Final Number IV (80)
An investment advisor with no place of business in the state is exempt from registration if it renders advice soley to employee benefit plans with assets of at least ____________
$1,000,000
What are 12B-1 fees? What are they used for?
12B-1 fees are charges against net asset value that pay for the cost of soliciting new investment to the fund. They can be used to compensate salespersons that sell the fund's shares.
A mutual fund is not permitted to advertise itself as a "no-load" fund if it charges _____ fees of more than _____ ( ____ basis points) annually.
12B-1 fees of more than .25 (25 basis points) annually
An agent's registration becomes effective ________ days after filing in the state
30 days after filing in the state
The statue of limitations for alleged criminal violations of the act is ____ years
5 years
An institutional buyer is defined under the Uniform Securities Act as any person: A so designated by the Administrator by rule or order B with over $100 million of assets under management C defined under Section 4(6) of the Securities Act of 1933 D that solely effects transactions using the mails or other means of interstate commerce
A
An investment adviser, age 33 and married, needs cash for the down payment to buy her first house. She asks her father if he can "help out" with the down payment. Her father is one of her advisory clients. Which statement is TRUE about this situation? A The investment adviser can accept the money from her father if he gives it as a gift B The investment adviser can accept the money from her father if he gives it as a loan C The investment adviser cannot accept the money from the father, whether given as a loan or a gift D The investment adviser can only accept the money from her father if there is a written agreement that details the terms and conditions
A
What is the sale of a security?
A contract to sell or dispose of a security, or an interest in a security, for value.
What is an offer of a security?
An attempt to offer to dispose of a security; or a solicitation of an offer to buy a security or an interest in a security
What is a secondary offering?
An issue from a company that already has registered securities outstanding
A Federal Covered Adviser discovers a material error in its Form ADV. When must Form ADV be amended with the State to correct the error? A There is no requirement to amend the filing in the State because the investment adviser is Federal covered B Within 30 days C Within 60 days D Within 90 days
B
An Administrator is allowed to start a suspension or revocation action against a registered broker-dealer: I on the basis of facts known at the time of the initial registration II after one year has elapsed from the time a broker-dealer withdraws from registration III on the basis of a conviction for violating the Securities Exchange Act of 1934 IV on the basis of a suspension order being entered by the Administrator of another State A I and II B III and IV C I, III, IV D I, II, III, IV
B
An investment adviser that claims that it is a "fee only" adviser could be compensated based on: A commissions earned by executing recommended trades B a flat annual or hourly fee for all work performed C 12b-1 fees paid by mutual funds D soft dollars paid by broker-dealers
B
If an agent fails to renew his or her license at the end of the year, the: A registrant must retake the Series 63 or 66 examination B registration expires with no action by the Administrator C registration is automatically renewed and a late fee is assessed D registration is revoked
B
In order to act as an adviser in a State, federal covered advisers: A must register with the State under the Uniform Securities Act B must file notice with the State and may be required to file such documents as have been filed with the Securities and Exchange Commission C are not required to file notice with the State D are not required to register their representatives with the State
B
Investment advisory contracts must include a: A power of attorney B no assignment clause C consent to service of process D duplicate copy for the client
B
Under the Uniform Securities Act, in a civil suit brought by a purchaser against a seller that is alleged to have violated the Uniform Securities Act, the burden of proof rests with the: A Defendant B Plaintiff C State securities administrator D Judge presiding over the state court hearing the case
B
Under the provisions of the Uniform Securities Act, which statements are TRUE regarding surety bond coverage as a requirement for registration as an Investment Adviser? I Investment advisers that take custody are required to maintain surety bond coverage II Investment advisers that take custody are not required to maintain surety bond coverage III Investment advisers that do not take custody are required to maintain surety bond coverage IV Investment advisers that do not take custody are not required to maintain surety bond coverage A I and III B I and IV C II and III D II and IV
B
Ms. Muffy Vanderbilt is an entrepreneurial socialite who has successfully worked as a fund raiser for a not-for-profit organization for the past 10 years. Because of her success at raising money and her extensive list of social contacts, she is recruited by an investment advisory firm to become a representative. Ms. Vanderbilt would be permitted to: I state to customers that she has 10 years of experience in the industry II use the title "investment adviser representative" on her business card III state to customers that she is registered as a representative with the SEC A I only B II only C II and III D I, II, III
B Choice II is not a misrepresentation
A broker-dealer is a syndicate member in a negotiated underwriting of revenue bonds issued by the City of Jacksonville, Florida Industrial Development Authority. If the issue is oversubscribed, under NASAA rules, it would be unethical for the bonds to be sold to: A residents of Florida B employees of the broker-dealer that are Florida residents C institutional investors in Florida D investors that are non-residents of Florida
B When an issue is oversubscribed, the employees of the broker-dealer cannot have the bonds sold to them
An Investment Adviser Representative wishes to set up a blog on the Internet to provide information to interested persons about current Federal and State regulatory events related to investment advisers. Which statement is TRUE about this? A This action is prohibited under NASAA rules B This action is permitted because the blog covers regulatory issues and is not promotional C This action is permitted only if the Investment Adviser Representative obtains permission of the Investment Adviser firm D This action is permitted only if the Investment Adviser Representative is affiliated with a Federal Covered Adviser
C
An investment adviser with no place of business in the State is exempt from registration if it renders advice solely to employee benefit plans with assets of at least: A $100,000 B $500,000 C $1,000,000 D $5,000,000
C
Registration by Filing would most likely be used for a(n): A issue that is being registered in another State B issue that is being registered with the SEC C secondary offering from an established company D primary offering from a new company
C
Under the Uniform Securities Act, an offering of a limited partnership made to a bank trust department is: I a transaction that is exempt from registration II exempt from the advertising filing rules III exempt from the anti-fraud rules A I only B II only C I and II D I, II, III
C
Which security is NOT subject to registration under the Uniform Securities Act? A Subordinated debentures of a Canadian Paper company B Preferred stock of a bank holding company C Equipment trust certificate of a railroad subject to Interstate Commerce Commission regulations D Limited partnership investing in issues of Federally chartered savings and loans
C
Under the provisions of the Prudent Investor Act, a Registered Investment Adviser should consider all of the following when investing and managing trust assets EXCEPT: A General economic conditions B Possible effect of inflation C Trading patterns of plan beneficiaries D Investment tax consequences
C Trading patterns of plan beneficiaries is too specific when considering the big picture of trust assets
Exempt securities under the uniform securities act include
Canadian Government Securities (not common stocks of Canadian companies) Bank Issues (not securities issued by bank holding companies!) Savings and Loan issues (not limited partnerships that invest in such securities)
Any registration statement for a securities offering includes:
Current balance sheet and income statement; Business description; Use of proceeds of offering; Offering Terms; Legal Opinion; Accountant's Opinion.
A husband and wife have a joint account at DEF Securities. The husband informs the representative in a private conversation that he intends to divorce his wife soon. Which action can the representative take? A The representative can send a letter to the wife informing her of her husband's intentions B The representative can call the wife and offer to open a separate account for her C The representative can immediately divide the joint account into 2 separate accounts D The representative can offer to maintain the husband's account and recommend another broker-dealer to the wife if she requests
D
As a condition of registration, the Uniform Securities Act requires that broker-dealer records be kept on file for: A 6 months B 1 year C 2 years D for the time period prescribed by Federal law
D
Under NASAA rules, which of following are unethical practices when recommending a mutual fund to a customer? I Recommending a letter of intent if the customer does not have the immediate funds to reach a breakpoint II Not disclosing to a customer the sales charge discount if a purchase is made at the breakpoint level III Not disclosing to a customer that dividends can be automatically reinvested without any sales charge imposed IV Recommending the purchase of shares which results in the customer simultaneously holding shares in different investment company portfolios with similar investment objectives A I and III B I and IV C II and III D II and IV
D
Under NASAA rules, which of the following records must be retained for 5 years by a Federal Covered Adviser? A Communications to 2 or more persons B Order memoranda C Canceled checks D None of the above
D
Under the Uniform Securities Act, copies of order memoranda maintained by investment advisers must contain all of the following EXCEPT: A person connected with the Investment Adviser who recommended the transaction to the client B person who placed the order C date of order entry D time of order execution
D
Under the Uniform Securities Act, which of the following would be defined as an investment adviser? A U.S. Trust Corporation B Countywide Savings and Loan C IZZI Advisers, which has $110 million of assets under management D ACCO Publishers, which has a website that charges for customized financial plans based on customer input
D
Which of the following information would be found in a registration statement for a security that is going to be registered by qualification in a State? I Current equity and debt capital of the issuer II Description of issuer's business, product lines and competitive environment III Use of proceeds of the offering IV Offering terms A I and III only B II and IV only C I, II, III only D I, II, III, IV
D
A broker-dealer has a place of business in State A does business exclusively in State A and is registered in the State. The broker-dealer has no office in State B and is contacted by a client in State B who wants to sell some securities that he inherited. State B has a de minimis rule for broker-dealers. The client is not interested in opening an account and only wants the broker-dealer to do this transaction and remit the proceeds to the customer. Which statements are TRUE? I In order to effect this transaction, the broker-dealer must be registered in State B II In order to effect this transaction, the broker-dealer is not required to be registered in State B III In order to effect this transaction, the securities involved must be registered in State B IV In order to effect this transaction, the securities involved are not required be registered in State B A I and III B I and IV C II and III D II and IV
D Remember the di minimis rule Because of the di minimis rule, the broker-dealer doesn't need to be registered in the state as well as the securities involved
True or False: A sale of a security is included in an "offer," or "offer to sell," a security
False
True or False: Along with regular e-mails, group e-mails also count as correspondence
False
True or False: To be considered and institutional buyer a person must be designated by the administrator buy rule or order, along with meeting minimum "assets under management," requirements
False A person is considered an institutional buyer if they are so designated by rule or order There IS NOT an "assets under management," requirement
True or False: Any deposit taking institution (IE US Trust Corp or Countrywide Savings and Loan) counts as an investment advisor
False ANY deposit taking institution DOES NOT count as an investment advisor
True or False: Administrators can require a minimum net worth requirement for both broker dealers and issuers
False Administrators require minimum net worth requirements for broker-dealers
True or False: An agent is allowed to take customer securities into his or her possession to deliver to the broker-dealer
False An agent cannot take customer securities into his or her possession to deliver to the broker dealer
True or False: Since Federally covered advisers are required to register with the SEC under the Investment Advisers Act of 1940, they are not required to register with the state. With that in mind, the administrator DOES NOT require federally covered advisers to file notice in the state
False Federally required advisers are still required to file notice in the state
True or False: NASAA can also set rules for federally covered advisers
False The Investment Advisers Act of 1940 sets the rules for federally covered advisers NASAA sets rules for non federally covered advisers
True or False: When a broker dealer is offering an IPO, it is permitted to WITHHOLD shares from sale to the general public
False When a broker dealer is offering an IPO it is NOT permitted to withhold shares from the general public
True or False: If an issuer's business in unproven in the state they do business, the administrator may issue a "stop order," for a securities issue "in registration."
False Whether or not the issuer's business is unproved doesn't affect a stop order If the spread taken by the underwriters is excessive, the sale of the securities tends to work a fraud on investors, or if the issuer's business is illegal in that State will be cause for a "stop order."
In most states, an agent may be registered with no more than ______ broker dealer at a time
No more than 1 broker dealer at a time
An agent moves from one broker-dealer to another. Notification must be made by the?
Old Broker Dealer, Agent, and the New Broker Dealer must notify the Administrator
In a civil suit brought by a purchaser against a seller that is alleged to have violated the Uniform Securities Act, the burden of proof rests with the _____
Plaintiff
Registration by ______ can be used by __________ companies that have been in continuous operation for the past _________ years, who already have registered securities with the Securities and Exchange Commission.
Registration by filing can be used by established companies that've been in continuous operation for the past 3 years
When a customer submits a written complaint, but then changes his mind, what needs to happen?
The original must be retained A copy of the original must be sent back to the customer
True Under the Uniform Securities Act, records maintained by broker-dealers and investment advisers that are subject to federal registration must be maintained for the time period prescribed under federal law.
True
True or False: An investment advisor cannot make or receive loans to or from its customers. However, it can receive gifts from its customers
True
True or False: An offering of a limited partnership interest to a bank trust department is an exempt transaction
True
True or False: If the security or transaction is exempt, the State Administrator cannot require filing of advertising related to that offer or sale.
True
True or False: The administrator can lengthen or shorten the record retention requirement for non-federally covered advisers
True
Unusual fees or charges must be disclosed when the _____ is ______
When the order is placed
If the administrator receives an application and learns that the applicant was suspended from membership on the London Stock Exchange 4 years ago, the administrator can deny the application
Yes Remember, the statue of limitations for securities violations is 10 years (US) For foreign violations its 5 years
For non-federally covered advisers, records must be maintained for a period of time specified by the _______
a period of time specified by the administrator
Under NASAA rules, the form ADV filed with the state must be updated ____ within ___ days of the ____ year end
annually within 90 days of the fiscal year end
Advisors that are fee only can can charge ______ fees, fees based on a ______________, and can charge ___________ fees - but only for __________ investors
hourly fees, fees based on a percentage of assets under management, and can charge performance fees - but only for wealthy investors
What is a no assignment clause?
the contract cannot be assigned to another investment adviser unless the customer consents in writing.
