that a security on his firm's restricted list is suitable for her portfolio. John indicates that he cannot sell the securities unless Brenda requests them on an unsolicited basis. Brenda considers making the purchase but ultimately declines. John discovers that Brenda has inherited shares in a manufacturing firm trading on the New York Stock Exchange and suggests that she sell them to him in a private transaction in which no commission would be charged.
An IAR is registered in New York and Vermont. While working in his New York office, he places a call to the cell phone of one of his New York clients who happens to be on vacation in Ohio. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Indiana. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, jurisdiction resides with the Administrator of
New York. Indiana. Administrators have jurisdiction if they are from the state in which the offer was made, directed, or accepted. The offer was made in New York and, because it was directed to the cell phone of a New York customer, the USA considers that the offer was directed to New York. The offer was accepted in Indiana. The mailing of the certificate is of no consequence and calling a local number and having it answered in another state is viewed the same way as mail sent to a customer's residence that is forwarded to another state:
the following would be included in the Uniform Securities Act's definition of a sale
Transfers for value of shares to a nontaxable organization
An agent mistakenly sold an unregistered nonexempt security to a customer. Which of the following actions should the agent's broker-dealer take
Offer to buy the security back from the customer. Offer to pay interest at an annual rate determined by the Administrator, less income paid, from the date the security was purchased.
According to the Uniform Securities Act (USA)the following would be the most appropriate action by a broker-dealer following the discovery of an inadvertent sale of an unregistered nonexempt security
Offering to buy back the security from the customer under a rescission agreement authorized by the Uniform Securities Act
the following statements relating to termination of registration of a securities professional registered under the Uniform Securities Act is true
Once the withdrawal is effective, the Administrator retains the right to commence an action for a period of one year.
Under the Uniform Securities Act, as a result of a hearing, the disciplinary actions that may be taken by the Administrator include
Permanent revocation of a registration Bar from employment with any registrant Restriction on a registrant's performance of any activity in the advisory or brokerage business
Under the Uniform Securities Act, the following is true regarding civil liability of agents?
Persons who control a civilly liable person may also be sued to recover losses.
According to the Uniform Securities Act, a person who sells securities in violation of state securities laws is civilly liable for
Principal Interest Court costs Attorney's fees
the following is considered a sale of securities under the Uniform Securities Act
Redemption of mutual funds shares worth $10,000 Disposition of stock for which cash consideration is received
Under the Uniform Securities Act, what remedy does a client have against a firm that sold him an unregistered nonexempt security
Rescission
A properly licensed agent in Illinois, Missouri, and Iowa has a client who moves from Illinois to Michigan on July 1, 2020. On September 1 of that year, the agent sells him 100 shares of a nonexempt security in a nonexempt transaction. On October 1, 2021, the client discovers that the agent's firm never licensed him in Michigan and that the agent is subject to civil liability to the purchaser. The statute of limitations for this sale runs out on
September 1, 2023. The statute of limitations for civil liability is the earlier of three years after the date of the sale or two years after discovery of the violation. In this case, the earliest date is three years after the sale on September 1, 2020, which is September 1, 2023.
state Administrators might have jurisdiction if there is a violation of the law
The Administrator of the state where the customer is domiciled at the time of the offer The Administrator of the state where the agent's office is located at the time of the offer The Administrator of the state where an offer is made, regardless of where the agent's office is located or where the customer is domiciled
The Administrator of State X receives a phone call warning that, within the next couple of weeks, a scam is going to be perpetrated in his state by someone from State Y. The tipster even supplies the Administrator with names of people who will be involved and ends the conversation by telling the Administrator that he himself is a resident of State Z. Which of the following would most likely be done
The State X Administrator would immediately begin an investigation. It's the old saying, "Where the Administrator smells smoke, he can go looking for the fire."
the following circumstances may an Administrator revoke an adviser's registration
The adviser has been convicted of a nonsecurities-related felony. If a registered investment adviser (IA) committed a felony, regardless of whether it was securities-related or not, its registration will be revoked, not canceled. An IA's registration may be canceled if the IA is found to be mentally incompetent, cannot be located, or is no longer in business. The difference between canceling and revoking a registration is subtle; cancellation is not punitive while revocation involves some sort of wrongdoing.
According to the Uniform Securities Act, under which of the following circumstances may an Administrator cancel an agent's registration
The agent is judged to be mentally incompetent.
If an agent unknowingly sells an unregistered nonexempt security and discovers the error afterward, what action is most appropriate
The agent should notify the appropriate supervisor who then, on behalf of the firm, will offer (in writing) to repurchase the security and pay a reasonable rate of interest minus any income derived from the security.
Under the Uniform Securities Act, which of the following are considered a sale or an offer to sell? The gift of assessable common stock The gift of nonassessable stock The sale of a warrant to purchase stock
The gift of assessable common stock The sale of a warrant to purchase stock
An Administrator could use the following as a reason for issuing an order denying the registration of a security in her state
The issuer's enterprise or method of business includes or would include activities that, although legal in the state of incorporation, are illegal in the Administrator's state. The offering would be made with unreasonable amounts of underwriter and seller discounts.
An agent licensed in Illinois, Missouri, and Iowa has a client move from Chicago to Detroit on July 1, 2020. On September 1 of that year, he buys 100 shares of a nonexempt security in a nonexempt transaction. On August 1, 2021, the client discovered that the agent's firm never licensed him in Michigan; therefore, he is subject to civil liability to the purchaser. The statute of limitations for this sale runs out
The statute of limitations for civil liability is the earlier of three years after the date of the sale or two years after discovery of the violation. In this case, the earliest date is two years after the discovery date of August 1, 2021, which is August 1, 2023.
the following statements is true regarding criminal penalties under the Uniform Securities Act
The statute of limitations on criminal indictments is five years. The Administrator does not have the power to pursue criminal prosecution, only to refer evidence to the attorney general or appropriate district attorney. Criminal penalties may be incurred by willfully violating any provision of the act.
A client sues an agent for selling an unregistered nonexempt security. Shortly before the case comes to trial, the client dies.
The suit survives the death of either party to the suit.
Criminal Liability
When an individual commits an act that is considered to be an offense against society as a whole.
The Administrator of a state securities department conducted a hearing regarding misconduct by an investment adviser registered at the state level. The Administrator required the adviser, as well as several clients who had lodged complaints against the adviser, to take a sworn oath that their testimony was true. Does the Administrator have the power to require sworn oaths
Yes, the Administrator is empowered to administer oaths as provided in the Uniform Securities Act, as enacted in the Administrator's state of jurisdiction.
Criminal Penalties
action taken by court system
An Administrator does not have jurisdiction over an offer to sell that is made in
a TV broadcast originating outside the state. a newspaper published outside the state. a newspaper published inside the state where more than two-thirds of its circulation is outside the state.
Under the Uniform Securities Act, a sale includes all of the following
a contract to sell. a contract of sale. a disposition of a security for value.
According to the Uniform Securities Act, a sale is
a contract to transfer ownership of a security for value.
If convicted of a willful violation of the Uniform Securities Act, an agent is subject to
a fine of $5,000, imprisonment for three years, or both.
The Administrator does not have jurisdiction over an offer made in a TV or radio broadcast that originated outside of the state. The same is true for
a newspaper published outside the state.
As defined in the Uniform Securities Act, a sale or an offer to sell would not include
a purported gift of nonassessable stock.
Under the Uniform Securities Act, violations of the act may result in all of the following
a receiver being appointed over the violator's assets. a bar from employment in the securities business. a court order requiring the violator to make restitution to others.
According to the Uniform Securities Act, an offer or a sale does not exist if it is
a reclassification of the issuer's securities. a bona fide pledge or loan. an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares. any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by the stockholders for the dividend.
A state securities Administrator may issue
a ruling or order to comply with the blue-sky laws of the state and designate the use of certain forms
A sale is a contract or transaction for value. Therefore, when a security is given as a bonus in connection with the sale of another security, it is also considered
a sale.
As defined in the Uniform Securities Act, a sale or an offer to sell would include
a stock dividend that requires only a nominal payment by the shareholder. any security given or delivered with, or as a bonus on account of, any purchase of securities. a sale or an offer of a warrant or right to purchase or subscribe to another security of the same or another issuer.
As defined in the Uniform Securities Act, the terms sale or sell would include
an investor using a cash dividend to automatically purchase additional shares of the issuer.
There is a stock that you believe is perfect for your customer's portfolio. However, the stock is not registered for sale in the customer's state of residence, nor is it exempt from registration. You suggest that the customer should enter an unsolicited order for the stock because you will be able to accept that. This is
an offer to sell. Under the Uniform Securities Act, the term offer is the solicitation of an offer. By suggesting the entry of an unsolicited order, the agent is soliciting an offer from the customer to buy a security. A solicitation is considered to have occurred even if the customer fails to act on the solicitation.
The Administrator may deny or revoke the registration statement but must provide the applicant with
an opportunity for a hearing.
An offer to sell is
any activity done in an effort to dispose of a security for value.
Sale, used interchangeably with sell, is defined in the Uniform Securities Act as
any contract of sale, any contract to sell, and any disposition of a security or interest in a security.
In order for a surety bond to meet the requirements of the Uniform Securities Act, it must provide that
any customer who can prove a violation is entitled to collect against the bond.
The Administrator may deny or revoke the registration statement but must provide the applicant with an opportunity for a hearing. In addition, the Administrator must give appropriate prior notice to the
applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered and present written findings of fact and conclusions of law.
Prior to the entry of a final order, the Administrator must provide
appropriate prior notice to the registrant, provide the opportunity for a hearing, and present findings of fact and conclusions of law
An Administrator may summarily suspend a registration pending final determination of proceedings under the Uniform Securities Act. However, the Administrator may not enter a final order without
appropriate prior notice to the registrant. an opportunity for a hearing. findings of fact and conclusions of law.
The Administrator has the power to impose or ask a court to impose any of the items shown but does not have the authority to
arrest anyone.
An agent works in Buffalo, New York and is registered in New York and Ohio. If the agent contacts a retail client in Ohio recommending the purchase of an unregistered non-exempt security, jurisdiction over this violation of the Uniform Securities Act would lie with the Administrator(s) of
both New York and Ohio.
An agent's license can be revoked if he is any of these except A) convicted of a non-securities-related felony. B) declared insolvent. C) under 21 years of age. D) convicted of a securities-related misdemeanor.
c . under 21 years of age
Injunctions are judicial orders that
can only be issued by a court of law, not by an administrative agency such as a state securities Administrator.
On determining that a registrant or applicant for registration is no longer in existence or has ceased doing business as either an agent or a broker-dealer, the Administrator may
cancel the registration or application.
There are several ways that a securities professional's registration can be terminated. Nonpunitive termination of a securities professional's registration could be done through
cancellation and withdrawal
The Administrator has authority to
issue a cease and desist order with or without a hearing.
Under the Uniform Securities Act, an Administrator who believes a violation has occurred or is about to occur may
issue a cease and desist order without a prior hearing. bring action to obtain an injunction and have a receiver appointed over the alleged violator's accounts. seek a court order requiring the alleged violator to make restitution to others.
The Administrator would cancel an agent's registration in the event of
death or mental incompetence of the registrant. Failure to locate an agent, such as mail being returned without a forwarding address, is also a cause for cancellation
Filing an incomplete application or willfully violating a provision of the Uniform Securities Act are reasons for
denial or revocation of an agent's registration. Lack of experience itself is not a cause. The Administrator can only judge based on what is on the applicant's record
A cease and desist order is a
directive from an administrative agency to immediately stop a particular action.
Radio or TV broadcasts made from outside the state
do not come under the Administrator's jurisdiction.
An automobile dealer advertises that anyone purchasing a new car this month will receive a $1,000 U.S. Treasury bond as a bonus. Under the Uniform Securities Act, the dealer is
engaging in the offering for sale of a security.
A sale is defined as
every contract to sell a security or an interest in a security, including a security given as a bonus with the purchase of another security or a gift of assessable stock when something of value is given
Under the Uniform Securities Act, the Administrator has the power to
examine files of registered persons who have their offices out of state. designate an officer who will then have the power to take evidence regarding investigations.
The Uniform Securities Act provides for all of the following
exemption from registration for federal covered securities. subpoena power for the state Administrator. criminal penalties for violations of the act.
An Administrator may deny or revoke a security's exemption without a hearing if the issuer is given an opportunity for a hearing after the revocation. The issuer requesting an exemption must prove the
exemption; this is not the responsibility of the Administrator. The Administrator may not revoke exemptions of federal covered securities.
If you are registered as an agent for a broker-dealer in State Y and you conduct business as an agent of theirs in State Z, a state in which you are not registered as their agent, you
expose yourself and your employer to disciplinary action by State Z. expose yourself to a possible fine. may obligate your broker-dealer to offer your client the right to rescind the sale. may have your registration in State Y revoked.
The Administrator may take disciplinary action against a registered person when the registrant has done any of the following
failed to properly supervise an employee who committed prohibited practices as defined by the act. engaged in unethical practices, even if no law was broken. violated the provisions of federal securities law.
Disciplinary action may be imposed by a state Administrator for violations of
federal securities regulations, improper supervision, and unethical practices committed, whether or not a law was broken.
Buzzy Rogers, an agent with the brokerage firm Speedy Executions, Inc. (SEI), has just received notice from his supervisor that a final order has come down from the Administrator of State Z suspending his agent registration for six months. Roger's options include
filing an appeal in the appropriate state court within 60 days of the date of the order.
Criminal penalties for violations of the Uniform Securities Act include
fines of up to $5,000 and/or imprisonment for up to three years.
An IA's registration may be canceled if the IA is
found to be mentally incompetent, cannot be located, or is no longer in business.
It is a violation of the Uniform Securities Act to file a
fraudulent or misleading application for registration as a securities industry professional (agent, broker-dealer, investment adviser, or investment adviser representative)
A registration of an agent can be denied or revoked if it is in the public interest and a registrant
has willfully violated the securities laws of a foreign jurisdiction. has engaged in dishonest or unethical practices in the securities business. failed to include the fact that he was convicted of a securities-related misdemeanor (or any felony) within the last 10 years
The guilty party and the one controlling that person are subject to civil liability. That means
if a broker-dealer failed to properly supervise the agent, the firm, and possibly the agent's manager, may also be named in the suit. Persons may be sued only up to three years following the sale of a security. As long as the plaintiff rejects the offer of rescission within 30 days, he retains the right to file a civil suit.
An agent can avoid civil liability under the Uniform Securities Act for soliciting and selling unregistered securities
if an offer of rescission is accepted. If an offer of rescission is accepted, the client has been made "whole" and has nothing further to claim.
The Administrator may examine files of any registered person, whether located
in state or out of state.
The Administrator may deny, suspend, or revoke a registration for many reasons, but they must be
in the interest of the public.
Under the Uniform Securities Act, criminal penalties can
include fines of up to $5,000, imprisonment for up to three years, or both.
Investment advisers may employ investment adviser representatives as
independent contractors. This is very common for independent financial planners
Suspension (or revocation) of a broker-dealer's (BD's) registration in another state is adequate cause for this state's Administrator to
initiate the process to suspend the BD's registration in his state
Civil liability includes
interest costs, rescission of trade, payment of attorney's fees, and return of principal invested.
The difference between canceling and revoking a registration is subtle; cancellation
is not punitive while revocation involves some sort of wrongdoing.
Under the Uniform Securities Act, a state securities Administrator who believes that a registered investment adviser representative is about to violate a provision of the act would initially
issue a cease and desist order. The Administrator would initiate action by issuing a cease and desist order. If the registered investment adviser representative continues to pursue activities that result in a violation of the USA, the Administrator may seek a court injunction to prevent the abuse
The Administrator of a state's securities department strongly believes that the registration statement for a security contains a substantial amount of misleading information and that investing in the security is likely to cause immediate and egregious harm to its investors. Under these circumstances, the Administrator may
issue a stop order to deny or revoke the registration statement, but must provide the applicant with the opportunity for a hearing.
Under the Uniform Securities Act, the Administrator may do all of the following
issue a stop order to revoke the effectiveness of a registration statement. issue a cease and desist order without a prior hearing. revoke a previously allowed exemption.
Only the courts can
issue an injunction.
the Administrator may
limit a registrant's functions to that of a broker-dealer if, in the initial application for registration as an investment adviser, the registrant is not qualified to act as an investment adviser. take into consideration that the registrant will work under the supervision of a registered investment adviser or broker-dealer in approving a registration.
The state securities Administrator has the authority to
make, amend, or rescind rules, forms, and orders necessary to administer the Uniform Securities Act.
Once an agent's registration is revoked, any future applications for registration in the securities industry (as an agent, a broker-dealer, or an investment adviser)
may be denied. You may see this expressed as a permanent bar from the industry.
The subject of a stop order must be given the opportunity for a hearing. As long as the stop order is in effect, the security subject to the order
may not be sold to the public or the proscribed activity may not continue.
An applicant for registration as an investment adviser discloses on its application to the Administrator that it plans to use palm readers to help determine which investments are most suitable for their clients. Under the Uniform Securities Act, the Administrator
may only justify denial for reasons listed in the Uniform Securities Act.
A registration may be canceled if the registrant cannot be located, is found mentally incompetent, or has disbanded. This is known as
nonpunitive termination of registration
A sale is
not an attempt to transfer ownership of a security, a solicitation of an offer to buy, or an offer of an equivalent contract (i.e., an offer or offer to sell).
A stock split would
not be considered a sale,
While a student at college nine years ago, Joe was convicted of possession of marijuana (a misdemeanor in that state) and received a suspended sentence. Joe now resides in a different state where the same offense is a felony. If Joe disclosed the matter on his application to ABC Securities, Joe's registration may
not be denied based on this conviction because it was a misdemeanor in the state where he was convicted.
In order for the Administrator to suspend an agent's registration, compliance with the requirements of the Uniform Securities Act would require that
notice be given of the proposed action and hearing. the agent be presented with an opportunity for a hearing. notification be given to the employing broker-dealer of the final order.
The issuance of warrants or convertible securities to anyone or stock rights to existing shareholders is considered an
offer to sell the underlying security because, unlike stock dividends, mergers, and bona fide loans, payment of money is involved to acquire the stock, thereby making the issuance an offer to sell.
The Administrator in State T has jurisdiction over an offer made
on a radio program originating in State T.
A person may request a withdrawal of a registration. Withdrawals become effective after 30 days if there are no revocation or denial proceedings in process. However, there remains a
one-year period during which the Administrator may commence an action for activity that occurred when the professional was registered.
Stock splits, bona fide gifts, and bona fide pledges or loans made with no purpose of evading the act are not considered
sales.
Under the Uniform Securities Act, an offer is made in a state when it
originates in that state.
A gift of securities given as a bonus for any purchase is considered
part of the purchase
In conducting investigations, the Administrator may
publish information of any violation over the vigorous objections of a violator. make investigations both inside the state and in other states to determine whether violations of the Uniform Securities Act have occurred in his state. require a person to file a statement in writing and under oath.
A state Administrator never has jurisdiction over a securities offering made in a bona fide newspaper published out of state. However, the Administrator has jurisdiction if the paper is
published in his state. There is an exception to that when two-thirds or more of the paper's circulation is out of that state.
Suspension, revocation, and denial are considered forms of
punishment.
To protect the public, the Administrator may do all of the following
require an applicant for registration as both a broker-dealer and an investment adviser to limit activities to those of a broker-dealer due to lack of qualifications to render investment advice. deny the registration of an investment adviser whose assets under management are less than $100 million. require an applicant for registration to submit to an oral examination.
The offer of rescission is based on the price originally paid for the security, plus interest at a rate determined by the Administrator (less any income received from that security). The claim must be made two years after the discovery of the violation or three years after the occurrence, whichever is sooner. A client rejecting the offer of rescission within the 30-day period
retains the right to take the matter to court (sue). But, if the offer is not accepted or rejected within that 30-day period, it becomes null and void.
If a registered investment adviser (IA) committed a felony, regardless of whether it was securities-related or not, its registration will be
revoked, not canceled.
The Administrator is empowered to issue cease and desist orders, which require the immediate halt of a specific activity. If the agent fails to stop engaging in the activity, the Administrator may
seek an injunction from a court of competent jurisdiction.
Under the Uniform Securities Act, the Administrator may designate another official in the department to
serve subpoenas.
Note that the TV broadcast is from a station in her state, so
she has jurisdiction
Under the Uniform Securities Act, a state securities Administrator can
start an investigation against a registrant even if a violation has not yet occurred. subpoena witnesses living outside the state
The Administrator may issue a cease and desist order with or without a hearing. It is the ____________ that requires a hearing.
stop order
An Administrator may issue a
stop order to revoke the effectiveness of a registration, issue a cease and desist order without a prior hearing, and may also revoke a previously allowed exemption.
Under the Uniform Securities Act, the Administrator may deny or revoke a registration if an agent
submits an incomplete application. willfully violates a provision of the Uniform Securities Act.
Among the powers granted to the Administrator under the Uniform Securities Act is the power to
subpoena witnesses or documents.
An Administrator has specific authority under the Uniform Securities Act to do all of the following
suspend the registration of a security if the suspension is in the public interest and the offering has excessive commissions. require that the proceeds from an offering be held in escrow until the issuer receives a certain percentage of the sale of the securities offered. enforce subpoenas in the state at the request of an Administrator of another state for alleged violations that occurred in another state.
Cancellation and withdrawal are nonpunitive methods of
termination of a person's registration
The Administrator could deny or revoke the registration of a broker-dealer if
the CEO has intentionally failed to file advertising material with the Administrator.
If it is in the public interest, under the Uniform Securities Act, an agent's registration may be suspended by the Administrator for all of the following reasons except A) it has been determination that the agent is not properly supervising her subordinates. B) the agent is enjoined by a court of law from engaging in the securities business. C) the agent is convicted of willful violations of the Uniform Securities Act. D) the agent is accused of violations of the antifraud provisions of the Uniform Securities Act.
the agent is accused of violations of the antifraud provisions of the Uniform Securities Act. An accusation is not grounds for suspension; one is presumed innocent until proven guilty. Once proof is obtained, such as through a conviction, suspension is an option.
The statute of limitations for civil liability is
the earlier of three years after the date of the sale or two years after discovery of the violation.
Under the scope of the Uniform Securities Act, if any part of a transaction occurs in a state, the transaction falls under
the jurisdiction of the state Administrator
Radio or TV broadcasts made from outside the state do not come under the Administrator's jurisdiction. The communications sent from out of state do because
the offers are directed to residents of her state
The Uniform Securities Act provides for civil penalties in the event of improper activities of agents. Under the act, the maximum that a purchaser would be entitled to claim would be
the original consideration paid for the security. interest at the state's legal rate. attorney's fees. court costs.
Administrators have jurisdiction over offers made in
the originating state (New York), the state to which the offer is directed (Ohio), and the state in which the offer is accepted
The Uniform Securities Act grants an Administrator a great deal of authority. Those powers include all of the following
the power to issue a cease and desist order with or without prior hearings. the power to seek court orders for the payment of restitution against any violators of the act. the power to have the court appoint a receiver for the defendant's assets after the issuance of an injunction.
The offer of rescission is based on
the price originally paid for the security, plus interest at a rate determined by the Administrator (less any income received from that security
When a sale violates provisions of the Uniform Securities Act, all of the following statements regarding civil liabilities are true
the rescission offer must be at the current market price.
Under the Uniform Securities Act, an offer and sale does not exist if it is
the result of a class vote by stockholders regarding a merger or consolidation. a bona fide pledge or loan. an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares. a gift of nonassessable securities.
Under the Uniform Securities Act, a client who purchased securities from a broker-dealer may request the trade be rescinded if
the security was sold in violation of the Uniform Securities Act.
Under the Uniform Securities Act, Administrators of all of the following states have jurisdiction
the state in which an offer to sell securities was accepted. the state into which an offer to sell securities was directed. the state from which an offer to sell securities originated.
The issuance of a stop order by a state securities Administrator requires
the subject of the stop order to be given an opportunity for a hearing.
The Uniform Securities Act (USA) provides for criminal penalties of up to
three years in prison and/or $5,000 in fines. The act describes civil liability, not specific civil penalties.
Aaron, a client of XYZ Financial Services, has suspected the possible churning of his account over the past several years but has taken no action. He consults his attorney, who informs him that any lawsuit for recovery of damages under the Uniform Securities Act must commence within
three years of occurrence or two years of discovery, whichever occurs first.
Under the statute of limitations found in the USA, a civil suit must be filed within
three years of the alleged infraction or two years from discovering the violation, whichever comes first.
An applicant for registration as an IAR in this state was convicted four years ago of a nonfinancially related crime in another state. Under that state's laws, the crime was a misdemeanor, but under this state's laws, it is a felony. When viewing this IAR's application, the Administrator will
treat the crime as a nonfinancial misdemeanor. Even though the crime is a felony in the state where registration is being sought, the applicant's record shows a misdemeanor; therefore, this individual would not be subject to statutory disqualification.
The offer of rescission is based on the price originally paid for the security, plus interest at a rate determined by the Administrator (less any income received from that security). The claim must be made
two years after the discovery of the violation or three years after the occurrence, whichever is sooner.
An Administrator has jurisdiction over an offer to sell securities if it is made in a newspaper published out of his state
under no circumstances.
Under the Uniform Securities Act, a client may sue an agent
unless the agent's broker-dealer offers to return the client's purchase price plus interest.
Under the Uniform Securities Act, all of the following are grounds for suspension, denial, or revocation of an issuer's registration statemen
unreasonable compensation to the underwriters. failure to pay filing fees. the security is subject to an administrative stop order in a federal court.
All of the following statements are true
upon appearance or likelihood that a violation will occur, the Administrator may issue a cease and desist order without a prior hearing. state securities Administrators do not have authority to issue injunctions and must submit requests to appropriate state courts to issue injunctions. under a civil violation of the Uniform Securities Act, a cause of action survives the death of the plaintiff or defendant. There is a five-year statute of limitations for criminal violations under the USA.
An Administrator may initiate a suspension or revocation proceeding against a broker-dealer registered in his state
upon discovery that the broker-dealer's registration had been suspended in another state.
A state-registered investment adviser is the subject of an injunction requested by the Administrator. As a result,
upon the request of the Administrator, a receiver or conservator may be appointed over the investment adviser's assets.
The Administrator may issue a cease and desist order
with or without a hearing.
If an agent chooses to appeal an Administrator's order, the agent must file for review of the order with the appropriate court
within 60 days of order entry.
Under the USA, a lawsuit for recovery of damages must commence
within three years of occurrence of the offense or two years of its discovery.
An Administrator may deny or revoke a security's exemption
without a hearing if the issuer is given an opportunity for a hearing after the revocation.
The Administrator may require _____________________________________________________________________________________________________________________________________________. However, he is not authorized to conduct investigations in other states to determine whether a violation of the USA has occurred in those states. Those investigations are under the jurisdiction of their Administrator.
written statements under oath, publicize violations, and investigate anywhere necessary to determine whether or not a violation of the act took place in his state.
Fusion Financial is a broker-dealer registered in States A, B, and C, with its home office in State B. A complaint is filed against the firm by a client who resides in State A. Under the powers granted by the Uniform Securities Act, the Administrator of State B could do all of the following except A) gather evidence from State A. B) subpoena witnesses from State C. C) gather evidence from State B. D) issue an injunction against Fusion Financial.
An Administrator has the power to gather evidence both within and outside of the home state, as well as subpoena evidence and witnesses in any state. Only the courts can issue an injunction.