Series 63 missed answers
A broker-dealer has flexibility in terms of the capacity in which it can act in a securities transaction. When buying a security from a client, the trade confirmation would
disclose that the firm acted as a principal in the transaction
James Douglas, an agent with Government Securities Specialists (GSS), a broker-dealer registered in this state, sells his client 10 U.S. government bonds due to mature in 30 years. According to NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following statements may Douglas legally make?
"The bonds are guaranteed as to principal and interest payments by the U.S. government." .
Under the Uniform Securities Act, which of the following statements are true about the authority of an Administrator?
A cease and desist order may be issued prior to a hearing. A cease and desist order may be issued after a hearing. *There is no time period associated with the order
Under the provisions of the Uniform Securities Act, as amended, a gift of nonassessable stock would be which of the following?
A gift *Nonassessable stock is free and clear, so the gift is truly a gift and not a sale. Had the question referred to an assessable stock, it would have created a potential liability to the recipient and therefore been considered an offer and a sale.
Under which of the following circumstances would the Administrator of this state have jurisdiction?
A letter was sent to a client in her state from an agent in another state. A mass mailing was made from another state to residents in her state. A television broadcast advertising a security was made from her state. *Radio or TV broadcasts made from outside the state do not come under the Administrator's jurisdiction.
Which of the following are not included in the definition of an agent in the Uniform Securities Act?
A licensed broker-dealer and An officer of an issuer who only represents the issuer in selling shares to a broker-dealer underwriting the company's securities
Which of the following individuals would be most likely to be willing to sell securities for the benefit of the issuer without receiving any compensation based upon those sales?
A member of the issuer's board of directors *It is common for small companies to sponsor their own public offering using officers and board members who generally are willing to sell the shares without receiving any compensation.
Which of the following persons with an office in the state is excluded from the Uniform Securities Act's definition of broker-dealer?
A person engaged in the business of making short-term loans to individuals resident in the state
Under the Uniform Securities Act, which of the following are securities?
A put option on a gold futures contract A warrant to purchase shares of a common stock that trades in the OTC market. commodities futures contracts are not considered to be securities
Which of the following transactions would be exempt from the advertising and sales literature filing requirements of the Uniform Securities Act?
A retired customer calls an agent and enters an order to purchase 1,000 shares of a low-priced stock traded on the Nasdaq Stock Market. *The key to the question is finding the exempt transaction. Any unsolicited transaction, regardless of the nature of the security, is exempt.
Which of the following transactions are exempt from the registration provisions of the Uniform Securities Act?
After a presentation is made to 23 potential individual investors, pre-organization certificates are subscribed to by 8 of them Isolated nonissuer transactions Unsolicited nonissuer transactions effected through a broker-dealer Transactions between issuers and underwriters
Which of the following would be considered an unethical business practice?
Agents correcting bona fide execution errors in their customer's accounts. *When a good-faith error is made, only the firm can make the correction
Which of the following statements regarding an investment adviser is not correct?
An investment adviser whose only clients in this state are insurance companies located in the same city as her office is not an investment adviser under the Uniform Securities Act. *The exemption for institutional clients exists only when the adviser does not have an office in the state
Which of the following securities are exempt from the registration requirements of the Uniform Securities Act?
An investment contract issued in connection with an employee pension plan Securities issued by St. Paul's Catholic Church in Tempe, Arizona Securities issued by a public utility Securities issued by the Canadian government
Company A, a blue chip with a AAA rating, has a wholly owned subsidiary, Company B. Because Company B is a relatively new operation, it has not yet developed a strong credit history. Needing to borrow additional funds for long-term capital investment, but wanting to keep interest costs to a minimum, what steps might Company B take?
Issue a bond guaranteed by Company A
A margin account is a type of brokerage account in which the broker-dealer lends the investor cash to purchase securities using marginable securities in the account as collateral. Which of the account documents authorizes the use of those securities as collateral for that loan?
The credit agreement
Which of the following qualifies under the Section 28(e) safe harbor provisions for soft-dollar compensation?
Clearance and settlement services provided by the broker-dealer
Which of the following activities could result in an Administrator taking action against a broker-dealer registered in her state?
Hypothecating a customer's securities in a margin account without written consent from the customer promptly after the initial transaction *The signed hypothecation agreement must be received by the broker-dealer promptly after the initial transaction in a margin account. Because the requirement is after, transactions can be made without having the margin agreements in hand. Charging reasonable fees is proper and, unlike investment advisers, broker-dealers do not have to notify the Administrator of their plan to maintain custody of customer assets.
An Administrator could use which of the following as a reason for issuing an order denying the registration of a security in her state? The issuer's enterprise or method of business includes or would include activities that, although legal in the state of incorporation, are illegal in the Administrator's state. The company has not been paying dividends. The offering would be made with unreasonable amounts of underwriter and seller discounts.
I and III
Under the Uniform Securities Act, the definition of sale includes bona fide gifts of securities. giving a security as a bonus with any purchase. exercising a right to convert one security into another. preliminary agreements between issuers and underwriters.
II and III
The Uniform Securities Act has provisions for agent registration and termination. Which of the following statements apply to withdrawals of an agent's registration?
If the Administrator commences an action against the agent prior to the effective date of the withdrawal, the withdrawal will be delayed until completion of the action.
State laws provide for exclusions from the definition of investment adviser. Which of the following persons is specifically excluded under the Uniform Securities Act?
Investment adviser representative
Which two of the following statements regarding customer accounts are correct?
Margin account agreements must be signed promptly after the first trade in the account. The option account agreement must be returned by the client within 15 days of the account being approved. *Don't ask why, but in both cases, trading can commence before the agreements are signed and returned. In the case of the margin account, promptly after the initial trade is the time and for the options account, within 15 days of account approval to engage in options trading.
Nobody Walks Motor Company, a licensed automobile dealer, is running a promotion offering a $1,000 corporate bond at no additional cost to anyone who purchases a new car over the weekend. Under the Uniform Securities Act, in order to make this offer
Nobody Walks Motor Company must be registered as a broker-dealer in the state.
Under the Uniform Securities Act or the North American Securities Administrators Association (NASAA) Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, which of the following would not be an unethical or prohibited action by an investment adviser?
Not providing the Administrator with a surety bond because the adviser does not maintain custody or exercise discretion over client assets
Securities of a nonexempt corporate issuer that are not registered with the SEC may only be registered with the Administrator in which of the following ways?
Qualification *Securities of a nonexempt corporate issuer that do not have a federal registration must be registered with the Administrator by qualifying with the Administrator. This process is called registration by qualification.
Which of the following items is not required under the customer identification program (CIP)?
Sex
The Uniform Securities Act excludes from the definition of agent individuals who represent certain issuers in the sale of their securities. An individual representing which of the following issuers qualifies for that exclusion?
The Second National Bank of Springfield
Margin is borrowing money from a broker-dealer to buy a stock, using the investment as collateral. In many cases, the brokerage firm then uses that collateral for a loan from a bank. Which of the following account documents authorizes the firm to pledge the customer's stock?
The hypothecation agreement
Which of the following is least likely to appear on a broker-dealer's application submitted to the Administrator?
The number of agents employed by the broker-dealer *does include: The form of business organization Disclosure of any charge, conviction, or guilty plea to any felony Proposed method of doing business
Registration as an agent under the Uniform Securities Act would be required of which of the following?
The secretary of a licensed agent who contacts the agent's clients with market suggestions when the agent is on vacation An officer of a broker-dealer whose only responsibility is performing suitability review of transactions based upon recommendations to clients
Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, requirements of advisory contracts include which of the following?
They must describe the amount of any prepaid fees that will be returned to the client in the event the contract is terminated. They must prohibit the use of discretion without the client's authorization.
Which of the following statements regarding Form ADV Part 2 is true?
Unless there are no material changes, it must be delivered to clients annually. *it is the brochure
When a broker-dealer is acting as a principal in a securities transaction, it is
a contra party to the trade.
Walt and Bryan are old friends who are agents with different broker-dealers. Bryan attends one of Walt's investment seminars and, at a prearranged point in the presentation, stands up and exclaims that his rich brother-in-law wisely purchased the same investment. This action is
a deliberate attempt to mislead and deceive investors.
If an agent misrepresents the price of a customer's stock by $10 per share to encourage the client to sell, this activity is
a misrepresentation and a fraudulent act.
All of the following actions are dishonest or unethical business practices under the Uniform Securities Act or the North American Securities Administrators Association (NASAA) statements of policy except
an agent offering an unregistered exempt security for sale. *NOT buying a stock in one market and selling it in another to create the appearance of increasing market interest.
In order for a surety bond to meet the requirements of the Uniform Securities Act, it must provide that
any customer who can prove a violation is entitled to collect against the bond.
As found in the Uniform Securities Act, the term issuer means
any person who issues or proposes to issue any security.
A state-registered investment adviser must deliver the Part 2A brochure and any Part 2B brochure supplements required by the rule to a prospective advisory client
at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.
An agent has a highly successful neurosurgeon as a client. The doctor has indicated that speculative growth, including aggressive positions, is the account objective. If the agent's manager noticed a pattern of excessive transactions in the account, this would be a case of
churning
A control affiliate of a broker-dealer applying for state registration could be the cause of a statutory disqualification if its Form BD disclosed that the control affiliate was
convicted of a non-securities-related felony eight years ago. *Conviction of any felony, securities-related or not, within the previous 10 years is listed as a specific justification for statutory disqualification.
The Uniform Securities Act specifies the records that must be kept by a broker-dealer. The methods of recordkeeping have evolved along with changes to technology. A broker-dealer would like to keep its records on a computer disk. Under the Uniform Securities Act, it
could do so if the system met certain requirements including that the information on the disk could not be altered.
Except as limited by the Securities Exchange Act of 1934, the state securities Administrator may require, by rule or order, that broker-dealers make or maintain all of the following records except
emails containing unsolicited testimonials.
Under the Uniform Securities Act, registrations of securities professionals expire
every December 31, unless renewed.
Under the Uniform Securities Act, the term agent would include an individual who sells exempt securities on behalf of a broker-dealer in an exempt transaction. non-exempt securities on behalf of a broker-dealer in an exempt transaction. securities on behalf of an issuer in an exempt transaction. revenue bonds as a representative of the city water authority.
exempt securities on behalf of a broker-dealer in an exempt transaction. non-exempt securities on behalf of a broker-dealer in an exempt transaction.
All of the following activities could result in being charged with a fraudulent or unethical practice except
failing to state all known facts about an investment when presenting it to a client.
The Uniform Securities Act would consider an agent's deliberate attempt to deceive a customer to be
fraud. *Here is a case where you must pick the specific legal term. Fraud is the deliberate or willful attempt to deceive a person. Yes, it is deceitful, prohibited, and unethical, but the legal term for this activity is fraud.
Rising Tide Investments, a broker-dealer specializing in underwriting new issues, was the lead underwriter of the recent successful IPO for XYZ Biogenetics. The stock is now selling at a 20% premium over the IPO price. When publishing a favorable research report about this stock, the broker-dealer shall
go ahead and release the report, being sure to disclose the potential conflict of interest.
Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, it would be considered a prohibited practice for a broker-dealer to
have a history of repeatedly delaying the delivery of securities to its customers. Failing to meet net capital requirements or register is not unethical—it is against the law.
The Uniform Securities Act provides that a broker-dealer with no place of business in a state is not defined as a broker-dealer in that state if its customers are exclusively
institutional investors or other BDs
Big Sky Securities (BSS) is a broker-dealer registered in states M, I, and W. They have no place of business in State O. The registration provisions of the Uniform Securities Act would not apply to BSS in State O if they confined their securities business in State O to all of these except
investment advisers.
Patrice is employed by ABC Securities, a registered broker-dealer. Patrice's sole responsibility is posting customer securities transactions to the blotter. As such, Patrice
is not defined as an agent.
SEC Regulation S-ID describes a broker-dealer's or investment adviser's duties regarding the detection, prevention, and mitigation of identity theft. The rule applies to an investment adviser when it
is permitted to direct transfers or payments from accounts belonging to individuals to third parties upon the individuals' instructions.
Under the Uniform Securities Act, those persons carrying out a broker-dealer's supervisory regimen over agents
must be registered as agents. *Supervising the activities of agents requires registration as an agent.
Under the Uniform Securities Act, an investment adviser with an office in a state
must register its investment adviser representatives who work in that office with the Administrator even if the investment adviser is federal covered
Your friend is a licensed life insurance agent whose client wants to purchase a variable annuity. You are a licensed securities and insurance agent, and your friend wants you to sell the policy and split commissions with him. Splitting commissions
on variable annuity sales is allowable only if the agents involved are both licensed in life insurance and maintain their securities licenses at the same or affiliated broker-dealers.
An agent may borrow securities from a customer
only if the client is in the business of lending securities
An individual currently registered in State A would not have to register as an agent in State B if he
received an unsolicited call from an existing customer currently on vacation in State B who wishes to purchase a particular stock. NOT solicited only five individuals living in State B during a 12-month period. *There is no de minimis exemption for broker-dealers or agents.
Clarice is registered as an agent in State X and represents a broker-dealer that is registered in all 50 states. A customer who is a resident of State Y calls the broker-dealer and is directed to Clarice. The customer wishes to place an order to purchase $10,000 of stock. Under the Uniform Securities Act, Clarice should
refer the order to an agent registered in State Y because she is not registered there.
Under the Uniform Securities Act, all of the following issues would be exempt from registration except
stock issued by an insurance company not offering policies in this state.
An applicant for registration as a broker-dealer realized that material information was omitted from the initial application. In that case
the 30-day period begins when the application containing that information is submitted
The Administrator could deny or revoke the registration of a broker-dealer if
the CEO has intentionally failed to file advertising material with the Administrator.
When it comes to safeguarding confidential information pertaining to the account(s) of an individual customer or family, the rules deal primarily with what is called a covered account. A key factor in determining if an account meets the definition is
the ability of the customer to move funds out of the account on multiple occasions
An individual is currently registered as an agent with a broker-dealer. If the agent would like to offer wrap fee programs through the firm, all of the following statements are correct except
the agent would be defined as an investment adviser *Once the broker-dealer decides to offer wrap fee programs, it is no longer excluded from the definition of an investment adviser and would become required to register on either the state or federal level. The agent would now become an IAR of the firm and, as such, would carry the additional fiduciary responsibility incurred in the advisory business.
Farrier and Nail has applied for registration as a broker-dealer in the state. The application is required to contain
the business history of the firm's principal officers. the types of business the firm is engaged in.
The agreement that the Administrator can receive subpoenas on behalf of a registered agent, broker-dealer, investment adviser, or investment adviser representative involved in any securities sale that violates the Uniform Securities Act is
the consent to service of process.
Under the Investment Advisers Act of 1940, if an investment adviser's sales literature describes an investment system, such as one using charts, the description must include
the difficulties and limitations of using the system.
All of the following statements regarding the disclosure investment adviser brochure rule of the Uniform Securities Act are true except
the disclosure brochure must be signed by an officer or partner of the firm.
Pedantic Professional Analytics (PPA) is an investment adviser registered in States B, C, and D. Part of PPA's service is offering a comprehensive financial plan, for which there is an initial fee of $2,500. During a discussion with a prospect, one of its investment adviser representatives seeks to allay the individual's concerns by informing her that once the firm delivers its brochure and receives the client's payment, there is a three-day period during which the client may cancel the contact and receive a refund of that fee. In this case,
the investment adviser representative is in violation because the time period is five days.
Unless exempt, all state-registered investment advisers must provide prospective and existing customers with a disclosure document. This document is most commonly called
the investment adviser's brochure
Magnum Manufacturing Company (MMC) wishes to raise capital through a public offering of its common stock. When filing the required paperwork with the Administrator, MMC is legally referred to as
the registrant.
A Canadian broker-dealer is registered in the province of Alberta. The firm has clients who vacation in Arizona, New Mexico, and Texas, and they would like to continue to do business with them while on their holidays. Under the Uniform Securities Act,
this would only be permitted if the trades were executed through an affiliated domestic broker-dealer who is licensed in those states.
For larger accounts, a broker-dealer is least likely to waive its normal fee for
transferring the account to another broker-dealer.
An agent's license can be revoked if he is any of these except
under 21 years of age
Under the Uniform Securities Act, an employee of a licensed broker-dealer firm is allowed to sell securities as an unregistered agent
under no circumstances. *It is unlawful for a person to transact business as a representative of a broker-dealer unless that person is registered, even if the securities are exempt.
Under the Uniform Securities Act, the state Administrator may, by order, deny, suspend, or revoke an investment adviser's registration for
violation of another state's securities laws within the last 5 years. *A violation of any state or federal securities or commodities law within the last 10 years is grounds for denial, suspension, or revocation of registration by order
An agent's registration is considered effective
when approval has been granted by the Administrator.
Rachel passed her life insurance license exam six months ago and is now studying the Kaplan material for the Series 63 exam. During this period, Rachel would be permitted to sell
whole life insurance.
One of the services frequently provided to customers by broker-dealers is maintaining custody of customer funds and securities. As specified in the Uniform Securities Act, a broker-dealer maintaining custody of its customers' funds and securities
will generally be required to post a surety bond or meet minimum net capital requirements.
Under the Uniform Securities Act, registration with the state as either an investment adviser or investment adviser representative would be required of which of the following?
*An individual employed by an investment adviser who is responsible for supervising the firm's client-facing analysts, but who personally offers no advice to any client *An agent with a broker-dealer who offers wrap fee programs charging an annual fee with a sliding scale based on assets under management
According to the Uniform Securities Act, an offer or a sale does not exist if it is
*a reclassification of the issuer's securities. *a bona fide pledge or loan. *an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares. *any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by the stockholders for the dividend.
If the Administrator has summarily suspended an investment adviser representative's registration, the registrant may request a hearing by written request and the hearing will be granted within
15 days.
An agent unintentionally sells nonexempt securities that have not been registered. Under the Uniform Securities Act, the broker-dealer may write a letter and offer to buy back the security plus interest, minus any income received. The client gives up the right to bring action against the firm in court if he does not respond within how many days of receipt of the letter?
30 days
Which of the following persons does not meet the definition of providing investment advice as a business outlined in SEC Release IA-1092?
A management consultant whose only investment advice is suggesting to a couple of small business clients who had invested their surpluses in speculative securities that they should find something less risky
In some instances, rather than using an investment banker to distribute its securities to the public, an issuer will hire a sales force or use its own employees to make the sales. The individuals involved in the selling in this state would not be defined as agents under the Uniform Securities Act if selling on behalf of which of the following issuers?
A savings institution organized and supervised under the laws of any state
Strategic Planning, Inc. (SPI), a broker-dealer registered with the state, has recently paid its renewal fees for registration. Three months later, Planned Stewardship, LLC, a new firm established to provide brokerage services, acquires SPI. Under the Uniform Securities Act,
Planned Stewardship has no registration fees to pay. *The Uniform Securities Act does not require new fees to be paid by successor entities.
Charles Horse is the CEO of Farrier and Nail, a new broker-dealer applying for registration in a number of states. In completing the application, which of the following events in the CEO's life must be disclosed?
Any charge, conviction, or guilty plea to a misdemeanor involving investments or an investment-related business or bribery, forgery, extortion, or similar offenses *no time limit
Susie Shue is the CFO of Farrier and Nail, a new broker-dealer applying for registration in a number of states. In completing the applications, which of the following events in the CFO's life could lead to statutory disqualification?
Any conviction for a misdemeanor involving investments or an investment-related business or bribery, forgery, extortion, or similar offenses within the past 10 years
MaryJo Barkley is the CEO of MJB Securities. MJB is distributing an offering of ABC common stock to investors. Barkley has been telling potential investors that the registration of the stock indicates approval by the state. Under the Uniform Securities Act, she is committing misrepresentation of
registration.
All of the following are exempt transactions as defined under the Uniform Securities Act except
Broker-dealer B offers a private placement to 15 regular public customers and closes the offering at the end of 30 days.
A broker-dealer registered in States P, S, and U has several clients in State C. If the firm does not have a place of business in State C, the firm would avoid the need to register in State C if its only clients in the state are
savings and loan associations.
Which of the following persons are included in the definition of an agent under the Uniform Securities Act? An individual who represents First Securities Brokers, Inc., in selling shares of XYZ Corporation, a New York Stock Exchange-listed company An individual who, as part of the job description, represents the City of Chicago in selling its bonds to the public An individual who represents First Securities Brokers, Inc., whose sole activity consists of selling individual investors securities issued by the U.S. government An individual who is employed by the Federal Reserve Board to sell Treasury bills to retail investors
I and III
Terrence Washington operates his own financial planning organization, TW and Associates. He is registered with the state as an investment adviser. From time to time, Washington sells mutual funds to his advisory clients. Complying with state and federal laws means that Washington is registered as an agent with a broker-dealer. His actions as an agent must be supervised by
the appropriate supervisory personnel of the broker-dealer holding Washington's agent's license.
An agent registered with a broker-dealer in the state has had his license enjoined. This means
the individual is prohibited from acting as an agent pending the results of a hearing
GEMCO Securities, a broker-dealer registered with the Administrator, was bought out by KAPCO Investments, Inc., who has never been registered in this state as a broker-dealer. If the deal closed on July 15, 2020, which of the following statements is correct?
KAPCO would have to file an application along with a consent to service of process, but would not need to submit a fee. The Administrator would be able to initiate proceedings against GEMCO until July 15, 2021 *In the case of a successor firm, no fee is required, but an application with a consent to service of process is. Because this, in effect, represents a termination of GEMCO's registration, there will be no renewal (although KAPCO must renew on December 31, 2020). Any termination of registration for a securities professional grants the Administrator a one-year period during which jurisdiction remains.
Under the Uniform Securities Act, which of the following is an agent?
Mark Blodgett an employee of XYZ Manufacturing Corporation, receives commissions when he represents XYZ in the issuance of securities exclusively to existing employees, partners, and directors of the corporation.
Myra Johnson is an investment adviser representative with a federal covered investment adviser. Her former college roommate, and very close friend, has approached Myra about opening an account in which the two of them can share in the profits and losses. In order to be in compliance with the Uniform Securities Act,
Myra must inform her friend that this may not be done. *Unlike agents of broker-dealers, IAs and their representatives can never share in the profits and losses of an account with a customer.
The term agent as defined in the Uniform Securities Act, would not include which of the following individuals?
One who represents an issuer in effecting exempt transactions
Agents A and B work for the same firm and wish to share commissions. Agent A is licensed in States X, Y, and Z. Agent B is licensed in States X, Y, and C. Which of the following statements is true in regard to their sharing commissions?
Only the commissions from States X and Y can be shared
Pinnacle Asset Management (PAM) is an SEC-registered broker-dealer. PAM is also registered in more than 25 states. The net capital rule of the SEC requires PAM's net capital to be at least $50,000, and at its most recent calculation, it had net capital of $58,000. One of the states where PAM is registered has a bonding requirement of $60,000. To be in compliance,
PAM would not be required to post a surety bond. *no state can require bonding or financial requirements in excess of those of the SEC
Which of the following statements regarding the brochure delivery requirements of the NASAA Model Rule for investment advisers are true?
The brochure delivery requirement does not apply to investment companies or clients who are serviced on an impersonal basis, such as with a newsletter, with an annual cost of less than $500. A brochure, or summary of material changes, if any, must be delivered to all clients within 120 days of the end of the adviser's fiscal year. *Because the information in the brochure is derived from Part 2A of the Form ADV, changes to Part 1A will not necessarily apply to items that are important to the client.
An individual eligible under federal law to purchase securities sold in a private placement is called
an accredited investor.
An individual who is compensated by an issuer or a broker-dealer for selling registered securities to the public is
an agent
Working remotely is no longer an uncommon practice for agents of broker-dealers. When using their home as the base of their operations, they must
have cybersecurity policies and procedures in place to protect customer data.
A client of a broker-dealer is completing a new account form that contains questions about the investor's investing experience and knowledge. More than likely, what type of account is being opened?
options
Under the Uniform Securities Act, a guaranteed security is protected by someone other than the issuer against loss of all of these except
principal on equity issues. *Third-party guarantees do not provide against market loss. Please note that capital gains are never included in this type of guarantee.
Under the Uniform Securities Act, when material information relating to a broker-dealer's registration changes, the Administrator must be notified
promptly.
As part of the registration process as a broker-dealer in a state, the Administrator may require
publishing a notice of the registration in one or more newspapers in the state
When an investment adviser representative terminates employment with a federal covered investment adviser and then registers with a different federal covered investment adviser in the state where the individual has an office,
only the investment adviser representative must notify the Administrator promptly. *not the federal covered advisors bc A federal registered IA is exempt from registration at the state level and therefore has very little contact with the state
The Uniform Securities Act provides an exclusion from the definition of an agent under certain specified conditions for those persons representing an issuer in the sale of its securities. An individual representing the issuer in the sale of that issuer's securities to the public would not qualify for that exclusion and have to register if
the issuer is a federal credit union. *Individuals representing an issuer in the sale of its securities are exempt from registration if the security is one of five specified exempt securities or if the transaction is exempt. Securities issued by a federal credit union are not in the list of five specified in your License Exam Manual.
If it is determined that a security must be registered prior to its sale in the state, Section 305 of the Uniform Securities Act of 1956 provides that a registration statement may be filed by
the issuer, any other person on whose behalf the offering is to be made, or a registered broker-dealer.
An agent sells her customer $10,000 of 15-year U.S. Treasury bonds. If the agent tells the customer this is the best investment due to the absolute safety of Treasury securities, the agent has acted
unethically because the term absolute safety implies that the customer cannot lose money.
A registered broker-dealer is under common control with a registered investment adviser. An individual who is an agent of the broker-dealer and an investment adviser representative of the adviser has a client with $250,000 under an asset management program. This individual calls the client and suggests the purchase of 500 shares of RMBM common stock as an appropriate addition to the portfolio. The broker-dealer is a market maker in RMBM, and the sale will be made as a principal, a fact that is disclosed to the client on the trade confirmation. In this situation, the registered person has acted
unethically in that investment advisers are required to make written disclosure and receive the advisory client's consent prior to completion of a trade where the firm or an affiliate will be acting in a principal capacity.
An Administrator may deny or revoke a security's exemption
without a hearing if the issuer is given an opportunity for a hearing after the revocation.
