SERIES 63
The Act EXCLUDED individuals who represent issuers
----4 EXCLUSIONS for issuers---- 1. Sales of specified exempt securities 2.Exempt transactions 3.Sales of specified covered securities 4.Sales of securities to employees of that issuer if no remuneration is paid
Which of the following would be defined as a broker-dealer in State A?
A broker-dealer located in State B who has an existing active customer who moves to State A
Which of the following persons is required to register as an investment adviser under the Uniform Securities Act?
A broker-dealer that charges an annual flat fee to customers for both investment advice and portfolio trade executions
Under the Uniform Securities Act, which of the following persons with no place of business in a State is EXCLUDED from the definition of an "Investment Adviser"?
A trust that receives special compensation for rendering advice about securities Excluded from the definition of an investment adviser are: Investment Adviser representatives (agents) Depository Institutions (banks, savings and loans, trusts) Professionals (accountants, lawyers, teachers, engineers, whose performance of these services is wholly incidental to their professional practice) Broker-dealers Newsletters that give general investment advice Federal covered advisers
As long as a Canadian BD is registered in Canada an DOES NOT have a place of business in the US it is exempt from registration
As long as the Canadian client spends less than 1/2 year in the US and intends to return to Canada the the Canadian BD and Agent are not required to register
Under the Uniform Securities Act, which of the following would be defined as an investment adviser?
ACCO Publishers, which has a website that charges for customized financial plans based on customer input
Which of the following is NOT defined as a federal covered adviser?
An adviser to insurance companies registered in the State Federal covered advisers are not required to register in the State; they are required to register with the SEC
Which of the following individuals is NOT EXCLUDED from the definition of a "sales representative" under the Uniform Securities Act?
An individual who represents an issuer in transactions with investors
Who must register in a State as an investment adviser?
An on-line broker-dealer who offers a "no maximum number of trades" program for a 90-day period for a set dollar amount hus, any flat fee product offered by a broker-dealer is considered to be an advisory product and requires that the firm and each agent register as an IA and IAR respectively in order to sell these
An institutional buyer is defined under the Uniform Securities Act as: A. an institution with at least $100 million of assets available for investment B. an accredited investor as defined under Rule 506 of Regulation D of the Securities Act of 1933 C. any person defined by the Administrator by rule or order D. any institution that is regulated by the Federal Reserve, SEC, or State Insurance or Banking Commissioners
C
Under the Uniform Securities Act, a "natural person" includes a(n):
agent
Under the provisions of the Uniform Securities Act, a "person" includes: I A parent that is acting as custodian II An adult couple III Municipality IV Corporation
all of the above
An individual who represents an issuer in selling securities of that issuer to the issuer's employees; and who does not earn a commission for this work; is defined under the Uniform Securities Act as a(n): A. agent B.Broker-dealer C. Issuer D. None of the above
D
An individual who represents an issuer in the sale of that issuer's securities and who earns a commission on each transaction would be defined as an "agent" under the Uniform Securities Act if that individual represents the issuer: A. in sales of specified exempt securities B. effecting exempt transactions C. in sales of covered securities D. effecting sales of securities to employees of the issuer
D
Individuals who represent ISSUERS effecting trades with employees, partners, directors, and officers of the issue are EXCLUDED from the definition of an agent as long as no commissions or other compensation is given to the sales rep for soliciting these persons
DEFINITION OF INVESTMENT ADVISER -must register with the State under the Act
Under the Act 'persons' are considered to be human or nonhuman EX) -individuals -corporations -partnerships -business trusts -estates -trusts(where the interests of the beneficiaries of the trust are evidenced by a security) -associations -joint stock companies or joint ventures -governments and political subdivisions of governments -unincorporated organizations and any other legal or commercial entity
DEFINITION OF ISSUER--an 'issuer' is any person who issues or proposes to issue a security -for securities where the structure is such that there is no BOD(Collateral Trusts, Voting Trusts, CD's, UIT's) the issuer is the person performing the functions of manager or depositor under the Trust agreement
individuals who represent ISSUERS in EXEMPT Transactions are EXCLUDED from registering with the state
EXEMPT Transactions -isolated transactions with someone other than an issuer (not intended to cover repeated trades by the same person) -transactions between issuers and underwriters
Under the National Securities Markets Improvement Act of 1996, which statement is FALSE?
Federal covered advisers cannot be investigated by the State Administrator
Firms that trade exclusively with Professional Investors with No place of business in the state are excluded (from the term broker-dealer)
Firms that contact existing customers on vacation in another state are Excluded (from definition of broker-dealer hence EXEMPT from registration)
Under the Uniform Securities Act, which of the following are defined as broker-dealers that must register in a State? I Any person who effects securities trades for the account of others II Any person who effects securities trades for his own account III Any person with no place of business in the state that has adopted a de minimis rule who has a single client in the state IV Issuers of securities
I and II
Which of the following individuals is defined as an "agent" under the Uniform Securities Act? I An individual who represents a broker-dealer selling exempt securities to the public II An individual who represents a broker-dealer selling securities listed on a national stock exchange III An individual who represents an issuer in an exempt transaction IV An individual who represents an issuer in a transaction with existing employees without accepting a commission
I and II only
Investment advisers may be formed as: I Partnerships II Corporations III Associations
I, II, III Legally, an investment adviser is a "person," which is any legal operating entity.
An investment adviser has determined that it can register as a federal covered adviser. This means that the adviser: I solicits clients on behalf of other investment advisers II currently operates in at least 15 States III has at least $25,000,000 of assets under management IV provides financial planning to customers for compensation as a regular business
II and III
Which of the following individuals is EXCLUDED from the definition of an "agent" under the Uniform Securities Act? I An individual who represents a broker-dealer selling exempt securities to the public II An individual who represents a broker-dealer selling securities listed on a national stock exchange III An individual who represents an issuer in an exempt transaction IV An individual who represents an issuer in a transaction with existing employees without accepting a commission
III and IV only
Which of the following is (are) NOT considered to be 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
III only
DEFINITION OF INVESTMENT ADVISER REPRESENTATIVE-- Any partner, officer, director, or other individual employed by an investment adviser who::::::: -Makes recommendations or renders advice regarding securities -Manages accounts or portfolios of clients -Determines which recommendations or advice regarding securities should be given -solicits offers or negotiates for sale of investment advisory services -supervises employees who perform any of the functions listed above
Investment Adviser Reps are: -employed by a "federal covered adviser" - has a place of business in the State
Broker-Dealer
MUST register in the State under the Act unless exemption is available
State Registration laws:
blue sky laws
An agent of a broker-dealer who effects securities transactions that are not recorded on the books of the broker-dealer is defined as a(n):
broker-dealer
Broker-Dealer
can be anyone that gives advice on Mergers and Acquisitions and finders that 'find' companies to be acquired
An officer of an issuer is engaged in the sale of that issuer's securities to the public. The issuer's securities are federal covered. The officer is:
defined as an agent who must register in the State
MID-SIZE ADVISERS---- -advisers with 25 million of more assets under management -advisers with 25 million assets under management that is NOT required to register in the State where it has its principal office must register with the SEC -advisers that must register in 15 or more states can opt to be SEC-registered
**Federal Covered Adviser is any person EXCLUDED from the definition of an investment adviser under the Investment Adviser Act of 1940
PERSONS NOT CONSIDERED TO BE BROKER-DEALERS
-Agents: individuals who represent the broker-dealer when performing securities transactions (sales Reps) -Banks, Savings Institutions, and Trust Companies: these are separately regulated under the Federal and State banking laws -Issuers
Institutional Buyers Include:
-Banks -Savings and Loans -Trust Companies -Insurance Companies -Investment Companies -Pension and Profit Sharing Pans -Anyone else so designated by the State Administrator
Institutional Buyers
-as long as broker-dealer or investment adviser does not have a physical office in a State and -only institutional buyers are solicited in the State then -no registration is required in the State
Federal Covered Securities
-covered securities -cannot be required to be registered in the State they can only be required to be federally registered with the SEC
Who is a Broker Dealer
-engages in the business of effecting securities transactions for the account of others -engages in the business of trading for his own account
Non-issuer Transaction
-proceeds from the sale of the securities go to someone other than the issuer -transaction that not directly or indirectly for the benefit of the issuer
Non-issuer
-simply a person who is not defined as an issuer under the Act -purchasers
Issuer Transactions
-when the 'issuer' redeems or sells securities -the sale of the securities is for the benefit of the issuer-the issuer receives the proceeds from the sale -primary transaction
DEFINITION OF FEDERAL COVERED ADVISER----------- -if an adviser is defined as a "federal covered adviser" then the adviser MUST register with the SEC and not the STATE -if an adviser is NOT a "federal covered adviser" then it must register in the STATE not with the SEC
Defined as: -Investment advisers that manage $100 million or more of assets -Investment advisers to registered investment companies -advisers that have between $100 million and $110 million of assets under management have the choice of registering with the State or Federal Level -SEC registration is only required once as adviser has $110 million or more of assets under management -Adviser that is SEC-registered already do not have to re-register unless its assets were to fall below 90 million
If an adviser is EXCLUDED from the Federal definition then it does not have to register in the State
EXCLUDED from the definition of an investment adviser under the 1940 ACT are: -banks or bank holding companies -lawyers, accountants, engineers or teachers whose performance of such services is solely incidental to the practice of their profession; -broker-dealers and their registered representatives whose advisory services are solely incidental to the securities business and who receive no special compensation for making recommendations; -publishers of bona fide newspapers, magazines, or financial publications of a general and regular circulation; -any person who advises solely about U.S. Government guaranteed obligations.
Under the Uniform Securities Act, which of the following are defined as federal covered investment advisers? I Investment advisers managing assets of $100,000,000 or more II Investment advisers to investment companies registered under the Investment Company Act of 1940 III Investment advisers to insurance companies
I and II Federal covered investment advisers are defined under the Investment Advisers Act of 1940 (federal law). They are advisers managing $100,000,000 or more of assets; and advisers to investment companies. It is not a coincidence that the Investment Advisers Act of 1940 and the Investment Company Act of 1940 were written at the same time. One of the main intentions of the Investment Advisers Act of 1940 was to regulate advisers to investment companies and limit their compensation
Which of the following are defined as an "agent" under the Uniform Securities Act? An individual who represents: IACME Broker-Dealer effecting trades in preferred stocks II the City of New York selling the City's general obligation bonds to New York residents III ACCO Broker-Dealer effecting trades in private placements exempted under Regulation D IV the Federal Reserve effecting trades of U.S. Government securities in its open market operations
I and III
An Investment Adviser can give advice on: I NYSE listed securities II Options III Commodity futures IV Variable annuities
I, II and IV The best answer is C. Investment Advisers and IARs give advice about securities, not commodities or futures contracts. Choice I, II and IV are all securities. Commodities futures are not securities.
Investment Adviser is a person who for compensation: -engages in the business of advising others, directly or indirectly as to the value of securities -issuers or promulgates analyses or reports concerning securities on a regular basis as part of a business -provides investment advisory services to others in a financial planning practice
NOT DEFINED as investment advisers::: -individual employees of the investment adviser -depository institutions:banks, savings and loans, trusts -professionals:lawyers, teachers, etc. -BD whose performance of these services is incidental to the conduct of the business and who receive no special compensation for these services -publishers of newsletters that DO NOT give advice based upon specific investment situations -Federal Covered Advisers
Federal law enacted to eliminate duplicate regulations that required registrations at both the Federal and State Level
National Securities Markets Improvement Act of 1996 (NSMIA)
DEFINITION OF AGENT -agent is an INDIVIDUAL who represents a BD or issuer in effecting securities transactions -also known as sales representatives and must register in each state in which they wish to perform trades ---agent is an individual who EFFECTS TRADES--
Partners,Directors,or Officers of a BD are only considered to be SALES REPS if they effect securities transactions ---if they do not touch securities transactions then they are just agents
Two individuals sponsor golf tournaments to which they invite venture capitalists that seek to be matched with wealthy potential investors. The individuals sponsoring the event intend to collect a finder's fee paid by the venture capitalist if he or she receives funds from an investor that attended the golf tournament. Which statement is TRUE based on these facts?
The 2 individuals are defined as broker-dealers because they will receive compensation if an investor is matched to a venture capitalist A broker-dealer is defined as a person engaged in the business of effecting securities transactions for others or for its own account. When deciding whether a firm is considered to be a "broker-dealer," the regulators look to see if compensation is being paid. If compensation is not being paid, then that firm is not "in the business" of effecting securities transactions. If it is being paid, in any form, then it is "in the business" and is defined as a broker-dealer that must register.
Specified Securities that are EXEMPT -US Gov -Foreign Gov -Municipal Gov -Canadian Gov -Bank and Savings Institutions -Trust Companies
The following specific securities also fall under this exclusion: -Promissory Notes that will mature in 9 months or less(issued in at least $50000) -exempts individuals representing issuers selling corporate commercial paper -securities issued in connection with Savings, Pension, Profit Sharing Plans and Employee Stock Option Plans
The Uniform Securities Act defines an investment adviser representative as a partner, officer, director, or other individual employed by an investment adviser who makes recommendations; renders advice; manages accounts; solicits the sale of advisory services; or supervises employees who perform any of these functions. Excluded is anyone who solely performs clerical or ministerial duties like a word processor.
The purpose of the Uniform Securities Act is to protect investors from: investment fraud The purpose of the Uniform Securities Act is to protect the public from investment fraud
All of the following are EXCLUDED from the definition of a broker-dealer under the Uniform Securities Act EXCEPT a firm with no place of business in the State that:
has a few clients in the State with a de minimis exemption
An investment adviser has determined that it MUST register as a federal covered adviser. This means that the adviser:
has at least $110,000,000 of assets under management
All of the following statements are TRUE about broker-dealers under the Uniform Securities Act EXCEPT a broker-dealer:
is not required to register in a State unless it has an office in that State Any broker-dealer that has an office in a State; or one that solicits in a State; must register in that State
An individual sells the securities of a federal chartered bank. This individual will be EXCLUDED from the definition of an agent if the individual:
is the employee of the bank
An individual who represents an issuer selling federally covered investment company securities:
must register as an agent in the State if compensation is being paid for this activity
All of the following are EXCLUDED from the definition of an agent EXCEPT an individual who represents the issuer in the:
sale of federal covered common stock to the public Excluded from the definition of an agent are individuals who represent issuers (not broker-dealers) in: Sales of specified exempt securities such as Treasury, Agency and Municipal debt (but not all exempt securities); Exempt transactions, such as the sale of securities only to institutions or underwriters or private placements as defined under State law; Sales of specified covered securities (basically private placement issues and sales to persons with investment assets of at least $5,000,000 and investment managers handling assets of at least $25,000,000) - however if the individual is selling federally covered "nationally traded" securities or investment company securities, he or she must register as an agent; and Sales of securities to employees of that issuer if no remuneration is paid - (the example here is a corporate employee who places company stock into employee 401(k) accounts).
Which of the following would likely be required to register as an investment adviser representative? A person who:
supervises other investment adviser representatives -a person who: makes recommendations or otherwise renders advice regarding securities; -manages accounts or portfolios of clients; -determines which recommendation or advice regarding securities should be given; -solicits, offers or negotiates for the sale of, or sells, investment advisory services; or -supervises employees who perform any of the foregoing
Equipment Trust Certificates
the issuers is the person to whom the equipment is to be leased or conditionally sold (which is the corporation)
Oil and Gas Programs or Mining Titles/Leases
there is considered not the be an issuers-will be issued through Registration Qualification
De Minimis
when BD has no physical presence in the State and is only doing minimal business in the State
Agency Capacity
when a firm effects trades for the account of others (middlemen) acting like a broker
Principal Capacity
when a firm trades out of its OWN account considered to be the dealer in transaction
Under the Uniform Securities Act, an agent that sells securities to a customer in a transaction that is not recorded on the books and records of his or her broker-dealer:
will cause the agent to become a statutory broker-dealer The best answer is D. Agents are prohibited from effecting securities transactions for customers unless the trades are known to the broker-dealer; are supervised by the broker-dealer; and are recorded on the books and records of the broker-dealer. This agent is "selling away" from his firm and is executing trades for customers that are not being recorded by the broker-dealer. He or she becomes a "statutory broker-dealer" under the Uniform Securities Act and is required to register in the State as such.
