Series 63
State Administrators have certain authority regarding the establishment of requirements related to net capital and registration of broker-dealers. Which best describes this authority?
Administrators can only enforce the minimum net capital requirements of the SEC.
Under the Bank Secrecy Act anti-money laundering rules, if a firm becomes aware of a suspicious transaction, it must file a Suspicious Activity Report within
30 days
Bison LLC is an investment advisory firm and is registered at the federal level. It requires prepayment of fees nine months in advance. Which of the following prepaid fee amounts would require the firm to file an audited balance sheet with its state securities Administrator?
$1,500
An agent of a broker-dealer has recently had multiple individuals make complaints about the agent. Under NASAA regulations, which of the following complaints would require the broker-dealer to contact the individual who filed the complaint?
A complaint submitted by a client in writing with regard to sales practice violations
An IA has its main office in State X, with offices in States Y, and Z. Once a year the adviser holds a seminar in State M and solicits business there. What states does the IA need to register in?
All of the Above
In order to comply with NASAA Statements of policy on Dishonest and Unethical Business Practices by broker-dealers and agents, when is it acceptable for a broker-dealer to exercise discretion in a customer's account?
A customer must give written authority prior to any trading in order for a broker-dealer to exercise discretionary authority.
Which of the following communications to the general public would be considered Retail Communications subject to the communication rules on advertising?
A firm's electronic bulletin board
According to NASAA's policy Statement on Unethical Business practices of Investment Advisers, which of the following may not be contained in the advisory contract between the adviser and the client?
A liquidated damages clause
Under the Uniform Securities Act, which of the following would NOT necessarily be considered an Investment Adviser Representative?
A person who performs analysis of securities and writes research reports.
An SEC-Registered IA has five clients in State X. prior to entering into any advisory contracts, it would be necessary for the IA to make a notice filing when entering into such an agreement with
A testamentary trust account that is set up for minors
Excluded from the definition of an investment adviser under the Uniform Securities Act is:
A trust company that, for a fee, provides investment advice to clients
Under the Uniform Prudent Investor Act, a trustee has been entrusted to oversee the real estate, securities investments, and tax situation of a sizeable Trust. The trustee is experienced in real estate and securities investments but did not analyze the tax situation of the trust since the trustee thinks that owner of the trust has a tax attorney. This trustee has
Acted imprudently because the job of a trustee is to manage the trust from an overall strategy.
Under the Securities Act of 1933, which of the following fall under the classification of a "covered security"?
All of the above
Under the Uniform Securities Act, an agent must disclose personal knowledge concerning a material public fact about an issuer to a customer in connection with the sale of an issue:
All of the above.
Under NASAA Model Rules on Agents, an agent of a broker-dealer has a client who is on the road most of the time. The client frequently calls the agent to get an update on his account and to verbally give the agent orders for execution on behalf of the client. The practice is
Allowed since this is a non-discretionary account and would be the primary way that the client gets trades executed.
According to the Uniform Securities Act, which of the following factors determine whether the administrator may proceed against an investment adviser for committing securities fraud?
An act which contributed to the fraudulent conduct was done in that state.
All of the following are included in the definition of an "agent" under the Uniform securities Act, EXCEPT:
An individual who is a partner of a broker-dealer who effects purchases and sales of the broker-dealer's securities to existing employees where no commission is paid
According to the Uniform Securities Act, which of the following statements is true regarding the Administrator's power to deny or revoke an exemption?
An order revoking an exemption may be issued without prior notice to the persons affected.
According to the Uniform Securities Act, certain transactions qualify for exemption from registration. Which of the following would NOT qualify for an exemption in terms of transactions?
Any non-issuer transaction including interests in a blind pool offering.
Chase works with clients as an agent of Broker-Dealer A. After a call initiated by Chase to discuss possible investments, one of Chase's clients enters a large order for 10,000 shares of XYZ Common Stock, a stock in which Broker-Dealer A makes a market. The client is using a third-party quotation system and states that the bid/ask is SSO-S50.2S. Without checking, Chase immediately informs the client that Broker-Dealer A can fulfill the order at those prices. According to the NASAA Model Rules, which of the following is TRUE?
Chase and Broker-Dealer A have acted in violation of NASAA Rules by promising to fulfill the order at the price stated by the customer without first checking Broker-Dealer A's inventory and pricing.
All of the following represent fees which could be charged by a mutual fund except?
Commission
Any security for which a registration statement has been filed with the SEC under the Securities Act of 1933, may also be registered in a State concurrently by which of the following means?
Coordination
Edward is registered as an Investment Adviser and as an Agent for a Broker-Dealer. Edward has many clients, some of whom he charges an advisory fee and manages their money, others where he charges them commission for transactions executed but does not charge an advisory fee, and others where he charges an advisory fee for managed funds and charges a commission for transactions executed. Based on Edward's different forms of compensation, which of the following are true under NASAA Rules?
Edward is required to disclose all forms of compensation prior to the execution of transactions, providing advice to clients or taking funds under management.
Paula is an agent of a broker-dealer and has decided that she wants to take a few years off in order to stay home and raise her two small children. Under the Uniform Securities Act which of the following is true with regard to Paula's State registration?
Her registration will be terminated with the broker-dealer and prompt notification must be made to the Administrator by both Paula and her broker- dealer.
A client's investment objective is income and safety of capital. She asks her IAR for a recommendation. Which investment would NOT meet her stated objectives?
High yield bonds
Which of the following is the Uniform Securities Act definition of a "guarantee"?
Guaranteed means guaranteed as to payment of principal, interest, or dividends.
Under NASAA Model Rules, which of the following entities would not be allowed to exercise any discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time and/or price for the execution of orders? I. A broker-dealer II. An investment advisory firm III. An agent of a broker-dealer IV. An Investment Adviser Representative
I & III
Which of the following actions taken by an investment adviser would require customer consent? I. The investment adviser and its accounts are acquired by a larger firm II. The investment adviser acquires a small firm and its accounts to enhance its geographic coverage III. The investment adviser wishes to retire and transfer its accounts to another investment adviser
I and III
Which of the following characteristics of a federal covered adviser separate a state-level investment adviser from a federal covered investment adviser, according to both state and federal law? I. The firm has registered under the Investment Advisers Act of 1940. II. The firm has registered in multiple states. III. The firm advises multiple investment companies registered under the Investment Company Act of 1940. IV. The firm only provides advice about U.S. Government Securities.
I and III
The types of registration of securities under the Uniform Securities Code are: I. Coordination II. Qualification III. Notification IV. Description
I, II and III
Under NASAA Statements of Investment Advisers which of the following factors would be taking into consideration when determining if the IA's trading was excessive in a client's account? I. The client's financial resources II. The client's financial objectives III. The general character of the client's account IV. The profit to the client based on the trades that took place
I, II, & III
According to the Uniform Securities Act, registration is required of investment advisers who are directing advice regarding which of the following securities: I. Stocks of corporations listed on the NYSE II. Bonds issued and guaranteed by a state III. Investment contracts issued in connection with an employee stock purchase plan
I, II, III
Under NASAA Statements of Investment Advisers, an investment advisory firm must establish, enforce, and maintain written policies and procedures designed to prevent the misuse of material non-public information. In establishing these procedures which of the following would be relevant factors? I. The types of clients carried by the advisory firm. II. The types of fees charged by the firm. III. The procedures to be followed if an IA of the firm should receive insider information. IV. The maximum number of clients the firm intends to maintain.
I, II, III
Under the NASAA Statement on Investment Advisers, an investment adviser would be considered to have custody of client funds in which of the following situations? I. The IA has actually taken physical possession of the clients funds II. The IA has the authority to take possession of client funds III. The IA has taken possession of client funds and will forward the client a receipt within 10 business days IV. The client has wired funds to the IA for investment purposes
I, II, III, IV
Under the Uniform Prudent Investor Act, which of the following are considerations that a trustee must include when making decisions for the trust? I. General economic conditions II. The effects of inflation or deflation III. Expected total return from income and capital appreciation IV. An asset's sentimental value, if any, with regard to the beneficiaries
I, II, III, IV
Under the Uniform Securities Act registration and licensing requirements, which of the following statements is true? I. Conditions for Surety Bonds of Broker-Dealers are determined by the Administrator and are subject to the limitations of the Securities Act of 1934. II. Conditions for Surety Bonds of Agents are set by the Administrator and are subject to the limitations of the Securities Act of 1934. III. In lieu of a surety bond, a Broker-Dealer may deposit cash or securities as prescribed by the Administrator. IV. In lieu of a surety bond an Agent may deposit cash or securities as prescribed by the Administrator.
I, II, III, IV
The Administrator of a State is permitted to suspend or revoke a registration for a firm if which of the following have occurred? I. The firm's registration as a member firm with FINRA (Financial Industry Regulatory Authority) has been suspended. II. The firm's registration as a member firm with the NEA (National Futures Association) has been suspended. III. The firm's registration as a member firm with a State Insurance Commissioner has been suspended. IV. The firm's registration related to banking has been revoked in the country of Canada.
I, II, III, and IV
What consequences might befall a broker-dealer firm that violates the provisions of the Uniform Securities Act? I. Criminal prosecution II. Civil law suits III. Registration suspension, denial, or revocation IV. Confiscation and repayment of fees and/or commissions resulting from such violations.
I, II, III, and IV
Which of the following actions would be permitted for a person who is not registered as an agent of a broker—dealer firm under the Uniform Securities Act? I. Back-office duties that are entirely clerical in nature II. The sending of mailers which have been approved by the firm's compliance and legal department by an unregistered person III. Duties related to running a broker-dealer firm which do not in any way include the actions of an agent or supervision of agents IV. Acceptance of orders related to commodities and/or fixed insurance products
I, II, III, and IV
Which of the following would NOT be considered a bona fide "gift" of securities? I. A corporation gives preemptive rights to existing shareholders in relation to an existing issue of common stock. II. After receiving several assessments, a grandfather gives 100 shares of assessable stock to his adult grandchild for his birthday. III. As part of his last will and testament, an uncle gives regular common stock in a widely known corporation to his adult niece upon passing away. IV. During a bond issuance, a corporation gives warrants to those buying the bonds in order to make the issuance more marketable.
I, II, III, and IV
Which of the following would be considered a financial institution or institutional buyer which would fall within the scope of the exemptions for transactions under the Uniform Securities Act? I. Banks and savings institutions II. Trust companies and insurance companies III. Pension or profit-sharing trusts IV. Broker-dealers
I, II, III, and IV
Of the securities listed below, which would be exempt from the registration requirements of the Uniform Securities Act? I. Securities issued by a railroad common carrier company. II. Securities issued by a federal credit union established for teachers. III. Securities issued by a trust company. IV. Securities issued by a corporation.
I, II, and III only
Which of the following would be grounds for denial, suspension, or revocation of registration of a broker-dealer or agent in connection with solicitation of investment company shares? I. Stating to a customer that investment company shares are sold without a commission if the customer purchases a front-end load mutual fund. II. Failing to properly disclose sales charges associated with redemption of mutual fund shares. III. Stating to a customer that investment company shares have no sales charge if purchased with closed-end investment company shares. IV. Stating that investment company shares have a sales charge discount for purchasing specific amounts.
I, II, and III only
Cancellation of a registration by the Administrator of a state is permitted under the Uniform Securities Act in which of the following scenarios? I. A advisory firm that was experiencing financial difficulty mid-year went out of business and never filed the appropriate withdrawal paperwork. II. An elderly investment adviser representative who intended to continue working has been diagnosed with Alzheimer's and a court has adjudicated the IAR as mentally incapable of driving a vehicle, living alone, and other normal daily functions, providing his adult daughter with power of attorney. III. After an investigation, it is discovered that an agent at a broker-dealer firm has churned client accounts. IV. An Administrator arrives at an IA firm's address to find an empty building and after making several phone calls and searching directories, fails to locate the IA firm and any of the named executives.
I, II, and IV only
Anyone who violates any provision of the Uniform Securities Act may be subject towhich of the following? I. liability to the purchase for the amount paid plus interest II. a fine of $10,000 Ill. imprisonment for not more than three years
I, III
A new broker-dealer firm has just opened its doors. The firm has an office located in California, but intends to do all of its business online. The firm does not have clients outside of California at this time, but intends to do business in any state where clients may be interested in the online platform. With the regulations of the uniform Securities Act in mind, which of the following statements about this scenario are TRUE? I. Since the firm intends to do all of its business online, it will be required to register with the SEC only. II. The firm will be required to register with the SEC and with any states in which it transacts business with clients. III. The firm's website is considered advertising, and copies of the current version as well as prior versions of the site must be maintained and stored according to regulations. IV. If the firm's website is limited to order executions only, the website will not be considered advertising.
II and III
Regulated by the Uniform Securities Act, which of the following responses would have to be registered by qualification? I. XYZ Corporation is one year old. A primary offering of its stock will be offered in all states at the same time. II. The RDC Corporation, formed two years ago, originally made an offering of its stock in several states but now wants to make a new offering of stock in just one state. III. SHZ Incorporated plans to offer its stock in one state and therefore will not file a federal registration statement.
II and III
Which of the following are fraudulent or prohibited activities? I. Using the dividends paid in the last 12 months to determine the current yield on a common stock. II. Implying that registration of a security means approval of the security. III. Selling speculative common stock to a client with income objectives. IV. All of the above.
II and III
Which of the following are NOT exempt from the sections of the Uniform Securities Act which require registration and filing of advertising materials? I. Secured bonds issued by a common carrier such as a railroad company. II. Equity options related to a stock that trades over-the-counter. III. Bonds issued by the country of Cuba. IV. Debentures issued by a bank or federal credit union.
II and III only
In which TWO of the following situations would an investment adviser be required to file the appropriate audited financial statements with a state Administrator? I. Discretionary authority has been given to the IA. II. The IA is federally registered under the Investment Advisers Act of 1940 and requires any fees totaling more than $1,200 be paid six months or earlier in advance of service. III. The IA manages assets totaling more than IV. Client funds are held in the custody of the IA.
II and IV
The Uniform Securities Act's definition of a "person" includes: I. Any human being, regardless of age II. A political subdivision of a government III. Shares of a corporation IV. An unincorporated organization
II and IV only
Agents who violate the Uniform Securities Act could be subject to which of the following penalties? I. Criminal penalties of not more than $10,000. II. Civil penalties (civil liabilities). III. Suspension or revocation of their license. IV. Criminal penalties with a 5 year statute of limitations.
II, III, and IV
Which of the following is an offer to sell or buy in a state under the Uniform Securities Act? I. A television advertisement originating out of state is seen in your state. II. A radio broadcast originating in a neighboring state and heard in your state. III. A prospectus mailed to and received in your state. IV. A television advertisement is broadcast and viewed in your state.
III, IV
ABC Advisers Inc. is an investment advisory firm that charges clients an annual fee of 1% of assets for their advisory services. ABC is approached by XYZ broker-dealer who offers to pay ABC trailing commissions on all mutual funds purchased through the broker-dealer. This would allow ABC to make additional revenue from mutual fund customers. Which of the following is true pertaining to such arrangements?
If IA clients receive full disclosure about the asset-based fees as well as the commission-based fees, the arrangement is allowed.
Under the Uniform Prudent Investor Act a trustee shall invest a managed trust's assets by considering the purposes, terms, distribution requirements, and other circumstances of the trust
In the context of the trust as a whole and as part of an overall investment strategy
According to the Uniform Securities Act, which of the following would be specifically excluded in the definition of a broker-dealer?
Issuers
Which of the following statements is TRUE of a no-load mutual fund?
It has an expense ratio of approximately 50 basis points.
John is a friend of yours who also happens to be an IAR. The two of you go to a bar for a beer and run into a mutual friend who is there with several people. The mutual friend begins to talk of how John knows his sister-in-law and has produced great returns for her since she became John's client. What may John do in this situation?
John can state that he knows the sister-in-law.
Family Investment Advisers Inc. is required to maintain certain registration requirements after their initial registration requirements are satisfied. All of the following are included in those requirements except?
The Administrator may require by rule or order that the IA contact the Administrator to set up an examination of the Family Investments Advisers Inc. books and records.
The capital appreciation or capital gains of a portfolio can be shared with an investment adviser (IA) only if which of the following disclosures, in writing, are made to the client, according to the Rules:
The IA must disclose that arrangements such as these may induce an IA to participate in higher-risk investments.
Mandy is an investment adviser. She receives a call from one of her clients, Carlos, who wants Mandy to put in an order for the purchase of shares of ABCD Incorporated Common Stock. Carlos trusts Mandy to have a good idea of pricing of ABCD, so he tells her to fill the order using her discretion. Which of the following are true of this scenario according to NASAA Regulations on discretionary authority for IAS?
Mandy is permitted to accept the verbal order which gives her discretionary authority, as long as within 10 business days after the trade, Carlos sends written discretionary authority to Mandy, which will be maintained on file at the IA firm.
According to both State and Federal Regulations, if an advisory firm advertises its services within a given state, which of the following would be TRUE?
The IA must register as an IA in a state if it directs advertising for advisory services to the state.
A person sells bonds for a State Chartered Bank. The individual offering these bonds
Not required to register as an agent in any state since the individual qualifies for an issuer exemption.
Joe has been traveling the country on a road trip for a couple of weeks and is now finally on his way home. He decides to make one more stop at a hotel in State B before he finishes up the drive to his home in State A. While at the hotel, Joe runs into Bill, an old friend and an agent, registered in State B, who solicits the purchase of a security to Joe. Joe agrees to purchase the security and pays for it then and there. Bill informs Joe that he will send the confirmation to Joe's residence in State A and does so. If Bill is properly registered throughout all states of the country, but sold Joe a security that is not registered and is not exempt in any way from registration, which of the following is correct?
Only State A and State B can take action against Bill regarding the sale to Joe.
When may an investment adviser (IA), share in profits and losses of a client's account?
Only when the IA and client have agreed in a written contract.
A public utility provides electricity to a specific area. A railroad provides transportation and freight services along a specific line. Government authorities of the State regulate the rates charged by both of these entities. Which of the following is TRUE of securities issued by these entities under the regulations of the Uniform Securities Act?
Registration and filing of advertising will not be required for both the securities of the public utility and the securities of the railroad.
Under NASAA Model Rules on Agents, the agent of a broker-dealer may not engage in "sell-away" transactions which will not be recorded on the regular books or records of the broker-dealer
Unless the transactions are authorized in writing by the broker-dealer prior to the execution of the transaction
An Administrator has noticed that there has been regular abuse of an exemption which applies to a specific type of non-profit organization. The Administrator has decided to revoke the exempt status for this type of non-profit. Which of the following is TRUE regarding this scenario?
Such a revocation is within the scope of an Administrator's authority.
According to the Uniform Securities Act, the Administrator is required to determine which of the following before taking disciplinary action against an adviser's registration?
That the order is in the public interest
An investor buys a debenture that is accompanied by a warrant. According to the definitions of the Uniform Securities Act, the warrant constitutes which of the following?
The accompanying warrant would constitute an offer.
An individual represents the Canadian government and its provinces when the government and provinces are issuing securities and effecting transactions related to the issue of these securities. When it comes to the regulations and definitions of the Uniform Securities Act, which of the following is TRUE?
The actions of the individual would be those of an agent, but the individual would qualify for an exclusion due to the issuer/securities.
Which of the following should NOT be a major consideration by an investment adviser giving advice in accordance with the regulations of the Prudent Investor Act?
The adviser should consider the fees collected and amount of time remaining in the contract held between the client and adviser when making investment decisions and creating investment strategies for the client.
An Agent discovers that an error has been made in a customer's account and the customer may sue. What can the agent offer to avoid civil liability?
The agent can offer to refund the purchase price plus interest, if the offer is made prior to the suit.
A client calls into their broker-dealer and is looking to achieve greater tax relief now that it is tax time. The client tells the agent that they wish to include some losses from a general partnership venture which included a mortgage. The client asks the agent if those losses could be written off as if they were securities, such as the stocks in the client's portfolio. What is an appropriate response from the agent?
The agent should inform the client that general partnerships and mortgages are not considered securities and cannot be included as if they were securities and should refer the client to a tax specialist in order to maximize tax relief.
A client calls their agent and is inquiring about an interest in an oil and gas program. The client is interested in purchasing limited partnership interests in the venture. The client has called to ask the agent if these limited partnership interests would be considered "securities" under the Uniform Securities Act. Which of the following is the best answer to the client's question?
The agent should inform the client that limited partnership interests or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease would fall within the definition of a security.
A broker—dealer registers in all states where they do business, which constitutes the majority of the US. The firm also is registered with the SEC. Which of the following statements is TRUE according to the Uniform Securities Act?
The broker-dealer must abide by federal standards when it comes to financial reporting requirements, and would not be subject to additional requirements by any State Administrator.
The ABC Company offers a profit sharing plan to its employees. ABC is in need of a short-term loan and the president of ABC, who is the trustee of the plan, asks the investment adviser to liquidate some of the plans assets and use the funds for the short- term loan to the company. As a fiduciary, the investment adviser must
advise the president that he cannot honor the request since it is not in the best interest of the plan participants
An individual represents a federal savings and loan association as it issues securities. The individual assists in this capacity and also effects transactions related to the issue of these securities. When it comes to the regulations and definitions of the Uniform Securities Act, which of the following is TRUE?
The individual would be considered an agent for engaging in these activities and would be required to register as such.
A broker-dealer is looking to expand its business. In an attempt to lure the business of a prominent local investment adviser representative OAR), it offers the IAR several of its services allowing them to be paid for by soft dollars. Which of the following would be an inappropriate soft dollar arrangement?
The offer of paying the salary for the services of an analyst from the research department.
According to the Uniform Securities Act, "person" may refer to:
almost any entity.
An investment advisory firm's offices are located in State X. The IA exclusively services financial institutions such as insurance companies. This IA firm must
be fully registered with State X but need not register with the SEC under the Investment Advisers Act of 1940.
A veteran agent and a new agent at a registered broker-dealer firm are having a conversation about exempt securities and transactions under the Uniform Securities Act. The veteran agent tells the new agent that all transactions that are effected through a registered broker-dealer qualify for exemption. Which of the following is correct with regard to the veteran agent's statement?
The veteran agent is incorrect, because in order to qualify for one of two exempt transactions applying to registered broker-dealers, the order must not involve the issuer, and either be entered by a registered agent in relation to qualifying issuers, or must be an unsolicited order.
A company is going to be performing an initial offering. The offering will be limited to one state. The company has no intention of registering at the federal level. How would this offering typically be registered according the Uniform Securities Act?
This company should go through the qualification process in order to register.
Under the Uniform Securities Act, registered agents may hire assistants who are unregistered to do which of the following?
Update a client's records in relation to executed trades at the direction and under the oversight of a registered agent
Mombasa Co. is a thinly-traded stock in the OTC market. A market maker currently is bidding for Mombasa shares at $4.10. There has been little trading activity in the stock. An agent at a broker-dealer places a market order for a client to sell 100 shares. The market-maker buys the shares at $3.95. Which of the following is correct regarding the market maker's action?
Violated the Model Rules by not purchasing the client's shares at the published market price.
In the event that an apparent violation of the Uniform Securities Act has taken place, which of the following is NOT included in the list of possible actions that may be taken by the Administrator?
Without providing for a hearing, the Administrator can immediately revoke the suspected violator's registration.
According to the Uniform Securities Act, it is illegal for an investment adviser (IA) to sell a security that it owns to an advisory client if:
Without written disclosure to the client, and consent from the client to the transaction.
DEF Company is incorporating and coming to market with an initial public offering of common stock. The company has already filed their registration statement and the registration has become effective. The company sees that demand for securities is high, and decides to amend the total amount of common stock that will be offered. Would this amendment be allowable under the rules of the Uniform Securities Act?
Yes. Though amendments to a registration statement that is beyond its effective date are generally not permitted, modification to the amount of securities being offered is a limited exception.
Tom is a very successful investment adviser representative and has decided that he is going to hire another investment adviser to help him manage some of his client accounts. Tom places about one third of his client accounts under the management of the new investment adviser and will share his adviser fee with the new investment manager. At the end of the year Tom receives a complaint letter from one of his clients who was managed by the new investment adviser. The client is unsatisfied with the losses generated in her trust account. In this situation, Tom
bears responsibility for the client's dissatisfaction because Tom had a duty to monitor the suitability of any delegation of investment and management functions of the client's trust account.
Burgess Capital is an investment advisory firm. It is considering entering into an agreement with Morpheus Affiliates, a debt collection company, to borrow funds. The presidents of these two companies are sisters. under the NASAA Statement of policy and Model Rules, Burgess Capital
cannot enter into an agreement to borrow funds due to Morpheus not being in the business of lending money
All of the following choices adhere to the NASAA Model Rule on Unethical Business practices of Investment Advisers EXCEPT when an investment adviser:
decides to borrow funds with a promissory note in writing from an individual client.
Investment advisers are fiduciaries to customers. This being said, they have a responsibility to
give their clients disinterested and impartial advice as well as advice that is not based upon other client's actions or accounts.
An Administrator of a state may deny an application by a broker-dealer for registration, according to the Uniform Securities Act, if the broker-dealer applicant
has been suspended by the London Stock Exchange.
According to NASAA Regulations, an IA that has and maintains custody of a client's funds must:
hold bank accounts in the name of the IA as agent or trustee for the benefit of the client
If an agent terminates his employment with one broker-dealer and has not yet been hired by another broker-dealer, the agent's registration:
is no longer effective
A broker-dealer amends its Form BD filing with a State Administrator to show a change in its business plan to now have custody over its client's funds and securities. Under the USA, the State Administrator:
may require the broker-dealer to post a surety bond with the Administrator.
An IA recommends that a client purchase a 20-year Treasury Bond at par with a coupon of 6%. The IA tells the client that he will "earn a 6% return per year if the bond is held to maturity." This statement is
not allowed because IA's cannot guarantee specific returns.
According to the Uniform Securities Act, there is an exemption from registration for investment advisers who solely service institutional investors. Institutional investors are defined as
people who have been designated as such by the state Administrator either by rule or order.
According to the Uniform Securities Act, all the following must be included in a written advisory contract except:
that the investment adviser has been qualified by examination, experience or training to be an investment adviser
An order ticket for a securities transaction would contain all of the following items EXCEPT the
the exchange on which the security trades.
