exemptions

All of the following are exempt transactions EXCEPT: A)commercial paper with a maturity of no longer than 270 days. B)isolated, nonissuer transactions. C)unsolicited, nonissuer transactions. D)the sale of securities to a closed-end investment company.

A)commercial paper with a maturity of no longer than 270 days. This question deals with transactions. While all of the items listed are exempt, commercial paper is an exempt security, not an exempt transaction.

Under the terms of the USA, an agent who sells shares of a Nasdaq Stock Market security to an insurance company has engaged in: A)an unlawful transaction. B)a sale exempt from the registration and advertising provisions of the USA. C)an issuer transaction. D)an unsuitable transaction.

B)a sale exempt from the registration and advertising provisions of the USA. An agent who sells shares of any security to an insurance company is engaged in an exempt transaction that is not bound by the advertising and registration requirements of the USA. Any sale to certain institutional customers, such as banks and insurance companies, is an exempt transaction. Neither exempt securities nor exempt transactions must adhere to the registration and advertising provisions of the USA. This is an exempt transaction due to the nature of the purchaser, not the type of security being sold.

A state securities Administrator does NOT require the filing of: A)pamphlets and marketing letters used by broker-dealers. B)advertising and sales literature relating to the sale of exempt securities. C)financial reports from broker-dealers and investment advisers. D)advertising and sales literature relating to the sale of nonexempt securities.

B)advertising and sales literature relating to the sale of exempt securities. A state securities Administrator may require the filing of advertising and sales literature relating to the sale of nonexempt securities, financial reports from broker-dealers and investment advisers, and pamphlets and marketing letters used by broker-dealers in an attempt to increase their business. Exempt securities are not required to register with the state Administrator and, therefore, are exempt from the filing requirements for advertising and sales literature.

Under the USA, private placements are exempt from state registration if they limit solicitations to how many noninstitutional clients per 12 month period? A)25 or fewer B)30 or fewer C)10 or fewer D)6 or fewer

C)10 or fewer The USA states that private placements are exempt from registration if they solicit a maximum of 10 noninstitutional (retail) clients during any 12 month period.

An application to register securities may be filed under the USA by a(n): agent of a broker-dealer. broker-dealer acting on behalf of the issuer. person on whose behalf the offering is made. issuer. A)II and IV. B)I, II, III and IV. C)II, III and IV. D)I only.

C)II, III and IV. Registration statements may be filed by a broker-dealer, a person on whose behalf the offering is made (e.g., a offering made by a large shareholder), or more commonly, the issuer.

To which of the following situations does the transaction exemption apply? City of Chicago bond offering. Canadian government bond offering. Offering an unregistered security to a maximum of 12 individual customers in a 10-month period. The sale of an estate's holding of IBM shares by an executor. A)III and IV. B)I and III. C)IV only. D)I and II.

C)IV only. An exempt transaction relieves the security from any state advertising or registration requirements. Transactions by executors and estate administrators are examples of exempt transactions. Municipal and government bonds are exempt securities and whether or not they are exempt transactions depends on to whom or how they are sold (that information is not given in this question). The sale of the unregistered stock is not an exempt transaction (private placement) as the USA only permits offers to a maximum of ten noninstitutional investors over a 12-month period.

Under the Uniform Securities Act, which of the following circumstances would exempt a security from registration? The security is exempt from registration under the act. The transaction in which the security is sold is exempt under the act. A)II only. B)I only. C)Neither I nor II. D)Both I and II.

D)Both I and II. It is illegal to sell securities that are not registered unless the security or the transaction itself is exempt from state registration requirements. This applies to new issues (primary distributions) and secondary market transactions.

Under the USA, which of the following are exempt securities? U.S. government securities. Unsolicited transactions. Transactions between issuers and underwriters. Securities of credit unions. A)I and II. B)III and IV. C)II and III. D)I and IV.

D)I and IV. U.S. government securities and securities of credit unions are exempt securities. Both unsolicited transactions and those between issuers and underwriters are exempt transactions, not exempt securities.

As used in the Uniform Securities Act, included in the term institutional investor would be: accredited investors. banks. employee benefit plans with assets of no less than $1 million. investment companies. A)II and III. B)I and IV. C)I, II, III and IV. D)II, III and IV.

D)II, III and IV. Institutional investors include banks, insurance and investment companies, and employee benefit plans. Although each of these is included in the term accredited investor, that term, as used in federal law (the term is not found in the USA), also includes certain individuals, and they would never be considered institutional investors under the USA.

A transactional exemption would be offered when a sale is made by: A)a broker-dealer. B)an attorney as an incidental part of her legal practice. C)an investment adviser. D)a sheriff.

D)a sheriff. Among the list of exempt transactions are sales made by a sheriff or marshal. It is possible that the attorney could be acting in the role of a fiduciary and, if so, the transaction would be exempt. From a test-taking standpoint, if you have to read something into an answer to make it correct, as we just did with the attorney, don't do it; go for the straightforward choice.

If Ann Smith, an agent with ABC Securities, Inc., sold a security to a federal covered investment company, this sale would be considered an example of a(n): A)sale of an exempt security. B)agent exemption from registration. C)broker-dealer registration exemption. D)exempt transaction in a security.

D)exempt transaction in a security. Smith's sale of the security to a federal covered investment company is an example of an exempt transaction, not an exempt security. These transactions are exempt from the advertising and sales literature filing requirements under the Uniform Securities Act.

When claiming an exemption from the requirement to register under the USA, the burden of proof is on the: A)investor. B)SEC. C)Administrator. D)party claiming the exemption.

D)party claiming the exemption. As in all legal matters, the burden of proving that one is exempt from a requirement is placed upon the person claiming the exemption.

Under the Uniform Securities Act, which of the following statements about federal covered securities is NOT true? A)Federal covered securities include securities sold under Regulation D of the Securities Act of 1933. B)Federal covered securities must be registered with the states. C)A security issued by an investment company registered under the Investment Company Act of 1940 is a federal covered security. D)The issuer of a federal covered security may be required to pay fees to the states.

B)Federal covered securities must be registered with the states. Federal covered securities are not required to be registered with the states, but issuers of federal covered securities may be required to pay fees to the states. Private placements (Regulation D) and investment companies both describe types of federal covered securities.

Which of the following activities would be prohibited for an agent? Executing a transaction in a discretionary account. Charging a larger than average commission on certain transactions. Soliciting sales of a non-exempt security not yet registered. A)II only. B)III only. C)II and III. D)I, II and III.

B)III only. An agent is prohibited from soliciting sales of a security that has not been registered. An agent is not prohibited from executing a transaction in an account over which he has been granted discretionary authority. An agent may also charge higher than average commissions on certain transactions typically involving low market volume securities and penny stocks among others.

Which of the following is NOT an exempt transaction? A)Isolated nonissuer transactions. B)Initial public offerings. C)Transactions under Regulation D. D)Transactions made on behalf of an estate.

B)Initial public offerings. Transaction exemptions exist for isolated nonissuer transactions, estate transactions, and private placement transactions under Regulation D. Initial public offerings are nonexempt and subject to the Administrator's jurisdiction.

Under the Uniform Securities Act, the Administrator may require the filing of advertising and sales literature in which of the following offerings? A)Sale of the bonds of AAA insurance company organized under the laws of the state. B)Sale of an IPO limited to residents of the state. C)Sale of a U.S. Treasury bond maturing in more than 10 years. D)Sale of preferred stock of a long-established company registered with the SEC whose common shares trade on the New York Stock Exchange.

B)Sale of an IPO limited to residents of the state. The state securities Administrator may require the filing of advertising and sales literature of an IPO limited to residents of the state. The other choices are securities of exempt issuers or, in the case of the NYSE-listed issuer, federal covered securities. The Administrator may not require exempt and federal covered securities to file advertising and sales literature.

According to the USA, the sale of a security to an insurance company is: A)an exempt security. B)an exempt transaction. C)always a private placement. D)an exempt transaction only if the insurance company is authorized to do business in this state.

B)an exempt transaction. Sales of securities to financial institutions are exempt transactions. Insurance companies are a typical example of a financial institution used on the exam. The only relevance of the company being authorized to do business in this state applies to whether or not securities it issues are exempt in this state.

XYZ Brick Company wishes to raise capital by issuing some securities in its home state. The CEO of the company feels that registration with the Administrator is unnecessary because the issue is exempt. Should XYZ be served with an order, the burden of proving its issue is exempt is on the: A)court. B)company. C)Administrator. D)hearing panel.

B)company. In any case where there is a question as to the legality of a specific exemption, the burden of proof is always on the party requesting the exemption.

Under the Uniform Securities Act, the definition of security includes a wide range of items. One of these is a two-party agreement representing a promise to repay a specific sum on a specified date that, if it meets certain requirements, is exempt from registration. This agreement is commonly referred to as a A)futures contract B)promissory note C)loan contract D)debenture

B)promissory note This is the basic definition of a promissory note, and it is one of the many items fitting the definition of a security under the USA.

All of the following must be specified in a security's state registration statement EXCEPT: A)a stop order from another state that affects the offering of the security within that state. B)the total amount of the security that will be offered in other states. C)the amount of securities to be offered in the state. D)the expected use of the projected proceeds of the offering.

B)the total amount of the security that will be offered in other states. The total amount of the security to be offered in other states need not be specified although identifying those states is required. The amount of the security to be offered in the state of registration is required, as it generally provides the basis on which the registration fee is calculated. A stop order from another state that affects the offering of the security within the state must be included. The registration statement will always describe the intended use of the proceeds.

All of the following are exempt from state registration EXCEPT: A)common stock in Mutual Savings Bank. B)variable annuities issued by a major insurance company. C)fixed income securities issued by a bank. D)fixed annuities issued by a small insurance company.

B)variable annuities issued by a major insurance company. Fixed annuities are not securities so there is no registration required. Of the other choices listed, only variable annuities are required to be registered.

The Uniform Securities Act provides an exemption from registration for certain securities and for certain transactions. However, the Administrator is not empowered to deny an exemption from state registration to: U.S. government securities. private placement transactions. a transaction with an insurance company. municipal bonds issued by another state. A)II and III. B)II and IV. C)I and IV. D)I and III.

C)I and IV. Other than in a transaction involving a federal covered security, the Uniform Securities Act gives the power to the Administrator to deny an exemption to any exempt transaction such as private placements or transactions with professional investors such as insurance companies or bank trust departments. However, when it comes to a security's exemption, the Administrator may only deny exempt security status to an issue of a nonprofit organization or an investment contract issued in connection with an employee benefit plan, never a U.S. government security or one issued by another state.

Under the Uniform Securities Act, the Administrator has the power to deny or revoke exemptions for which of the following types of securities? Stock issued by a bank organized under the laws of another state. Securities of nonprofit organizations. Investment contracts issued by employee benefit plans. A)I, II and III. B)I and II. C)II and III. D)II only.

C)II and III. The Administrator may deny or revoke the exemption granted to a nonprofit organization or investment contracts issued by employee benefit plans. Any transaction exemption may be revoked as well. However, there are certain security exemptions that the USA does not grant the Administrator the power to deny. Included in that list is any security issued or guaranteed by any bank organized under the laws of any state.

Commercial paper with a maturity of nine months or less: A)can only be issued by underwriters. B)must be registered as a security. C)need not be registered as a security. D)must be sold on the New York Stock Exchange.

C)need not be registered as a security. Any short-term debt instrument in the top three grades of a recognized rating service (such as Moody's or Standard & Poor's) with 270 days or less to maturity issued in face amounts of $50,000 or more as commercial paper, promissory note, bill of exchange, draft, or banker's acceptance is exempt from registration.

If securities of an issuer registered with the state are outstanding, how long after the effective date of registration must an issuer wait before the registration may be withdrawn? A)18 months. B)Only at the administrator's discretion. C)6 months. D)12 months.

D)12 months. Registration statements are usually effective for a period of 1 year from the effective date and may not be withdrawn during this period if any of the securities of the issuer of the same class are still outstanding.

The Uniform Securities Act prohibits which of the following? Agents exercising discretion in discretionary accounts. Broker-dealers charging larger than ordinary commissions on certain transactions. Agents soliciting orders for unregistered nonexempt securities. A)I, II and III. B)I and II. C)II and III. D)III only.

D)III only. The USA prohibits soliciting orders for unregistered, nonexempt securities. The act does not prohibit agents from exercising discretion or from charging larger than ordinary commissions when justified.

Under the provisions of the USA, all of the following transactions are exempt EXCEPT A)liquidation of a security pledged as collateral for a loan B)transactions by executors C)transactions in preorganization certificates if no commission is paid, no subscriber makes any payment, and the number of subscribers does not exceed 10 D)a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made

D)a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made A transaction pursuant to an offer by an issuer to no more than 10 non-institutional persons in the state would qualify as a private placement and would be exempt. However, unlike a preorganization certificate, the subscribers do pay for their purchases. All of the other transactions are exempt.

The term used to describe a customer initiated order that includes all of the details except time and price is: A)discretionary. B)solicited. C)limit. D)unsolicited.

D)unsolicited. When the order to buy or sell is initiated by the customer, it is considered to be an unsolicited order. Discretionary orders leave the decision as to what security, how much and buy or sell up to the designated agent. Limit orders carry a specified price and time.

Which of the following would fall under the USA's definition of exempt transaction? A)An investment adviser purchases securities from the issuer B)An issuer sells a new issue to a broker-dealer C)An agent accepts an order from a client after having sent a research report dealing with that security. D)A real estate partnership sells interests to the public with no commission charge

B)An issuer sells a new issue to a broker-dealer Transactions between issuers and broker-dealers (but not investment advisers) are exempt transactions. As long as the sale is to the public, regardless of commissions charged (or not charged), the transaction is nonexempt. Don't be lured into thinking that accepting an order from a client is unsolicited. That's not true in this case because it is as the result of the research report.

Under the Uniform Securities Act, any securities registration statement must include: the amount of securities to be offered in that state. a list of the other states in which the security will be registered. a copy of the prospectus or offering circular. A)I and III. B)I, II and III. C)II and III. D)I and II.

B)I, II and III. A registration statement must include all three items shown, plus any adverse finding by any court, any Administrator, or the SEC.

Which of the following securities are exempt from registration requirements under the Uniform Securities Act? Issues of U.S.-based insurance companies authorized to conduct business in the state. NYSE traded issues. Issues of nonprofit religious organizations. Commercial paper meeting certain requirements. A)I and III. B)I, II, III and IV. C)III only. D)II, III and IV.

B)I, II, III and IV. Securities issued by an insurance company organized under the laws of any state and authorized to do business in that state are exempt from registration. NYSE-listed issues are federal covered, and nonprofit organizations and commercial paper with a maturity of 270 days or less are also exempt.

When describing exempt transactions under the USA, which of the following are fiduciaries? Executor of an estate Administrator in intestacy Custodian for a minor in an UTMA account An agent with authority over time and price execution A)I and III B)II and IV C)I and II D)III and IV

C)I and II Both executors and administrators are fiduciaries. An agent is a fiduciary if the agent has discretionary authority over the assets in the account, but time and price authority is not considered discretion. A sale made by the custodian for a minor in an UGMA or UTMA account does not qualify as an exemption transaction under the USA, even though, as a matter of law, the custodian is functioning in a fiduciary capacity.

Which of the following securities is (are) exempt from registration under the Uniform Securities Act? Municipal securities. Government securities. Stock or bonds issued by an insurance company authorized to do business in this state. A)I only. B)I and III. C)I, II and III. D)II and III.

C)I, II and III. All government and municipal securities are exempt from registration requirements under the Uniform Securities Act as are insurance company securities if the company is authorized to do business in this state.

Which of the following transactions would be included in the USA's definition of exempt transaction? A banker liquidates stock pledged as collateral for a loan that has gone into default. An offer to purchase a new stock made to 5 individuals and 15 institutional investors in this state during the past 12 months. An isolated nonissuer transaction. The sale of preorganization certificates to 10 individuals with no commission being paid. A)III and IV. B)II and III. C)I, II, III and IV. D)I and II.

C)I, II, III and IV. All of these are included in the USA's definition of an exempt transaction. Sales made by a bona fide pledgee are exempt. Even though the number of offerees in the private placement exceeds 10, that limitation does not apply to institutional investors. A preorganization certificate may be sold to as many as 10 persons, while a private placement may not be offered to more than 10 (not counting institutional investors).

A bank purchases 200 shares of a stock. In regard to this purchase, the bank would be considered a(n): A)public investor. B)corporate investor. C)small investor. D)institutional investor.

D)institutional investor. Banks and insurance companies are regarded as institutional investors regardless of the size of orders they place. (Although in most real world situations, the orders placed by institutional investors are substantial blocks of stocks and/or bonds, they don't have to be.) The term "public investor" implies individuals and households.

Because, under the USA, many different securities qualify for an exemption from registration, proof of qualification for an exemption is the responsibility of: A)the Administrator. B)no specific party; the exemptions are automatic. C)any interested investor. D)the person requesting the exemption.

D)the person requesting the exemption. The USA provides for exemption from registration in a number of cases. If the exemption is challenged by the Administrator, it is up to the person, usually the issuer, requesting the exemption to prove that it is merited.

Under the Uniform Securities Act, which of the following would NOT be considered an exempt transaction? A)An agent sells Canadian treasury bonds to an individual client. B)The sale of LMNO common stock, listed in the Pink Sheets, to an insurance company. C)The sale of an unregistered nonexempt security to an individual client at that client's request. D)A bank liquidates the securities pledged as collateral for a loan that has gone into default.

A)An agent sells Canadian treasury bonds to an individual client. Even though the bonds are an exempt security, the sale to an individual client is not an exempt transaction. Sales to institutions, or sales by fiduciaries, or unsolicited transactions are all exempt.

Section 402(a) of the Uniform Securities Act contains a lengthy list of securities that are exempt from the registration and advertising filing requirements of the Act. Included in that list would be all of the following EXCEPT: A)Bonds issued by the city of Berlin, Germany. B)Bonds issued by the city of Berlin, Ohio. C)Common stock listed on the NYSE. D)Church bonds.

A)Bonds issued by the city of Berlin, Germany. Securities exempt from state registration include those issued by a U.S. or Canadian governmental unit, such as municipal bonds, and securities issued by nonprofit and charitable organizations, such as church bonds. However, bonds issued by a non-sovereign foreign government (cities, etc.) are not considered exempt securities unless guaranteed by the sovereign (German, in this case) government. Even before the NSMIA created the exemption for federal covered securities, those listed on the NYSE received what was called the "blue-chip" exemption.

Which of the following securities is (are) exempt from state registration and filing of advertising materials? New York City municipal revenue bonds. Montreal bonds guaranteed by the province of Quebec. Preferred stock of the National Bank, N.A., a member of the Federal Reserve System. Preferred stock of Local County Bank, organized and regulated solely by the banking laws of the state of Illinois. A)I, IIA)I, II, III and IV. C)IV only. D)I and III.

A)I, II Any security issued by a bank that is federally regulated is exempt under the USA. State banks are exempt if regulated by that state. Municipal bonds are exempt if issued by a municipality in the United States or Canada.

Under the provisions of the Uniform Securities Act, securities exempt from registration requirements include: securities issued by the U.S. government. securities issued by a building and loan association organized under the laws of any state and authorized to do business in this state. bonds issued by an insurance company organized under the laws of any state and authorized to do business in this state. A)I, II and III. B)II and III. C)I only. D)I and II.

A)I, II and III. Securities exempt from registration requirements include securities issued by the state or U.S. government; securities issued by foreign governments with whom the U.S. maintains diplomatic relations; and any securities issued by savings and loan or building and loan associations, insurance companies, and credit unions authorized to do business in this state.

Under the Uniform Securities Act, certain transactions are exempt from the sales literature and advertising filing requirements. Which of the following would be included in that category? Any isolated, nonissuer transaction. Any sale to a financial institution. Any transaction by the executor of an estate. Any transaction between an issuer and underwriters. A)I, II, III and IV. B)I and III. C)II and III. D)I, II and IV.

A)I, II, III and IV. All four options describe exempt transactions. Exempt transactions are not subject to the advertising and sales literature filing requirements of the Administrator.

Which of the following are exempt from registration under the Uniform Securities Act? -Preferred stock issued by ZXZ Corporation, whose common stock is traded on the New York Stock Exchange. -Common stock issued by a national bank. -Equipment trust certificates issued by a railroad company regulated by a state or federal agency. -A debenture traded in the over-the-counter market issued by a corporation whose common stock trades on the NYSE. A)I, II, III and IV. B)II, III and IV. C)II and III. D)I only.

A)I, II, III and IV. All the securities listed are exempt from registration under the Uniform Securities Act. Preferred stock issued by corporations whose common stock trades on the NYSE is a federal covered security and is exempt from registration with the states. The same is true for a debenture of a company registered on the NYSE even though the debenture is traded over the counter. The issuers of equipment trust certificates (railroads) are regulated by other agencies, and issuers of bank securities (commercial banks) are regulated by the Federal Reserve and Office of the Comptroller of Currency (OCC); their securities are exempt from registration by the states. The National Securities Markets Improvement Act of 1996 (NSMIA) prohibits dual regulation of securities.

Which of the following securities are exempt from the registration provisions of the USA? Issue of a savings and loan association authorized to do business in this state. General obligation municipal bond. Bond issued by a company that has common stock listed on the American Stock Exchange. A)I, II, and III. B)I only. C)II and III. D)II only.

A)I, II, and III. The USA exempts a number of different issues from registration, including securities issued by a bank, or anything that functions like a bank (e.g., a savings and loan or credit union). Securities issued by a governmental unit are always exempt. Securities listed on the American Stock Exchange are part of a group known as federal covered securities that also includes those listed on the New York Stock Exchange and Nasdaq Stock Market issues. If the common stock is listed, then any security of that issuer that is equal or senior in claim to the common is also considered exempt.

Which of the following are exempt transactions under the Uniform Securities Act? XYZ Company signs an agreement to sell 1 million shares of its stock to ABC broker-dealer, who will then act as an underwriter in marketing the shares to the public. A non-issuer sale of securities listed on the Nasdaq Stock Market to several individual clients of the agent. Mr. Jones sells 100 shares of an unregistered security he owns to his next--door neighbor for $1,000. A customer calls a registered agent and asks to buy 1,000 shares of SPHG, a company the representative is not familiar with, and the representative fills the order. A)I, III and IV. B)II and IV. C)I and II. D)I and III.

A)I, III and IV. Transactions between an issuer and an underwriter, isolated nonissuer transactions (Mr. Jones), and unsolicited nonissuer transactions (SPGH) are exempt under the Uniform Securities Act. Transactions in federal covered securities (listed on national exchanges or the Nasdaq Stock Market) are transactions in an exempt security, but, because the sales are being made to individual clients, the transactions might not be exempt.

Under the Uniform Securities Act, which of the following statements are TRUE regarding private placements? They are offered to no more than 10 persons in a state in a 12-month period. They may be offered to an unlimited number of institutional investors. Institutional buyers need not be purchasing for investment. A)II and III. B)I and II. C)I and III. D)I, II and III.

A)II and III. Private placements are transactions resulting from offers to no more than ten noninstitutional persons in 12 months for investment purposes only. The offeror must be convinced that buyers are purchasing for investment. This means no immediate resale intentions are allowed on the buyer's part. No commissions may be paid, directly or indirectly, for these transactions. However, sales to institutional purchasers are exempt from the limitations regarding number of sales, resale restrictions, and commissions. They may, therefore, be offered to more than ten persons. (Remember that the term person is defined very broadly in the act.)

Which of the following financial instruments of XYZ Oil Corporation, whose shares are traded on the New York Stock Exchange, is NOT exempt from registration with the state? A)Interests in oil and gas limited partnership units in which XYZ is the general partner. B)XYZ debentures listed on the New York Stock Exchange. C)XYZ bonds issued and sold in the United Kingdom only. D)Convertible preferred stock issued by XYZ Oil Corporation.

A)Interests in oil and gas limited partnership units in which XYZ is the general partner. XYZ's participation as a general partner of an oil and gas limited partnership does not qualify the issue as exempt from state registration. XYZ's direct debt and preferred stock are exempt under the Uniform Securities Act.

All of the following describe exempt transactions EXCEPT A)Joe Smith, an employee in the consumer lending department of Amalgamated National Bank, buys securities from ABC Securities, a broker-dealer registered in the state. B)Amalgamated National Bank sells its publicly traded bond portfolio to ABC Insurance Company. C)First National Bank sells its entire publicly traded bond portfolio to Amalgamated National Bank. D)ABC Securities, a registered broker-dealer functioning as an underwriter, purchases securities from XYZ corporation.

A)Joe Smith, an employee in the consumer lending department of Amalgamated National Bank, buys securities from ABC Securities, a broker-dealer registered in the state. The purchase of securities from a broker-dealer by an employee of a bank is a nonexempt transaction because it is a sale of a security by a broker-dealer to a member of the public. Transactions between broker-dealers and issuers, transactions between banks, and between banks and insurance companies are exempt because they occur between financial institutions. Exempt transactions are most often identified by the transaction's parties, rather than the type of security involved.

Each of the following actions would be considered an unethical or prohibited business practice under the Uniform Securities Act EXCEPT: A)a licensed agent offering an exempt security for sale. B)an agent following a pattern of buying a stock in one market and selling it in another to create the appearance of increasing market interest. C)an agent implying to a prospect that the Administrator has approved of an agent's qualifications. D)an agent calling his clients who are capable of accepting risk and suggesting they purchase a stock after hearing from his brother-in-law that the company's CFO disclosed that the next earnings report will show a dramatic increase.

A)a licensed agent offering an exempt security for sale. The solicitation of unregistered exempt securities, such as municipal bonds, is a common and permissible practice.An agent who implies that he has received approval from the Administrator or any other SRO; executes trades to create fictitious volume; or recommends trades based on nonpublic, inside information would be in violation of the USA and other securities regulations.

Under the USA, all of the following are exempt transactions EXCEPT: A)a sale of a primary offering registered with the SEC. B)transaction executed by a trustee in bankruptcy. C)unsolicited customer orders. D)isolated nonissuer transactions.

A)a sale of a primary offering registered with the SEC. In almost every instance, an issuer transaction-that is, one for the benefit of the issuer-will not be considered an exempt transaction. Exempt transactions include isolated nonissuer transaction; transactions between an issuer and an underwriter; transactions by an executor, Administrator, sheriff, marshal, trustee in bankruptcy, guardian, or conservator; any sale or offer to a bank, savings institution, investment company, or other financial institution; and private placements.

All of the following are exempt securities under the Uniform Securities Act EXCEPT: A)securities issued by a bank holding company. B)securities issued by the Canadian government. C)securities issued by a Canadian province. D)securities issued by a federal savings and loan association.

A)securities issued by a bank holding company. Securities issued by a bank are exempt. However, this answer refers to a bank holding company that is considered to be an ordinary company subject to state registration if not otherwise exempt.

Under the Uniform Securities Act, a non-exempt transaction may take place in the state only if: A)the security is registered, exempt, or federal covered. B)the security is sold in an exempt transaction. C)it is between institutions. D)it is offered privately to no more than 10 individuals in any 12 month period.

A)the security is registered, exempt, or federal covered. We are told that the transaction is not exempt. Therefore, unless the security is exempt (or federal covered), the only way to have a legal sale is for it to be registered.

According to the Uniform Securities Act, which of the following is NOT an exempt transaction? A)A broker-dealer sells an entire new issue to five bank clients. B)A broker-dealer makes an offer of private placement securities to 15 individual investors within a 30-day period. C)The executor of an individual's estate liquidates individual stocks and invests the proceeds in a money market account at a bank. D)Bonds with a rating below investment grade are sold to the ABC High Yield Bond Fund.

B)A broker-dealer makes an offer of private placement securities to 15 individual investors within a 30-day period. The Uniform Securities Act defines a private placement as an offering made to no more than ten noninstitutional investors in a 12-month period. If a private placement complies with this restriction, it is an exempt transaction.

Under the Uniform Securities Act, the registration and advertising filing requirements do not apply to exempt securities. In addition to exempt securities, the Uniform Securities Act extends this same exclusion to exempt transactions. Examples of exempt transactions would include: an individual client calling an agent to purchase 500 shares of a nonexempt unregistered security for his IRA. a sale of 200 shares of a stock listed on the NYSE to a corporate pension plan with assets of $800,000. a sale of 300 shares of a stock traded on the Pink Sheets by the executor of an estate. a sale of a AAA corporate bond by the custodian of an UTMA account. A)I and IV. B)I and III. C)I, II and III. D)II and IV.

B)I and III. B)I and III.

Which of the following securities are exempt from the registration requirements of the Uniform Securities Act? An investment contract issued in connection with an employee pension plan. Securities issued by St. Paul's Catholic Church in Tempe, Arizona. Securities issued by a public utility. Securities issued by the Canadian government. A)II and III. B)I, II, III and IV. C)II and IV. D)I and III.

B)I, II, III and IV. All of the securities listed are exempt from registration under the USA.

Section 403 of the USA Act states that the Administrator may, by rule or order, require the filing of any sales and advertising literature addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser unless the security or transaction is exempted by Section 402 or is a federal covered security. This would include any: circulars. form letters. investment adviser's website. prospectus. A)I, II and III. B)I, II, III and IV. C)I and II. D)III and IV.

B)I, II, III and IV. All of these are included in the filing requirements, even the prospectus.

Among the many exempt transactions under the Uniform Securities Act are the private placement and the preorganization certificate or subscription. While these two exemptions have several requirements in common, they have which of the following differences? I. The private placement exemption places a limit on the number of sales to retail investors while the preorganization certificate places a limit on the number of offers to all investors.​ II. Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. III. It is expected that noninstitutional buyers of the private placement are purchasing for investment only, while no such requirement exists for the investors in a preorganization certificate. IV. Commissions may be paid on the sale of a private placement to noninstitutional clients, while no remuneration is payable on the sale of a preorganization subscription. A)II and IV B)II and III C)I and IV D)I and III

B)II and III No money changes hands in the sale of a preorganization certificate or subscription, while the seller receives payment in the case of a private placement. The state will consider a private placement an exempt transaction if it is anticipated that individual (noninstitutional) investors are purchasing for investment only, not immediate resale. No holding restrictions are placed on preorganization certificates. Only in the case of a sale of a private placement to an institutional client is it permissible to pay commissions. Finally, choice I has it backwards. When referring to retail (noninstitutional) investors, there is a limit to the number of offers (10), while in the preorganization certificate, the number of sales (subscribers) is limited to 10 regardless of whether they are retail or institutional.

Which of the following activities are prohibited practices under the principles of the Uniform Securities Act? Buying and selling the same stock on the same day on different exchanges. Offering shares of an unregistered, nonexempt security to customers. Offering a Canadian government bond to a resident of a state in which the agent of a broker-dealer is not registered. A)I, II and III. B)II and III. C)II only. D)I only.

B)II and III. Unless qualifying for an exemption, broker-dealers and agents must be registered in each state where offers or sales occur. Also, every security must be registered unless it is an exempt security. Buying a security on one exchange and selling it on another is an arbitrage activity and not a violation of the USA. Although the Canadian government bond is an exempt security, the agent must be properly licensed in each state in which an offer to sell is being made.

Which of the following transactions are exempt? XYZ Corp., a local manufacturing firm, sells its common stock to several local individual accredited investors on an infrequent or isolated basis. Joe Smith, an agent with ABC Securities, Inc., sells XYZ Corporation's 5-year fixed income securities, rated AAA by Standard & Poor's, on a regular basis to selected members of his large retail client base. Joe Smith, an agent with ABC Securities, Inc., sells XYZ Corporation's securities to a high-net worth client on an unsolicited basis. Alexander Wimpton had his sizable portfolio of stocks and bonds sold by the administrator of his estate upon his death. A)II and III. B)III and IV. C)I and IV. D)I and II.

B)III and IV. Unsolicited secondary market transactions and those made by an estate's executor are exempt transactions; the net worth of the client is immaterial. While the AAA bonds may be an exempt security, soliciting regular transactions (unless with institutional buyers) is not an exempt transaction. XYZ Corp., a local manufacturing firm, is an issuer of the common stock. Had it been a non-issuer transaction on an isolated basis, the transaction would have been exempt and the accredited investor status of the clients is meaningless here.

Common stock of KAPCO, Inc., trades on the NYSE. Which of the following securities would NOT be exempt from registration under the USA? A)KAPCO noncumulative preferred stock. B)Limited partnership interests in a shopping center with KAPCO, Inc., as the general partner. C)Stock rights to acquire KAPCO common stock. D)KAPCO, Inc., subordinated debentures, traded on the Pink Sheets.

B)Limited partnership interests in a shopping center with KAPCO, Inc., as the general partner. When an issuer's stock is listed on the NYSE, any security issues that are equal to or senior to that stock is a federal covered security and exempt from registration with any state. When that issuer acts as a general partner in a real estate offering, it is not their security that is being sold so the exemption does not apply.

Which of the following is required for a preorganization subscription to be an exempt transaction? A)There may be no more than 15 subscribers. B)No commission has been paid. C)Full payment has been made. D)Prior notification of intent to incorporate must be given to the Administrator.

B)No commission has been paid. A preorganizational subscription is an exempt transaction if there are no more than ten subscribers and no commissions are paid, either directly or indirectly. The subscribers make no payments until they purchase the underlying security.

Under the USA, all of the following issues would be exempt from registration EXCEPT: A)stock issued by savings and loan association authorized to do business in this state. B)stock issued by an insurance company not offering policies in this state. C)bonds issued by the city of New Orleans. D)an investment contract issued in connection with an employee stock purchase plan.

B)stock issued by an insurance company not offering policies in this state. Had the insurance company been authorized to do business in this state, its securities offering would be exempt.

Under which of the following circumstances will a private placement fail to qualify for exemption from registration under the USA? A)A bank holding company purchases the offering for trading purposes rather than investment purposes. B)The offer is directed to only five individuals during any 12-month period. C)A modest commission is paid to the agents who sell the offering to noninstitutional clients. D)The seller reasonably believes that individual purchasers are buying for investment purposes rather than immediate resale.

C)A modest commission is paid to the agents who sell the offering to noninstitutional clients. A private placement will lose its exemption if those who sell the offering are paid commissions on sales to noninstitutional clients. For a private placement to be exempt, the offer cannot be directed to more than 10 persons during a 12-month period. In the case of noninstitutional buyers, the seller must reasonably believe (nice to have it in writing, but not required), they are purchasing the offering for investment purposes only. Institutional purchasers do not have to purchase the offering for investment purposes.

A licensed agent with a registered broker-dealer in a state would be permitted to engage in which of the following transactions in unregistered nonexempt securities? A)A solicited transaction in a small Canadian mining company B)The sale of commercial paper with a 12-month maturity C)A private placement D)The sale of a preorganization certificate on which the agent receives no commission on the amount paid by the investor

C)A private placement Under the USA, it is unlawful for any person to offer or sell any security in this state unless (1) it is registered under the USA; or (2) the security or transaction is exempted under the USA; or (3) it is a federal covered security. In this case, a private placement is an exempt transaction so the agent is within the limits of the law. The sale of the preorganization certificate is not an exempt transaction because, although the agent received no commission, the investor paid for the subscription and, in order to be an exempt transaction, no payment is allowed.

Which of the following transactions is NOT exempt from registration? A)Transactions between an issuer and underwriter or between underwriters. B)A bona fide pledge of securities. C)A sale of an exempt security to an individual customer as a result of an agent's solicitation. D)Transactions with banks, savings and loan associations, and other financial institutions.

C)A sale of an exempt security to an individual customer as a result of an agent's solicitation. Solicited trades with individuals are not exempt transactions, even when the security being traded is exempt. Transactions between issuers and underwriters or between underwriters are exempt from registration and advertising filing requirements. A bona fide pledge of securities is not a transaction and this question is looking for a nonexempt transaction. Transactions with banks, savings and loan associations, and other financial institutions are exempt from registration and advertising filing requirements.

Under the Uniform Securities Act, which of the following would NOT be considered an exempt transaction? A)An executor liquidates the estate's portfolio. B)The sale of ABCD common stock, listed on the Nasdaq Stock Market, to a trust company. C)An agent sells U.S. Treasury notes to an individual client. D)The purchase of an unregistered nonexempt security by an individual client at that client's request.

C)An agent sells U.S. Treasury notes to an individual client. Even though the bonds are an exempt security, the sale to an individual client is not an exempt transaction. Sales to institutions, sales by fiduciaries, or unsolicited transactions are all exempt.

Under the Uniform Securities Act, which of the following statements is TRUE regarding the Administrator's power to deny or revoke an exemption? A)In a proceeding to revoke an exemption, it is assumed that the exemption applies and the Administrator must prove that it does not apply. B)The Administrator may not revoke the exemption of securities issued by a nonprofit corporation. C)An order revoking an exemption may be issued without prior notice to the persons affected. D)The revocation may apply to a period prior to the date on which the revocation order was issued.

C)An order revoking an exemption may be issued without prior notice to the persons affected. An order revoking an exemption, sometimes referred to as a summary order, may be made effective without prior notice. The injured party may request a hearing in writing, which must be granted within 15 business days of receipt of the request. No denials or revocations may be made on a retroactive basis. The Administrator does have the power to revoke the exemption granted to securities issued by nonprofit entities. In any proceeding, the burden of proving an exemption is on the person claiming it, not the Administrator.

The Uniform Securities Act specifically exempts certain issues from the registration and advertising filing requirements of the act. Which of the following securities does NOT carry that exemption? A)Canadian government bond. B)6-month commercial paper. C)Bank holding company stock. D)Tax-free municipal bond.

C)Bank holding company stock. The securities of banks, trust companies, and savings institutions are exempt; the securities of bank holding companies are not. Commercial paper with a maturity of 270 days or less is also included in the list of exempted securities.

Which of the following entities are considered to be exempt issuers under the Uniform Securities Act? State of Michigan. City of Calgary, Alberta. City of Birmingham, UK. Kapco Leveraged Partners, an unregistered hedge fund whose adviser is registered with the SEC. A)I, II and IV. B)I, II and III. C)I and II. D)I, II, III and IV.

C)I and II. Any state or Canadian province, or political subdivision thereof, is considered an exempt issuer. Foreign national governments with which the US has diplomatic relations, but not their political subdivisions, are considered exempt issuers. SEC-registered investment companies are exempt issuers, but, unregistered hedge funds are not, regardless of with whom their advisers are registered.

Under the Uniform Securities Act, the sale of an unregistered nonexempt security: is permissible if the order was unsolicited. is permissible if the customer agrees not to pursue legal action. is permissible if the security appreciates in value. may subject the agent to civil liability. A)II and III. B)II and IV. C)I and IV. D)I and III.

C)I and IV. If a security or the transaction in which a security is sold is not exempt, the security must be registered with the state. The sale of a security in violation of the act, such as the sale of an unregistered nonexempt security, exposes the broker-dealer and agent to civil liability. If a nonexempt security is sold through an exempt transaction, such as an unsolicited transaction, the security effectively becomes exempt for purposes of registration and, therefore, legal.

The James Henry Company (JHC), an SEC-registered securities broker-dealer with offices in Chicago and Los Angeles, limits its clientele to banks and trust companies. JHC makes a sale of US government securities to the Wall Street Bank located in New York City. Which of the following statements is (are) TRUE under the Uniform Securities Act? The security itself is exempt from registration. The transaction is exempt. The broker-dealer is not required to be registered in the state of New York. A)I and II B)I only C)I, II and III D)II only

C)I, II and III The sale involves a U.S. government security, which is exempt from the registration requirements under the act. The transaction itself is also exempt because it involves a sale to a financial institution. Remember, in an exempt transaction, the security subject of the transaction need not be registered with the state in which the transaction takes place. In this example, the security was already exempt, but that does not diminish the fact that the transaction is exempt. The fact that the firm limits its clientele to financial institutions, such as banks, and that the broker-dealer has no office in New York means that, under the Uniform Securities Act, the firm is not considered a broker-dealer in that state. Therefore, the broker-dealer is not required to be registered in the state of New York.

Under the Uniform Securities Act, the Administrator may deny or revoke the exemption from registration for which of the following? A security issued by a nonprofit organization. Investment contracts of employee benefit plans. An exempt transaction not involving a federal covered security. A)I only. B)I and III. C)I, II and III. D)II and III.

C)I, II and III. The Administrator may deny or revoke any transaction exemption except those involving a federal covered security. The only security exemptions where the Administrator has this power is in the case of securities issued by non-profit organizations and investment contracts of employee benefit plans. The order must pertain to a specific transaction or security.

Securities of which of the following issuers are exempt under the USA? National banks. State banks. Bank holding companies. Federal savings and loan associations. A)I only. B)I, II, III and IV. C)I, II and IV. D)I and II.

C)I, II and IV. Under the USA, the registration exemption for bank-issued securities is justified by strict financial requirements imposed on banks by banking industry regulators such as the FDIC, the Comptroller of the Currency, and the Federal Reserve. Both federal and state banks and federal savings and loan associations are subject to such regulation. However, bank holding companies (as separate legal or corporate entities) are subject to state registration if not otherwise exempt. Thus, securities issued by bank holding companies are not exempt securities under the act.

Under the Uniform Securities Act, which of the following statements is NOT true regarding registration of securities? A)The Administrator may require the proceeds of the sale of securities be escrowed until sales reach a certain level. B)A post-effective amendment must be filed if there are any material changes in the information on file. C)Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. D)The Administrator may require periodic sales and other reports to be filed.

C)Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. The Administrator may require certain reports to be filed and the registration statement and other offerings be updated as necessary. A post-effective amendment must be filed if there have been any material changes to information on file. Administrators may require the proceeds of the sale to be escrowed when it would take specific amounts of money to achieve the primary purpose of the offering. Registration of investment companies must comply with the Investment Company Act of 1940, and investment companies are not required to register with the state.

Which of the following transactions is NOT exempt from the registration requirements of the Uniform Securities Act? A)An isolated nonissuer transaction. B)Transactions by an executor, administrator, sheriff, or receiver in bankruptcy. C)Solicited transactions in a nonexempt security. D)Transactions between an issuer and an underwriter or among underwriters.

C)Solicited transactions in a nonexempt security. Solicited transactions in a nonexempt security are not exempt transactions. The Uniform Securities Act specifically exempts transactions by an executor, administrator, sheriff, or receiver in bankruptcy from the registration requirements of the act. The same is true for an isolated nonissuer transaction and transactions between an issuer and an underwriter or among underwriters.

Under the Uniform Securities Act, which of the following statements regarding private placements is TRUE? A)Being an exempt transaction, the antifraud provisions do not apply. B)The offering must be made to fewer than 15 noninstitutional persons. C)The security ​that is the subject of the private placement ​need not be registered. D)A prospectus must be provided before the offering.

C)The security ​that is the subject of the private placement ​need not be registered. Private placements are offers to no more than 10 noninstitutional persons in a 12-month period for investment purposes (not immediate resale), where no commissions are paid, directly or indirectly. Such transactions are exempt from registration requirements. The fraud provisions apply to any person involved with the purchase or sale of a security, whether registered or exempt, and the prospectus delivery requirements apply to registered securities. Please note that when it comes to institutional clients, there are no numerical limitations on offers, no required holding period, and no restrictions on payment of commissions.

Under the Uniform Securities Act, when an IAR acting in the capacity of trustee of a family trust executes a transaction on behalf of the trust, it is A)an exempt transaction B)a violation of the trustee's fiduciary responsibility C)a nonexempt transaction D)an exempt security

C)a nonexempt transaction Among the list of exempt transactions is those made by fiduciaries, including trustees in bankruptcy, but not other trustees. Therefore, this is a nonexempt transaction. The fact that this is an IAR who is the trustee has no bearing on the question.

Exempt transactions, as defined in the Uniform Securities Act, would include all of the following EXCEPT A)isolated nonissuer transactions B)liquidation of securities held in an estate by the executor C)an agent selling U.S. Treasury bonds to an individual client D)pre-organization certificates being sold to 8 retail investors

C)an agent selling U.S. Treasury bonds to an individual client Even though Treasury bonds are an exempt security, a solicited sale to an individual is NOT an exempt transaction.

All of the following are exempt transactions under the USA EXCEPT: A)a sale of common stock by an administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator. B)a securities transaction by an executor. C)initial sale of shares to in-state residents of a local manufacturing company. D)a rescission offer, sale, or purchase.

C)initial sale of shares to in-state residents of a local manufacturing company. An initial sale of shares to in-state residents is an intrastate initial public offering and must be registered with the state securities Administrator. A securities transaction by an executor, a sale of common stock by an administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator, or a rescission offer, sale, and purchase are exempt transactions.

In conjunction with the offering of securities, an issuer furnishes a portion of the offering to a promoter for a consideration substantially different from the public offering price. According to the USA, the Administrator: A)must require that the promoter's securities be escrowed for a period not exceeding three years. B)must require that the promoter's securities be escrowed for a period not exceeding one year. C)may require that the promoter's securities be deposited in escrow and that the proceeds from the sale of the registered security in his state be impounded until the issuer receives a specified amount from the sale of the security in his state. D)must stop the offering.

C)may require that the promoter's securities be deposited in escrow and that the proceeds from the sale of the registered security in his state be impounded until the issuer receives a specified amount from the sale of the security in his state. When a promoter of a public offering receives issuer shares for less than the public offering price, the Administrator of a state's securities department may require that the promoter's securities be escrowed until the issuer receives a specified amount from the sale of the security in his state.

Under the Uniform Securities Act, all of the following conditions must exist in order for a private placement to be considered an exempt transaction EXCEPT: A)commissions may not be paid to sales agents of the broker-dealer offering the securities to noninstitutional clients. B)the offer must be directed to no more than 10 individuals during any 12-month period. C)noninstitutional clients must not make payment for their purchases. D)broker-dealers and their agents must reasonably believe that noninstitutional clients are buying the securities for investment purposes and not for resale.

C)noninstitutional clients must not make payment for their purchases. For a private placement to remain an exempt transaction under the Uniform Securities Act, the offer may be directed to no more than 10 individuals during any 12-month period. Additionally, no commissions may be paid to agents of the offering broker on sales to noninstitutional buyers, and there must be reasonable belief that the purpose in buying the securities by noninsitutional clients is for investment rather than resale purposes. However, just as with any other securities purchase, payment must be made in accordance with industry standards.

When registering a security under the Uniform Securities Act, the registrant must indicate all of the following EXCEPT A)adverse rulings by a court, regulatory authority, or the SEC with respect to the offering B)the amount of securities to be offered in the state C)the effective date of the offering D)all other states in which the security is to be registered

C)the effective date of the offering The effective date is determined by the state Administrator or the SEC, not the person registering the security. Registrants must indicate all other states in which the security is to be registered. The amount of securities to be offered in the state, for which a specific registration is sought, must be disclosed in addition to any adverse rulings related to the offering.

If a person offers to buy a security after reading a tombstone ad, the offer to buy would be considered: A)null and void. B)solicited. C)unsolicited. D)illegal.

C)unsolicited. A client calling to buy based on reading a tombstone ad is considered an unsolicited order because, under the law, the tombstone ad is neither a solicitation to buy nor an offer to sell. If the question had stated that the agent had sent a prospectus out and the client was responding to that, it would have been a solicited order.

All of the following are exempt from state registration under the Uniform Securities Act EXCEPT: A)securities issued by a nonprofit organization. B)debt securities issued by or guaranteed by an insurance company licensed to do business in this state. C)variable annuities or other variable insurance products offered by an insurance company. D)bonds issued by a bank that is a member of the Federal Reserve System.

C)variable annuities or other variable insurance products offered by an insurance company. A variable annuity (or other variable insurance product) offered by an insurance company is a nonexempt security under the Uniform Securities Act. Securities issued by or guaranteed by an insurance company are covered by extensive state insurance regulations and are exempt from state securities registration. Securities issued by banks are exempt because banks are covered by extensive state and federal banking regulations.

The Uniform Securities Act contains a number of exemptions from registration of securities. Which of the following do not qualify for any of those exemptions? A debenture issued by a corporation. A bond issued by the city of Athens, Greece. A bond issued by the province of Manitoba. A security issued by a credit union authorized to do business in the state. A)I and IV. B)II and III. C)III and IV. D)I and II.

D)I and II. Securities issued by political subdivisions of countries other than the U.S. and Canada, are not exempt unless guaranteed by their federal government (and that government has diplomatic relations with the U.S.). The only way the corporate debenture would be exempt is if it was issued by a company whose common stock was federal covered. Since the question does not tell us that, we must assume it is not.

Under the USA, a private placement is considered an exempt transaction when directed: to no more than ten noninstitutional persons. to no more than 15 noninstitutional persons. in nine consecutive months. in 12 consecutive months. A)I and III. B)II and III. C)II and IV. D)I and IV.

D)I and IV. An exempt transaction is considered a private placement directed to no more than ten noninstitutional persons in a 12-consecutive-month period. Furthermore, purchasers must agree that they are purchasing for investment purposes only, not for immediate resale. No such holding period restrictions apply to institutional buyers of a private placement.

Securities issued by which of the following would be exempt from the registration requirements of the Uniform Securities Act? Nonprofit organization. Exchange-listed security. Savings and loan association. Federal credit union. A)I and IV. B)III and IV. C)I and II. D)I, II, III and IV.

D)I, II, III and IV. All of the issuers listed are exempt from the registration provisions of the Uniform Securities Act.

Which of the following is(are) exempt from the registration requirements of the Uniform Securities Act? Securities issued by a nonprofit organization. Securities guaranteed or issued by a federal savings and loan. T-bills. Unit investment trusts registered with the SEC. A)I, II and III. B)I only. C)II, III and IV. D)I, II, III and IV.

D)I, II, III and IV. Securities issued by nonprofit organizations, federal savings and loans, and the U.S. government (i.e., Treasury bills, Treasury bonds) are exempt from the registration requirements of the Uniform Securities Act. Unit investment trusts that are registered under the Investment Company Act of 1940, are federal covered securities and, therefore, are exempt.

Under the Uniform Securities Act, which of the following statements are TRUE? It is unlawful for anyone to conduct business as a broker-dealer in a state unless also registered as an agent. A registration statement may be filed by an issuer itself, a broker-dealer, or any other person on whose behalf the offering is to be made. Registration of an agent is not effective when the agent is not associated with a broker-dealer registered under the act. Registrations are automatically renewed one year after approval, provided no violations occurred during the year. A)I and IV B)II and IV C)I and III D)II and III

D)II and III It is unlawful for anyone to conduct business as a broker-dealer in a state unless properly registered as such; an agent is not a broker-dealer. A registration statement can be filed by an issuer itself or any other person on whose behalf the offering is to be made, or by a broker-dealer. Registration of an agent is not effective when the agent is not associated with a broker-dealer registered under the act. Registrations expire December 31st unless renewed, regardless of violations.

An agent would be engaged in a prohibited practice if he: shared commissions with other agents of his broker-dealer. sold a nonexempt, unregistered security to a CPA who specialized in auditing financial institutions. shared both the gains and losses in a client's account with written approval of both the client and the employing broker-dealer. aggressively traded a discretionary account on a daily basis with long-term growth as an objective. A)I, II, III and IV. B)I and II. C)I and IV. D)II and IV.

D)II and IV. An agent cannot lawfully sell an unregistered, nonexempt security unless in an exempt transaction. The sale to the CPA is not an exempt transaction as would be the sale to a financial institution. Day trading in an account with long-term growth as an objective would constitute unsuitable activity and, therefore, is prohibited under USA. Sharing commissions is only permitted with agents of the same or affiliated broker-dealers. Remember that investment adviser representatives may never share in the gains and losses in a customer's account in the same fashion that agents can.

A security that is exempt from the registration requirements of the USA is also exempt from which of the following concerning the act? Civil liabilities provisions. Antifraud provisions. Requirements for filing advertising and sales literature. A)I, II and III. B)I and III. C)I and II. D)III only.

D)III only. An exempt security is only exempt from the registration requirements and the requirements for filing advertising and sales literature. No security is exempt from the antifraud provisions of the act and the liabilities that arise from fraudulent practices.

Which of the following is NOT an exempt transaction as defined in Section 402 of the USA? A)Corporate bond sale to an insurance company. B)Sale of XYZ common stock, traded on the OTC Bulletin Board, to an individual investor by the executor of an estate. C)Sale of common stock by the county sheriff at the request of the state securities Administrator. D)Isolated sale of a corporate bond on behalf of the bond's issuer.

D)Isolated sale of a corporate bond on behalf of the bond's issuer. First of all, don't panic when you see a Section number - just answer the question based on the specific topic; in this case, the definition of an exempt transaction. An isolated sale of a corporate bond on behalf of the bond's issuer is not exempt. Under the USA, only isolated nonissuer transactions are exempt. In this question, the transaction is on behalf of the issuer, so this transaction is not exempt. The sale of a corporate bond to an insurance company is the sale of a security to a financial institution; this is an exempt transaction. A sale of common stock by the executor of an estate, or by the county sheriff is considered a fiduciary transaction and is exempt regardless of the client or the type of security.

Which of the following are NOT exempt securities under the Uniform Securities Act? A)B&O Railroad equipment trust certificates. B)$50,000 denomination commercial paper maturing in 6 months. C)Anglican church bonds. D)Preferred stock underwritten by a local broker-dealer.

D)Preferred stock underwritten by a local broker-dealer. Corporate securities, such as preferred stock, are ordinarily required to be registered and are not exempt from registration unless the issuer fell into specific exempted categories, which are not mentioned in this question. The other answers are specifically exempted from registration under the Uniform Securities Act: nonprofit religious organizations, securities issued or guaranteed by a regulated common carrier, and commercial paper with a maturity of 9 months or less and in minimum $50,000 denominations.

Under the Uniform Securities Act, which of the following is NOT an exempt transaction? A)A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid. B)The sale of a non-Nasdaq over the counter stock to a closed-end investment company. C)A sale of securities by the executor of an estate. D)The sale of U.S. government securities to an individual with a net worth in excess of $2 million by a registered government securities dealer.

D)The sale of U.S. government securities to an individual with a net worth in excess of $2 million by a registered government securities dealer. In the case of a U.S. government security, the security is exempt, but the transaction is not. All of the other choices are exempt transactions since they are either to an institutional investor, existing owners for no consideration, or by a fiduciary.

When the USA refers to unsolicited orders, which of the following is TRUE? A)A client may not purchase, at his own initiative, securities trading in the secondary market if the agent is otherwise prohibited from soliciting the order. B)If the order ticket is appropriately marked, the Administrator may not challenge a broker-dealer's assertion that the order was unsolicited. C)Under certain conditions, an Administrator may prohibit a broker-dealer registered in the state from accepting any unsolicited orders. D)Unsolicited orders are defined as exempt transactions under the USA.

D)Unsolicited orders are defined as exempt transactions under the USA. A client has the right to buy or sell whatever she may desire. The issue becomes who initiates the trade. An unsolicited transaction may be executed by an agent if it is the client who asks for the trade. The trade ticket should be marked as unsolicited. The state securities Administrator has the right to seek verification from the client that the trade was, in fact, unsolicited. The security involved in the trade can be one that is nonexempt and unregistered in the state.

All of the following securities transactions are exempt under the USA EXCEPT: A)an offer of preorganization certificates made to 25 persons that involves no commission or payment. B)a sale of stock to a pension trust. C)a purchase of stock by an underwriter from the issuer in a firm commitment underwriting. D)a sale of private placement securities to 25 noninstitutional investors in a state.

D)a sale of private placement securities to 25 noninstitutional investors in a state. Private placements are exempt under the USA if they are offered to less than 10 general public investors in a 12-month period. Institutional investors are not included in the numerical limitations. Transactions involving issuers and underwriters, pension trusts, and other financial institutions are also exempt. The sale of preorganization certificates is exempt if there is no commission for solicitation or payment by subscribers and no more than 10 subscribers; there is no limit to the number of offers that may be made.

The Uniform Securities Act is designed to protect the general public and not restrict investment activities of institutional or professional investors. Any offer or sale to any of the following would be considered exempt from the registration and advertising filing requirements of the USA EXCEPT: A)insurance companies. B)savings institutions. C)banks. D)chief executive officers of companies listed on the NYSE.

D)chief executive officers of companies listed on the NYSE. Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, whether the purchaser is acting for itself or in some fiduciary capacity is considered an exempt transaction.Corporate chief executive officers are individual investors under the USA. Transactions in their personal investment accounts are therefore not exempt from the provisions of the act.

All of the following are exempt from the registration requirements of the USA EXCEPT A)a registered open-end investment company whose portfolio consists exclusively of Georgia municipal bonds B)a closed-end investment company registered under the Investment Company Act of 1940, but not traded on a recognized stock exchange C)a Canadian Government bond D)stock issued by a Canadian company that provides actuarial services to insurance companies

D)stock issued by a Canadian company that provides actuarial services to insurance companies Securities issued by Canadian governmental entities, such as the federal government or the provincial governments and their municipalities, are exempt from registration under the USA in the same fashion as US government and municipal securities. However, Canadian corporate issuers do not enjoy an exemption unless qualifying under special conditions, such as being listed on the NYSE or Nasdaq and, therefore, are a federal covered security. Investment companies registered under the Investment Company Act of 1940, regardless of where they trade, are exempt from registration because they are federal covered securities.

Which of the following statements regarding federal covered securities is NOT true? They are: A)not exempt from filing fees imposed by state securities Administrators. B)not subject to the registration requirements of the Uniform Securities Act. C)subject to the antifraud provisions of the Uniform Securities Act. D)subject to the registration requirements of the Uniform Securities Act.

D)subject to the registration requirements of the Uniform Securities Act. Federal covered securities are not subject to the registration provisions of the USA, but they are subject to the act's antifraud provisions. In some instances, states may impose filing fees on federal covered securities, especially those issued by registered investment companies.

ABC Furniture Company wishes to raise capital by issuing some securities in its home state. The CEO of the company feels that registration with the Administrator is unnecessary because the issue is exempt. Should ABC be ordered to appear at a hearing, the burden of proving its issue is exempt is on: A)the hearing panel. B)the CEO. C)the Administrator. D)the company.

D)the company. In any case where there is a question as to the legality of a specific exemption, the burden of proof is always on the party requesting the exemption.

An unsolicited customer order to buy a security is considered an exempt: A)transaction only if the security is exchange-listed. B)transaction only if the security is exempt. C)security providing the purchaser is an institutional investor. D)transaction whether the security is exempt or nonexempt.

D)transaction whether the security is exempt or nonexempt. Unsolicited customer orders, regardless of the purchaser, are defined as exempt transactions under the Uniform Securities Act, whether the securities are exempt or nonexempt. To ensure that this exemption is not abused, the Administrator has the power to request written certification from the customer that the order was, in fact, unsolicited.