Final Number V (89)
Filing fees are only required for ________ in the ________. Not for ___________ that occur in the _________.
Securities registrations in the state (primary market) Secondary market transactions that occur in the state
What needs to be included on the confirmation
Customer Name Customer Account Number Size of the trade Price of the execution Any commission charged
The person who is designated to enforce the provisions of the Uniform Securities Act is known as the: A Secretary of State B Governor C Commerce Secretary D Administrator
D
A Registered Investment Adviser (RIA) is formed as a partnership. The RIA intends to charge an incentive fee that is based on investment performance. Under NASAA rules, the RIA: A must be able to show that the fee is fair and reasonable to the State Administrator B is not permitted to have an incentive fee under any circumstances C can charge an incentive fee as long as it is included in the partnership agreement D must offer the customer a fee refund if the performance does not meet the benchmark
A
A broker-dealer that has a place of business in State B does not have an office in State A. It would be required to register in State A if it: I sold securities to customers in State A II made an offer to sell securities to customers in State A III effects securities transactions solely with institutional investors in State A IV effects securities transactions solely with issuers in State A A I and II only B III and IV only C I, II, III, IV D None of the above
A
An agent of a broker-dealer is told by a wealthy, well-connected client that "I just talked to the president of ABCD Corp. (an NYSE listed company) and was told that this quarter's results are going to be lousy." Which statement is TRUE? A. The agent can discuss this phone conversation with his branch manager B. The agent can discuss the phone conversation with his spouse C. The agent can discuss the phone conversation with anyone who is registered as an agent in that State D. The agent cannot discuss this phone conversation with anyone
A
An agent of a broker-dealer wants to become a part-time SCUBA instructor. Which statement is TRUE? A The agent must notify the broker-dealer in writing B The agent is permitted to do so as long as he does not offer securities to students in his SCUBA classes C The agent is permitted to do so as long as he earns less as a SCUBA instructor than he does as an agent D The agent is prohibited from engaging in any other business
A
No civil liability exists under the Uniform Securities Act if a(n): A issuer offers to sell a security in violation of the Act, but no sale occurs B agent omits a material fact when selling a security C terminated agent effects securities transactions for customers before associating with another registered broker-dealer D issuer sells a security without registering the issue in that State, relying on the incorrect advice of counsel that the issue was exempt
A
Under the Uniform Securities Act, which of the following practices by an investment adviser is permitted? A Being compensated based upon the total value of funds being managed B Assigning the advisory contract to another investment adviser without the customer's prior consent C Changing the management of an investment adviser formed as a partnership without notifying each customer D Taking custody of customer funds without giving prior notice to the Administrator
A
The person who is designated to enforce the provisions of the act is known as the _________
Administrator
FINRA suspends an associated person for a rule violation. Which statement is TRUE? A The individual will only be suspended in the State where the agent is physically located B The individual will be suspended in each State in which he or she is registered under the Uniform Securities Act C The individual will only be suspended in a given State if the Administrator of that State takes action D The individual will only be suspended in the State if the violation of FINRA rules is also a violation of the Uniform Securities Act
B
If a registration is found to be incomplete, the issuer must send the Administrator a(n): A new registration application B amendment to the registration application C consent to service of process D certified financial statement
B
In order for an investment adviser to be compensated with a performance fee, all of the following must be disclosed in writing EXCEPT: A the periods that will be used to measure performance and their significance in the computation of the fee B the fee arrangement is based solely on realized capital gains C the nature and significance of any index used as a comparative measure D the reason why the adviser believes that any comparative index used is appropriate
B
Under NASAA recordkeeping rules for investment advisers, any advertisement, circular or other communication: I must be retained if it is circulated to 2 or more persons II must be retained if it is circulated to 5 or more persons III cannot recommend the purchase or sale of a specific security IV can recommend the purchase or sale of a specific security and if it does not state the reasons for the recommendation, a memo must be retained indicating the reasons for the recommendation A I and III B I and IV C II and III D II and IV
B
Which of the following information MUST be included on a customer confirmation? I Whether the transaction was solicited or unsolicited II The exchange where the transaction was effected III The customer name and account number IV The price of execution A I and II B III and IV C II, III, IV D I, II, III, IV
B
Limited partnership shares are sold to a bank. Under the provisions of the Uniform Securities Act of 1956, as amended, this transaction is subject to: I advertising filing requirements with the Administrator II anti-fraud provisions as promulgated in the Act III payment of filing fees with the State A I and III only B II only C II and III only D I, II, III
B Exempt securities and exempt transactions are exempt from advertising filing requirements filing fees are only required for securities registrations in the State (primary market); not for secondary market transactions that occur in the State.
True or False: If FINRA suspends an individual for a rule violation, they'll only be suspended in the state the violation occurred
False When FINRA suspends an individual for a rule violation, they'll be suspended in each state that they're registered under the act
An investment adviser has placed a block trade for 100,000 shares of ABCD stock. The trade is filled in 2 separate lots of 50,000 shares each, with one lot filled at $50.01 per share and the other lot filled at $50.03 per share. The adviser has developed a methodology of allocating shares purchased at the lowest price to clients with a history of referring other clients and to clients with more assets under management and has been doing this unknown to staff and clients for many years. The investment adviser is guilty of: A failure to supervise B breach of fiduciary duty C failure to adhere to prudent investor standards D insider trading
B The IA is not allocating the shares equally among clients at a uniform price on a pro-rata basis
True or False: A dealer can also be an agent
False A dealer is a principal in a transaction
All of the following are unethical practices under NASAA rules EXCEPT an: A. agent makes a blanket recommendation of the same security to all of his clients on a regular basis B. agent's assistant accepts a sell order from a customer without notifying the agent C. agent effects trades in customer discretionary accounts that are excessive in size, but not in frequency D. agent accepts a buy order in a customer account from another person that does not have a power of attorney from the customer
B the assistant can accept a sell order from a customer without notifying the agent
True or False: Full time employees are the only employees that need to register in the state
False Full time Part time Independent contractors Officers all need to register in the state
Why can't a broker dealer charge a separate fee for investment advice?
Because it would be a double charge to the customer. Double charges are not permitted.
A "consent to service of process" must accompany which of the following? I Agent's initial registration application II Agent's renewal registration application III Investment Adviser's initial registration application IV Civil complaint filed against a broker-dealer A. I and II only B. III and IV only C. I and III only D. I, II, III
C
All of the following are synonymous EXCEPT: A. salesman - agent B. broker - agent C. dealer - agent D. salesman - broker
C
An Investment Adviser Representative is terminated. Under the Uniform Securities Act, which statement is TRUE about the records that must be retained by the Investment Adviser relating to this? A. The copy of the original U-4 signed by the registrant must be filed with the State Administrator B. The copy of the original U-4 signed by the registrant must be destroyed C. The copy of the original U-4 signed by the registrant must be retained for a period of time specified by the State D. The copy of the original U-4 signed by the registrant must be given to the terminated representative
C
An Investment Adviser Representative writes a blog published on the Internet about how to achieve the best returns for clients, while minimizing risk. Which statement is TRUE about this? A This can only be done if the Investment Advisory firm that employs the IAR approves of the content B This can only be done if the Investment Advisory firm that employs the IAR authorizes the distribution of the communication C This can only be done if the Investment Advisory firm that employs the IAR both approves the content and authorizes the distribution of the communication D This action is prohibited
C
If an investment adviser is an individual, which of the following items would be included in the computation of adviser's net capital? A Goodwill B Automobile C Accounts receivable D Copyright
C
To register an agent in a State, the Administrator can require which of the following? I Minimum net capital II Surety bond III Qualifying written or oral exams A I only B III only C II and III D I, II, III
C
True or False: Unlike with state law, federal law allows for advertising in a private placements
False Like with state law, federal law prohibits advertising in private placements
Under the NASAA Model Rule covering Investment Adviser records, the adviser's articles of incorporation must be retained for: A 3 years B 5 years C for the life of the firm plus an additional 3 years D for the life of the firm plus an additional 5 years
C
Under the Prudent Investor Act, a fiduciary is: A not permitted to delegate investment authority over trust assets B obligated to make investments in securities that are rated "BBB" or better C obligated to maximize overall portfolio return consistent with the level of risk assumed D required to register with the Administrator in the State where the trust is formed
C
Under the Uniform Securities Act, which of the following actions by an agent is (are) prohibited during a sales presentation? I Predicting specific future investment results II Omitting non-essential information III Omitting facts that can influence the investment decision A I only B II and III only C I and III only D I, II, III
C
Which of the following statements is (are) TRUE regarding the conduct of customer accounts? I An agent may not personally guarantee a customer's account against loss II An agent may not recommend the use of options to hedge a customer's account against loss III Agents may not share in the gain or loss in a customer's account A I only B I and II C I and III D II and III
C
Which of the following is (are) issuer transactions? I Purchase of a NASDAQ listed security II Purchase of a mutual fund share III Purchase of a limited partnership interest from the sponsor IV Purchase of an NYSE listed security A I only B I and IV C II and III D I, II, III, IV
C An issuer transaction is one where the issuer is either on the sell-side or the buy-side of the transaction The issuance of a mutual fund share, or redemption of a mutual fund share, is an issuer transaction. The sponsor is the issuer of a limited partnership offering - thus buying a limited partnership interest from the sponsor is an issuer transaction.
An investment adviser prepares an advertisement that will be used in newspapers in a large city. Under NASAA rules, the advertisement would be permitted to contain a(n) A testimonial from a famous client of the firm B offer of free research given to any customer that signs an investment contract C listing of the firm's "Top 10 Picks" showing performance over the past year D a toll-free number to call for more information
D
Which of the following items would be included in the computation of an investment adviser's net capital? I Business reputation II Furniture and fixtures III Automobiles IV Organizational expenses A I and III B I and IV C II and III D II and IV
C intangible assets are not included in the computation of an investment adviser's net capital
An agent of a broker-dealer recommends a security to a customer. The customer buys 1,000 shares, paying the firm a commission. The stock reaches a new market high in two weeks. Under the Uniform Securities Act, which statement is TRUE? A The firm can charge the customer a separate amount for investment advice B The firm can increase the commission charged to the customer based on the excellent performance of the investment C The agent can accept a large gift from the client for the advice D The only compensation that can be accepted by the broker-dealer is the original commission charged
D
An attorney that has been appointed executor of a deceased customer's estate contacts an investment adviser in a State to invest and manage the estate's financial assets until they are distributed to the heirs. The attorney offers to pay an advisory fee that is based on a percentage of assets under management. Which statement is TRUE regarding this arrangement? A The advisory contract must be approved by the probate court judge prior to the adviser taking control of the financial assets B The advisory contract must be approved by the heirs prior to the adviser taking control of the financial assets C The contract is null and void because executors are not permitted to delegate investment and management functions over estate assets D The contract is valid as long as the adviser exercises reasonable care to comply with the terms of the delegation
D
If an individual's registration has been revoked by the Administrator within the past 10 years due to a felony conviction resulting from a securities law violation, this individual is prohibited from being registered as a(n): I Agent for another broker-dealer II Principal of another broker-dealer III Representative for an investment adviser IV Principal of an investment adviser A I only B I and III only C II and IV only D I, II, III, IV
D
Registration by Filing would NOT be permitted for which of the following reasons? I An Administrator in another State has issued a stop order relating to this issue II The issue is only going to be offered in one State III The Securities and Exchange Commission denies effectiveness to the Federal registration statement IV The Administrator has not received a copy of the latest prospectus A I and III only B II only C I, II, III D I, II, III, IV
D
The Administrator CANNOT deny an exemption from registration for a(n): A sale of securities to a bank trust department B isolated non-issuer transaction C private placement D U.S. Government bond
D
Under the Uniform Securities Act, a security cannot be offered in a state unless it: I has been registered in the state II is an exempt security, in which case no registration is required III is offered in an exempt transaction IV is a federal covered security, in which case no registration is required A I only B II only C I and II D I, II, III, IV
D
Under the Uniform Securities Act, all of the following persons with no place of business in the State are EXEMPT from registration as an investment adviser EXCEPT advisers that: A. deal solely with insurance companies B. deal solely with investment companies C. deal solely with broker-dealers D. have more than 5 clients in the state in the preceding 12 months
D
When is an investment adviser deemed to have custody of client funds? A When the adviser holds a check payable to the client from the client's broker-dealer B When the adviser holds a full power of attorney over the client's account C When the adviser acts as a trustee where the client is the beneficiary of the trust D All of the above
D
Which of the following individuals that offer securities to the public on behalf of a broker-dealer must be registered in the State? I Full-time employees II Part-time employees III Independent contractors IV Officers A I and II B III and IV C I, II, IV D I, II, III, IV
D
Which of the following securities is/are EXEMPT under the Uniform Securities Act? I Savings and loan association stock II Municipal industrial revenue bonds III Bonds issued by a company listed on the Midwest (Chicago) Stock Exchange A. I and II B. I and III C. II only D. I, II, III
D
Which of the following statements are TRUE regarding private placements under the Uniform Securities Act? I No commissions can be paid for sales to individual investors II No more than 10 prospective investors may be contacted III General advertising is prohibited A III only B I and II C II and III D I, II, III
D
Which of the following individuals is NOT EXCLUDED from the definition of a "sales representative" under the Uniform Securities Act? A An individual who represents an issuer in isolated non-issuer transactions B An individual who represents an issuer in transactions with underwriters C An individual who represents an issuer in transactions with financial institutions D An individual who represents an issuer in transactions with investors
D The Act defines individuals who represent issuers effecting securities transactions with the public as "agents" who must be registered.
If a customer of a broker-dealer fails to pay for a securities purchase by the 4th business day from trade date, the customer's account must be:
Frozen for 90 days
When a rep that transacts business in a state terminates employment with a federal covered adviser, the ______ must notify the _______ _______
The representative must notify the administrator promptly
True or False: Agent, salesman, and broker can all be synonymous terms.
True
Fee arrangement must be disclosed in the _________ with the client; not in the _________________.
advisory contract; partnership agreement
A "consent to service or process," is part of the initial registration for what?
agents broker-dealers investment advisers investment adviser representatives
An executor or trustee is permitted to delegate investment and management functions as long as the ______ or ______ permits such
trust or will
Whether or not a trade was solicited is required on a _____, not on a ______
order ticket trade confirmation
When an IAR Is terminated, the ______ must be retained for ________
original U-4 signed by the registrant must be retained for a period of time specified by the state
An investment adviser with no place of business in a state is exempt from registration if they deal solely with
other advisers broker-dealers insurance companies investment companies financial and institutional investors government agencies.
An agent is an individual who deals with the ________
public
Which securities are exempt under the act?
securities issued by Savings and Loans municipal bonds industrial revenue bonds securities of companies listed on stock exchanges
Under federal law, a private placement is a sale of securities to no more than ______ _______ investors.
35 "non-accredited"
If a representative that transacts business in a State terminates employment with a federal covered adviser: A the representative must notify the Administrator promptly B the federal covered adviser must notify the Administrator promptly C both the representative and the federal covered adviser must notify the Administrator promptly D both the representative and the federal covered adviser must notify the Administrator within 30 days
A
True or False: An RIA may charge an incentive fee
False
True or False: It is permitted to be paid on the gains of a customer account
False
True or False: The holding of mutual fund sales contests are prohibited under NASAA rules
False
True or False: Federally covered securities are exempt from state anti-fraud provisions
False ALL securities are subject to ALL anti-fraud provisions
True or False: Along with not being able to personally guarantee a customer's account against loss and not sharing in the gain or loss in a customer's account, an agent may not recommend the use of options to hedge a customer's account against loss
False An agent is allowed to recommend the use of options to hedge a customer's account against loss
True or False: ONLY exempt securities ARE EXEMPT from advertising filing requirements. Exempt transactions ARE NOT EXEMPT from filing advertising filing requirements
False BOTH exempt securities and exempt transactions are exempt from advertising filing requirements
True or False: An agent or broker dealer need not register if they're ONLY offering exempt securities or securities in exempt transactions
False Regardless of the status of the security or transaction, agents or broker dealers need to register if they're offering securities or executing transactions
True or False: An agent only needs to pass qualifying written or oral exams to register in the state. An agent need not worry about surety bond coverage. That is something only the BD needs to worry about
False Since the agent will be handling discretionary accounts or will be taking custody of customer funds they need surety bond coverage
True or False: While the purchase of a mutual fund share is an issuer transaction, the purchase of a limited partnership interest from the sponsor IS NOT an issuer transaction
False Since the sponsor is the issuer of a limited partnership offering, buying a limited partnership interest from the sponsor is an issuer transaction
True or False: It is prohibited for an assistant to accept/sell an order form a customer without notifying the agent
False The assistant can accept a sell order from the customer without notifying the agent
Which of the following are "critical" pieces of information that MUST be collected from a customer to open a new account? I Name II Address III Date of Birth IV Social Security Number
I II III IV
Which of the following is (are) defined as a "broker-dealer" under the Uniform Securities Act? I A person who effects securities transactions for its own account II A person who effects securities transactions for the account(s) of others III An agent of a broker-dealer who effects securities transactions IV An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer
I II IV Choice IV is technically wrong however, the agent is still a broker-dealer. Albeit a statutory broker-dealer.
The uniform securities act allows the administrator to make, amend, or rescind any provision of the Act if the action is ________ or if the action is _______
Necessary Is in public interest
Does the exchange where the trade was effected need to be on the confirmation?
No
If an individual represents an issuer in performing only exempt transactions (i.e. occasional trade) are they considered to be an agent?
No
If an individual represents the issuer in dealing with underwriters or financial institutions, is that individual considered to be an agent?
No
Is an investment advisor representative allowed to share in the gain/loss of a customer account
No
If an issuer offers to sell a security in violation of the act, but no sale occurs, is that issuer still subject to civil liability?
No Since no sale has occurred, there's no need for civil liability
What're the three things private placements cannot do/be under the Act?
No commissions can be paid for sales to individual investors No more than 10 prospective investors may be contacted General advertising is prohibited
True or False: Individuals representing issuers who don't deal with the public are not agents
True
True or False: Omitting non-essential info is acceptable, since it isn't needed to make an informed decision
True
True or False: The Administrator cannot change the exemption from registration given to the securities specified as exempt under the Act, such as U.S. Government or municipal bonds.
True
True or False: The only fee that can be accepted is the original commission charged
True
Before entering into an advisory contract that charges a performance fee, the adviser must disclose in writing
The investment adviser will get compensation based on both unrealized appreciation and realized capital gains the basis for valuing any illiquid investments used in computing unrealized appreciation the periods that will be used to measure performance and their significance to the computation of the fee the nature of any index used as a comparison of investment performance, the significance of the index, and the reason why the adviser believes the index is appropriate.
True or False: An agent cannot predict specific future investment results, since he has no basis for knowing what will happen in the future. Omitting facts that can influence an investment decision is prohibited, since these facts are "material."
True
True or False: Broker dealers and Agents are prohibited from commingling customer funds and securities with their own funds and securities
True
True or False: If an individual's registration has been revoked by the administrator within the past 10 years they are not allowed to associate with ANY Broker Dealer or Investment Adviser in any capacity period
True