final 2 kaplan 63

Which of the following statements may be used when discussing a stock with a client?

"Past performance of this stock is no guarantee of future performance."

Examples of identity theft include I. taking over an individual's credit card account. II. applying for new credit cards in the compromised individual's name. III. lending money in the name of the compromised individual. IV. purchasing lottery tickets in the name of another individual.

1 and 2

As defined in the Uniform Securities Act, an agent is I. an individual who represents an issuer of nonexempt securities in nonexempt transactions. II. a registered broker-dealer that deals in registered securities. III. an individual who sells nonexempt securities as a representative of a registered broker-dealer. IV. an individual who has no place of business in the state and sells securities to an existing client who is not a resident of the state

1 and 3

Under the Uniform Securities Act, an offer to sell would not include I. stock acquired through a merger. II. the issuance of warrants or convertible securities. III. the issuance of stock rights to existing shareholders.

1 only

Under the Uniform Securities Act, as a result of a hearing, the disciplinary actions that may be taken by the Administrator include which of the following? I. Permanent revocation of a registration II. Bar from employment with any registrant III. Restriction on a registrant's performance of any activity in the advisory or brokerage business

1,2,3

Under the Uniform Securities Act, which of the following are prohibited practices? I. Failing to disclose that one is acting as a principal for one's own account in a securities transaction for which one has received a fee for investment advice II. Selling unregistered nonexempt securities that are not federal covered securities in transactions that are not exempt III. Engaging in a practice not expressly forbidden by the act but defined as unethical by the Administrator in a rule

1,2,3

When submitting an application for registration as a broker-dealer, which of the following must be disclosed? I. Form of business organization. II. Any felonies or certain misdemeanors on the records of partners or officers. III. Business history of the principals of the firm. IV. Financial information on the firm.

1,2,3,4

One of your customers sends you an email with an attachment describing a "can't miss" investment opportunity. Which of the following would be red flags you should share with the client? I. The security being offered is registered with the SEC and a number of states, including the state of residence of your client. II. The offer shows an anticipated return of 5% per month with little or no risk. III. Payment must be made by Western Union wire to an offshore account. IV. Payment may be made by a check payable to an escrow account at the largest bank in your state.

2 and 3

Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, requirements of advisory contracts include which of the following? I. They must be renewed on an annual basis. II. They must describe the amount of any prepaid fees that will be returned to the client in the event the contract is terminated. III. They must prohibit the use of discretion without the client's authorization.

2 and 3

In cases of fraudulent sales practices or advice with respect to securities, state securities Administrators may I. not take enforcement action against federal covered investment advisers. II. take enforcement action against federal covered investment advisers. III. not take enforcement action against state-registered investment advisers. IV. take enforcement action against state-registered investment advisers.

2 and 4

Which of the following are exempt transactions as defined in the Uniform Securities Act? I. An agent sells a security issued by a foreign government with which the United States has diplomatic relations to an individual client II. An agent fills a buy order based upon an unsolicited request from an existing client to purchase a nonexempt security III. The sale of an unregistered nonexempt security in a private, nonpublicly advertised transaction to 14 noninstitutional investors over a period not exceeding 12 months IV. The sale of unlisted securities by a trustee in bankruptcy

2 and 4

Which of the following persons is not excluded from the definition of, or exempt from registration as, a broker-dealer under the Uniform Securities Act?

A broker-dealer with no office in the state that has no more than five retail clients resident in the state within a 12-month period DE MINIMIS ONLY FOR IA

Transactions involving certain persons are included in the Uniform Securities Act's definition of exempt transaction. Transactions involving which of the following persons would not be exempt transactions?

A trustee of an irrevocable trust

Helen, a registered agent with a broker-dealer, recommended a stock to many of her clients when that stock was trading at $35 per share. The stock is currently trading at $70 per share. From the choices below, which statement best reflects her situation?

Although this stock has enjoyed an excellent performance, past performance cannot predict future results

Under the Uniform Securities Act, who automatically becomes registered as an agent when a broker-dealer firm's registration becomes effective?

Any partner, officer, or director of the firm who is active as an agent in the firm's securities business

If Somerville Discount Securities has its principal office in New Jersey and recently registered a branch office in Minnesota, which of the following statements is true?

Each agent must be registered in the appropriate state before soliciting or taking orders.

Registration with the Administrator as a broker-dealer generally requires the filing of

Form BD agents would be U-4

In which of the following cases would the Uniform Securities Act require registration of an investment adviser who had no place of business in the state?

He had more than five noninstitutional clients who were residents of the state.

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 I. expose yourself and your employer to disciplinary action by State Z. II. expose yourself to a possible fine. III. may obligate your broker-dealer to offer your client the right to rescind the sale. IV. may have your registration in State Y revoked.

I, II, III, and IV

Which of the following meets the definition of churning? I. Encouraging customers to make frequent changes in their holdings in an effort to maximize commissions II. Excessive activity in a customer's discretionary account III. Transactions that are excessively large considering the customer's financial situation

I, II, and III

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

II and III

Agents A and B work for the same firm and wish to share commissions. Agent A is licensed in States X, Y, and Z. Agent B is licensed in States X, Y, and C. Which of the following statements is true in regard to their sharing commissions?

Only the commissions from States X and Y can be shared.

Which of the following statements is not true of investment advisers under the Uniform Securities Act?

Only written advice concerning investments is covered by the act.

With regard to net capital of broker-dealers, when the Administrator promulgates the minimum requirements for his state, it is mandatory that those requirements do not exceed those of

SEC

The Uniform Securities Act excludes from the definition of agent individuals who represent certain issuers in the sale of their securities. An individual representing which of the following issuers qualifies for that exclusion?

The Second National Bank of Springfield

In which of the following situations is an agent committing a prohibited practice?

Using discretion to purchase a security in a discretionary account while awaiting a written receipt of trading authority

Clarissa Daniels is a professional financial planner. She operates her practice under the name of Daniels Financial Planning Services. Her only office is in State T and all of her clients reside there. Daniels is an independent investment adviser representative for WPLJ Advisers, a firm registered with the SEC. The responsibility for supervising her activities belongs to

WPLJ Advisers

When a broker-dealer is acting as a principal in a securities transaction, it is

a contra party to the trade.

A broker-dealer is not acting fraudulently if the firm is

acting as agent for both buyer and seller on a transaction.

A type of fraud using social media where the fraudster pretends to be a member of a group, sometimes using respected leaders of the group to spread the word about the scheme, is known as

affinity fraud

Under the Uniform Securities Act, the Administrator may require a broker-dealer to post a surety bond of

an amount not in excess of that set by the SEC.

The president of a manufacturing company sells shares of the company's common stock to the public and receives a commission substantially lower than others selling that stock. Under the Uniform Securities Act, the president is acting

as an agent of the issuer.

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.

In general, the Administrator would require that a broker-dealer's social media policies be

committed to writing and communicated firmwide.

The Uniform Securities Act requires that broker-dealers maintain all of the following records except

copies of customers' tax returns.

A broker-dealer purchased some municipal bonds for its inventory. Six months later, some of the bonds have fallen in value by as much as 30%. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, when selling these bonds to customers, the broker-dealer must base its quote on

current market prices.

Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, all of the following are prohibited practices except

disclosing customers'' written complaints to one's employing broker-dealer.

All of the following are prohibited actions except

executing a transaction in a registered nonexempt security in a discretionary account.

Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities law practice full time in New York state. He must register as an investment adviser in New York state if

his clients, none of whom are residents of New York, receive investment advice as an integral part of his legal services.

You receive a note from your firm congratulating you on passing the exam as an agent. Furthermore, your brokerdealer indicates that it has received notice from the Administrator that your registration as an agent is effective. At this point, you could not

indicate to prospects that you are approved by the state

Securities regulators know that one of the most important ways to protect investors is requiring securities professionals to disclose information pertinent to the relationship with customers. When opening a new account, it is expected that a broker-dealer will disclose

its fees and charges.

Broker-dealers with no place of business in a state are not required to register in that state if their only clients in that state are

life insurance companies.

An agent is preparing a marketing piece using information drawn from the prospectus. The agent decides to omit certain information that might cast a negative light on the company. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, this is

prohibited because omission of material information is not permitted.

If a state-registered investment adviser moves to another location, the Administrator must be notified

promptly

A broker-dealer would most likely hire an agent to

sell securities to clients.

An IAR with a federal covered adviser is also an agent with a broker-dealer. When dealing with advisory clients, all of the following are true except

the IAR must disclose that he is liable for any losses suffered in the account due to poor portfolio performance.

If an investment adviser is registered in another state and has no place of business within an Administrator's state, the adviser is exempt from registration under the Uniform Securities Act if

the adviser has no more than 5 retail clients who are residents of the state during the preceding 12 months.

An issuer employs its officers and directors to sell newly issued shares of the company to the public. To comply with the Uniform Securities Act, the officers and directors would have to be registered as agents of

the issuer.

Acme Manufacturing Company's latest stock offering is registered with both the SEC and the states. This would permit a registered agent to make the comment that

the security is legal for sale.

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.

Rapacious Investment Partners (RIP) is a broker-dealer registered in States X and Y. Wishing to expand into State Z, RIP acquires Peng Asset Traders (PAT), a broker-dealer registered in State Z. The acquisition is finalized on July 1, 2020. As the successor firm to PAT, RIP

will not have to pay a license fee until the renewal date.

This morning's financial section of your newspaper has an article discussing several significant material facts relating to a stock held in the portfolio of several of your clients. You would be able to share these facts with your clients

with or without the issuer's permission.