Series 63
A client sues an agent for selling an unregistered, non-exempt security. Shortly before the case comes to trial, the client dies. A) The suit survives the death of either party to the suit. B) The suit is cancelled. C) The suit will only be continued if acted upon by the beneficiaries of the client. D) Judgment is immediately rendered in favor of the deceased client.
A
A registered investment adviser has been investigated by the Administrator for fraudulent misrepresentations purportedly made to several clients. If the IA is found to have been in violation of the Uniform Securities Act, this may result ina $10,000 fine per violationa receiver being appointed over the adviser's assetsa prison term of 5 years per violationthe requirement that the investment adviser make restitution to the victims A) II and IV B) I and II C) III and IV D) I and III
A
A sales agent who is only registered in Nebraska works for a broker-dealer that is registered in all 50 states. A customer who is a resident of North Dakota calls the representative in Nebraska and offers to purchase securities. Under the Uniform Securities Act, the agent should A) reject the order because she is not registered in North Dakota B) accept the order because she received it in Nebraska C) accept the order because it is unsolicited D) accept the order because her broker-dealer is registered in all 50 states
A
All of the following must be specified in the state registration statement of a security EXCEPT A) the total amount of the security that will be offered in each state B) a stop order from another state that affects the offering of the security within that state C) all other states where the security is currently registered or will be registered D) the total amount of the security that will be offered in this state
A
An investment adviser with $100 million or more in assets under management may register with A) the SEC B) FINRA C) the NYSE D) NASAA
A
As used in the Uniform Securities Act, included in the term institutional investor would beaccredited investorsbanksemployee benefit plans with assets of not less than $750,000investment companies A) II and IV B) I and IV C) I, II, III, and IV D) II, III, and IV
A
Different types of accounts have different times for receipt of customer information. Which of the following does NOT correctly state the required time for the specified account? A) Margin account agreements must be received before the first margin trade in the account. B) The options account agreement must be received within 15 days after the customer's account has been approved. C) Written discretionary account authorization must be received by a broker-dealer before exercising discretion. D) Written discretionary account authorization must be received by an investment adviser within 10 days after the initial discretionary trade.
A
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 which of the following records?Account ledgersCorrespondencePapers and memorandaBlotters and books A) I, II, III, and IV B) I, II, and III C) III and IV D) II and III
A
For larger accounts, a broker-dealer is least likely to waive its normal fee for A) transferring the account to another broker-dealer B) wiring funds to the client's bank C) the annual account maintenance charge D) safekeeping of funds or securities in the account
A
If an agent's registration is revoked for a violation of the Act, the Administrator may deny a future application submitted by the agent foragentbroker-dealerinvestment adviser A) I, II, and III B) II only C) I and II D) I only
A
If the Administrator wishes to conduct an examination of an investment adviser's books and records, how much advance notice must be given? A) None B) 30 days C) 15 days D) 60 days Explanation
A
In order for a security to lawfully be sold or offered under the USA, it must meet at least one of the following requirements EXCEPT that it is A) registered with the SEC B) sold in an exempt transaction C) an exempt or federal covered security D) properly registered with the Administrator
A
Registration statements for securities A) may be amended after their effective dates as to the amount of securities issued, provided that underwriting fees and the initial offering price have not changed B) need not be filed with the Administrator if the securities are only sold in one state C) are effective for at least 2 years from their effective dates, or longer if the securities are still under distribution by the underwriters D) expire on December 31 of each year and must be renewed if further sales are to be continued
A
Simus Fund, a new open-end investment company, is preparing its registration statement with the SEC. Under the provisions of the NSMIA, this company would qualify for sale in a state by A) notice filing B) securitization C) coordination D) qualification
A
There are several ways that a securities professional's registration can be terminated. Nonpunitive termination of a securities professional's registration could be done through cancellation suspension revocation withdrawal A) I and IV B) II and IV C) I and III D) II and III
A
Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, which of the following must be included in an advisory contract?Whether the contract grants discretionary power to the adviserThe term of the contractThe amount of prepaid fee to be returned in the event of contract terminationThe formula used for computing the fee A) I, II, III, and IV B) II only C) I and II D) I, II, and IV
A
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 A) have a history of repeatedly delaying the delivery of securities to its customers B) maintain an office in the state, but fail to register with the Administrator C) fail to maintain the required net capital D) inform customers that past performance is no guarantee of future results
A
Under the Uniform Securities Act, bonds issued by which of the following are nonexempt securities? A) ABC, Inc. of Canada, a distributor of beverages in the United States and other countries B) Canadian province of Ontario C) Canadian city of Montreal D) The Canadian Government
A
Under the Uniform Securities Act, which of the following is NOT a reason for canceling an agent's registration? A) The agent has engaged in an unethical business practice B) The agent has been found by a court to be mentally incompetent C) The agent has ceased to do business as an agent D) The agent cannot be located after a reasonable search
A
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) a deliberate attempt to mislead and deceive investors B) only problematic if someone invests in the product and loses money C) a dubious sales practice but not strictly prohibited D) a legitimate sales tactic known as priming the pump
A
Which of the following statements best describes rights of rescission under the USA? A) An investor who believes he has been wronged in conjunction with a violation of the USA may be entitled to restore his former financial condition as if the transaction had not occurred. B) Any investor who loses money in a securities transaction can be made financially whole under the rights of rescission. C) An agent who unknowingly violated the USA may be imprisoned for up to 5 years. D) Rights of rescission are not generally available to public customers under the USA, although such rights may be made available to institutional investors.
A
Which of the following would NOT be considered an agent under the Uniform Securities Act? A) A broker-dealer who transacts business with the general public B) A natural person who sells variable life insurance policies as an employee of a life insurance company authorized to do business in this state C) An individual working for a broker-dealer who sells commercial paper to wealthy individuals D) An individual who sells foreign securities required to be registered with the state
A
Which of the following would be an agent under the terms of the Uniform Securities Act?A sales representative of a licensed broker-dealer who sells secondary securities to the general publicAn assistant to the president of a broker-dealer who, for administrative purposes, accepts orders on behalf of senior partnersA subsidiary of a major commercial bank registered as a broker-dealer that sells securities to the publicAn issuer of nonexempt securities that are registered in the state and sold to the general public A) I and II B) II and IV C) II and III D) I and IV
A
Which of the following would subject an agent to a denial of registration?An arrest for fraudulent behavior in selling securities to an insurance company 2 years agoConviction of a securities-related misdemeanor eight years agoLosing a civil lawsuit three years ago that related to the agent's actions as a landlordFailure to pay filing fees A) II and IV B) I and IV C) II, III, and IV D) I, II, and III
A
A fraudulent transaction was initiated by an agent in Indiana by contacting a client residing in Iowa. After evaluating the offer, the client agreed to purchase the recommended security while vacationing in Florida. Which Administrator(s) has (have) jurisdiction?The Indiana AdministratorThe Iowa AdministratorThe Florida Administrator A) I only B) I, II, and III C) I and II D) II only
B
A transactional exemption would be available when a sale is made in all of the following situations EXCEPT A) to a federally chartered credit union B) to a lawyer as an incidental part of his legal practice C) to a broker-dealer by a non-affiliated broker-dealer D) by a federal marshal to individual investors
B
A working group convened by NASAA has developed a model fee disclosure schedule to help investors better understand the costs involved in doing business with their broker-dealer. The template has broker-dealers disclosing which of the following fees? A) Markups and markdowns B) Account closing fees C) Advisory fees D) Commissions
B
All of the following are exempt securities under the Uniform Securities Act EXCEPT A) securities issued by the Canadian government B) securities issued by a bank holding company C) securities issued by a Canadian province D) securities issued by a federal savings and loan association
B
All of the following are exempt transactions under the USA EXCEPT A) a sale of common stock by an administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator B) initial sale of shares to in-state residents of a local manufacturing company C) a rescission offer, sale, or purchase D) a securities transaction by an executor
B
An Administrator may deny or suspend a registration in all of the following situations EXCEPT A) if the registrant has failed to properly supervise agents and investment adviser representatives B) if the applicant is not qualified on the basis of experience C) if the applicant was convicted of a misdemeanor involving securities within the last 10 years D) if the applicant has been the subject of an adverse order entered by the Administrator of another state within the past 10 years
B
An agent is registered in Illinois and Ohio. One of her substantial clients has just moved from Ohio to Arizona, and the agent would like to continue to do business with her. Under the Uniform Securities Act, which of the following statements is TRUE?The agent's broker-dealer must already be registered in Arizona or complete the Arizona registration process within a time period specified by the act.The agent must complete the Arizona registration process within a time period specified by the act.The agent must ask the Ohio Administrator to request reciprocal registration from the Arizona Administrator.The agent must suggest that the client maintain a mailing address, such as a post office box, in Ohio. A) III and IV B) I and II C) II and III D) I and IV
B
An individual is an agent for a broker-dealer. He takes and passes the appropriate examinations and forms a sole proprietorship investment adviser. About a year later, he terminates his registration with the broker-dealer. This action would require A) terminating the IA registration B) amending the Form ADV C) qualifying by re-examination D) affiliating with another broker-dealer within 30 days
B
An interest in which of the following is a security under the Uniform Securities Act?Merchandising marketing schemeMultilevel distributorship arrangementOil and gas drilling programCattle feeding program A) I only B) I, II, III, and IV C) II and III D) III only
B
First Securities Advisers, Inc., a subsidiary of First Securities Broker-Dealers, Inc., requires customers to have a minimum of $250,000 under management and charges them 1% in advisory fees based on the amount of assets in their accounts. Clients also pay commissions for securities transactions in their accounts at First Securities Broker-Dealers, Inc. First Securities Advisers, Inc., has A) not violated the prohibition against performance fees B) violated the Uniform Securities Act by charging excessive advisory fees C) violated the Uniform Securities Act by charging commissions in addition to advisory fees D) violated the prohibition against charging performance fees
B
If it is in the public interest, under the Uniform Securities Act, an agent's registration may be suspended by the Administrator for all of the following reasons EXCEPT A) the agent is enjoined by a court of law from engaging in the securities business B) the agent is accused of violations of the antifraud provisions of the USA C) it has been discovered that the agent is not properly supervised D) the agent is convicted of willful violations of the USA
B
In an effort to combat money-laundering, financial institutions are required to file reports with FinCEN for each cash transaction A) of $10,000 or more B) that exceeds $10,000 C) that exceeds $5,000 D) made by a new customer
B
In cases of fraudulent sales practices or advice with respect to securities, state securities Administrators maynot take enforcement action against federal covered investment adviserstake enforcement action against federal covered investment advisersnot take enforcement action against state-registered investment adviserstake enforcement action against state-registered investment advisers A) III and IV B) II and IV C) III only D) I and II
B
Nifty Advisers Group made an announcement on its website that the firm was going to create a Facebook account to keep all its clients and prospective clients updated on the market. To get the word out, Nifty sent an email notice to its current clients and asked them to please refrain from airing complaints through that account; any negative comments would be addressed through the normal channels. Also, contained in the email was an announcement that all "likes" would receive a one-time 5% decrease in the client's quarterly fees. For this campaign, which of the following are NOT true? A) Third-party use of the "like" feature on an investment adviser's social media site could be deemed a testimonial. B) This would not be considered a testimonial and therefore permitted under the regulations. C) Even though the rules do not prohibit testimonials for broker-dealers, they are strictly forbidden for use by investment advisers. D) Currently there has been no comment from NASAA concerning the use of "likes".
B
Registration as an agent would be required of a sales assistant whoaccepts unsolicited orders from clientstakes telephone messages for the registered agentposts updates to client recordssolicits new clients for the firm A) II and III B) I and IV C) III and IV D) I and III
B
The Administrator may do all of the following with respect to federal covered securities EXCEPT A) require submission of a consent to service of process B) require that the issuer meet minimum financial standards C) require the payment of a filing fee to the state D) initiate enforcement action in the case of fraud committed in the Administrator's state
B
The Administrator may, by rule or by order, prescribe the filing of financial reports by which of the following persons registered in his state?AgentsBroker-dealersInvestment Advisers A) I and III B) II and III C) I, II and III D) I and II
B
The Uniform Securities Act is designed to protect the general public and not restrict investment activities of institutional or professional investors. A transaction between a broker-dealer and any of the following would be considered exempt from the registration and advertising filing requirements of the USA EXCEPT A) banks B) chief executive officers of companies listed on the NYSE C) broker-dealers D) savings institutions
B
The wife of a customer calls an agent to sell $25,000 worth of securities for a down payment on a house. Although the account is in her husband's name, she says her husband told her to sell the securities. To comply with NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents, the agent should A) sell as instructed B) call the husband immediately and confirm the order C) get permission from his principal D) tell the couple that the purchase of a house is a bad investment
B
Under the Uniform Securities Act, a client may sue an agent A) only if the agent is still alive B) unless the agent's broker-dealer offers to return the client's purchase price plus interest C) for up to 5 years from the date of the violation D) only if the broker-dealer goes out of business
B
Under the Uniform Securities Act, if no stop order is pending, a registration under coordination will become effective A) when the issue is declared effective by FINRA B) when the issue is declared effective with the SEC C) when declared by the Administrator D) 2 business days after filing of the documents with the Administrator
B
Under the Uniform Securities Act, registration by coordination becomes effective A) in 30 days B) when the registration with the SEC becomes effective C) immediately D) in 10 days
B
Under the Uniform Securities Act, the state Administrator may by order deny, suspend or revoke an investment adviser's registration for A) conviction for a nonsecurities-related felony more than 15 years ago B) violation of another state's securities laws within the last 5 years C) conviction for a securities-related misdemeanor more than 15 years ago D) lack of experience as an investment adviser
B
Under the provisions of the Uniform Securities Act, a securities agent may NOT A) be licensed by both an independent insurance company and a securities broker-dealer B) accept an unsolicited order for an exempt security from a retail client of the broker-dealer who resides in a state in which the agent is not registered C) be registered with two broker-dealers under common control D) be registered with a licensed real estate broker as well as with a licensed securities broker-dealer
B
Which of the following are allowable activities of an agent of a registered broker-dealer? A) Splitting commissions with an agent registered with another broker-dealer B) Borrowing money from a colleague at the agent's broker-dealer C) Establishing a joint account with a customer without consent of the broker-dealer D) Borrowing money from a retail client at the broker-dealer
B
Which of the following are required to register with a state Administrator? A) An investment adviser who has no place of business in the state and has fewer than 6 advisory clients in the state B) Investment adviser representatives of federal covered advisers who have a place of business in the state and limit their clientele to employee benefit plans with a minimum of $10 million in assets C) An employee of a federal covered investment adviser who has no natural person clients and is limited to performing administrative functions D) A person that only provides impersonal investment advice through newspaper columns, magazine articles, or a financial publication of general and regular circulation
B
Which of the following is exempt from state registration under the USA? A) Common stock of a manufacturing company whose shares are not registered with the SEC and will only be sold to residents of the state B) Common stock of the First National Bank of Boston, a major American commercial bank with branches and representative offices in the United States and abroad C) Sale of variable annuities offered to the general public by an insurance company licensed to do business in the state D) Sale of interests in a limited partnership to 500 individuals in an offering available to the general public
B
Which of the following securities are exempt from the registration provisions of the USA?Issue of a savings and loan association authorized to do business in this stateGeneral obligation municipal bondBond issued by a company that has common stock listed on the New York Stock Exchange A) II and III B) I, II, and III C) I only D) II only
B
Which of the following securities is (are) exempt from registration under the Uniform Securities Act?Municipal securitiesGovernment securitiesStock or bonds issued by an insurance company authorized to do business in this state A) I and III B) I, II, and III C) I only D) II and III
B
Which of the following would NOT be an example of market manipulation? A) A principal of a SEC-registered broker-dealer leaks a rumor that ABC is going to acquire LMN—After a few days, the broker-dealer sells short LMN for its own account B) A specialist on the NYSE buys and sells stock for his own account C) Matched purchases D) Three broker-dealers begin trading shares of ABC common stock between themselves at successively higher prices with no effective change of ownership
B
Which of the following would be included in the Uniform Securities Act's definition of a "sale"? A) Conveying, for value, precious metals to a jewelry distributor B) Transfers, for value, of unit trusts to a nontaxable organization C) Donation of interests in rights, warrants, or options on a nonexempt security D) Sale of a large fixed annuity contract to a taxable institution
B
A broker-dealer with an office in this state must register as an investment adviser if it chargescommissions for selling securitiescommissions for selling securities while offering investment advice incidental to the sale of the securitiesa fee for selling investment research and additional fees in the form of commissions for the sale of securitiesfees for investment research sold exclusively to institutions located in this state A) II and III B) I and II C) III and IV D) I and IV
C
A notice filing would be most appropriate for which of the following new issues? A) Intrastate offering B) Federal credit union stock C) Open-end investment company shares D) Railroad equipment trust certificate
C
An agent lives in Montana and is registered in Montana and Idaho. His broker-dealer is registered in every state west of the Mississippi River. The agent's client, who lives in Montana, decides to enroll in a 1-year resident MBA program in Philadelphia, Pennsylvania. During the 1-year period, when the client is in Philadelphia, the agent may A) not deal with the client until the broker-dealer registers in Pennsylvania B) only accept unsolicited orders C) conduct business with the client as usual D) not conduct any business with the client
C
Bryan, an agent registered with a broker-dealer, buys 1,000 shares of XYZ Corp. in his own account. In recommending XYZ Corp. to his customers, Bryan informs them that he believes in the company so much that he put his own money in the stock. This practice is A) only problematic if investors lose money in the investment B) only problematic if Bryan sells his shares after informing the other investors C) not an unethical sales practice D) an illegitimate sales tactic
C
Disciplinary proceedings under the Uniform Securities Act require the Administrator to provide which of the following?An opportunity for a hearingWritten findings of facts and conclusions of lawAppropriate prior notice A) I and II B) I and III C) I, II, and III D) II and III
C
It would not be a prohibited practice under the Uniform Securities Act for an agent to tell a client that A) my commissions are structured so I make money only if the client makes money B) the fact that she passed her licensing exams is ample proof of her qualifications C) registered nonexempt securities may properly be sold in the state D) registration of securities implies tacit approval of the Administrator
C
Joan, who has a PhD in economics, has been employed as an agent by Gibraltar Securities for the past 15 years. Missing academic life, she resigns from the broker-dealer and accepts a position as an economics professor at a state university. Which, if any party, is required to notify the state securities Administrator of this change? A) Only the securities firm B) Only Joan C) Both Joan and the firm D) No party, because Joan's termination is voluntary and not for cause
C
The Uniform Securities Act considers certain securities to be exempt from the registration requirements of the act. Under the USA, which of the following is an exempt security? A) Commercial paper with a term of more than one year B) Corporate bonds C) Equipment trust certificate issued by a railroad that is regulated by a state's regulatory body D) Preferred stock
C
The Uniform Securities Act provides for civil penalties in the event of improper activities of agents. Under the act, the maximum that a purchaser would be entitled to claim would be the original consideration paid for the security interest at the state's legal rate attorney's fees court costs A) III and IV B) I and II C) I, II, III, and IV D) I, III, and IV
C
Under the Uniform Securities Act, all of the following are included in the definition of the term exempt transaction EXCEPT a sale of A) unregistered non-exempt securities in an unsolicited transaction B) nonexempt securities to a broker-dealer C) securities to an individual investor with a net worth of more than $5 million D) securities to a bank
C
Under the Uniform Securities Act, an individual is subject to registration as an agent if he engages in transactions between an issuer of a non-exempt security and A) an insurance company B) the underwriters C) an individual investor with assets in excess of $1 million D) savings institutions or trust companies
C
Under the Uniform Securities Act, the requirements for filing of advertising and sales literature dealing with an exempt security with the Administrator A) apply only to sales literature B) apply only to advertising C) do not apply D) always apply
C
Under the Uniform Securities Act, the term broker-dealer would include A) a person with no office in the state who effects securities transactions with over 50 different banks domiciled in the state B) agents registered under the act who from time to time sell stock from their personal brokerage accounts C) a person with no office in the state who effects securities transactions with no more than 5 individual residents of the state in any 12-month period D) an issuer distributing its own common stock offering
C
Under the Uniform Securities Act, which of the following best describes the obligations of an issuer of a stock listed on the NYSE? A) There is no obligation because the issuer is excluded from the definition of broker-dealer. B) As the issuer of a federal covered security, it is exempt from all of the provisions of the Act. C) Although the security is exempt from registering with the state, the issuer must not make any misrepresentations in the sale of their security. D) It must register the security with the state and must not make any misrepresentations in the sale of their security.
C
Which of the following is NOT an issuer under the USA? A) A company whose shares trade on the New York Stock Exchange B) A new company that offers shares to the public in an IPO C) A broker-dealer trading securities as an agent for the account of others D) A corporation that proposes to issue securities but has not done so as of yet
C
Which of the following statements regarding Form ADV Part 2 is TRUE? A) It must be delivered no later than 48 hours prior to entering into an investment advisory contract. B) It must always accompany the investment adviser's brochure. C) Unless there are no material changes, it must be delivered to clients annually. D) It must be delivered no later than receipt of the client's funds.
C
Fusion Financial is a broker-dealer registered in States A, B and C with its home office in State B. A complaint is filed against the firm by a client who resides in State A. Under the powers granted under the Uniform Securities Act, the Administrator of State B could do all of the following EXCEPT A) subpoena witnesses from State C B) gather evidence from State A C) issue an injunction against Fusion Financial D) gather evidence from State B
C
According to the NASAA investor advisory regarding fees charged by broker-dealer firms for services and maintenance of investment accounts, A) the schedule should be made available on the broker-dealer's public website and should be password protected B) fee schedules should only be delivered by hand or postal mail to reduce cyber security threats C) as long as the schedule is available in electronic form, it is not necessary to provide a paper version to retail customers D) the schedule should be made available on the broker-dealer's public website without requiring any login or password
D
All of the following statements are consistent with the Uniform Securities Act EXCEPT A) any security may be registered with the state by the procedure known as registration by qualification B) state Administrators may require federal covered investment companies to file documents with the Administrator using a procedure known as notice filing C) a security for which a registration statement is filed under the Securities Act of 1933 may simultaneously register with the state by the procedure known as registration by coordination D) state Administrators do not require consent to service of process to be submitted with notice filings for covered securities
D
An Administrator may initiate a suspension or revocation proceeding against a broker-dealer registered in his state A) based upon facts known to the Administrator at the time of the broker-dealer's initial registration B) upon discovery that an agent of the broker-dealer is convicted of a felony violation involving securities fraud C) up to 2 years after the broker-dealer voluntarily withdraws its registration D) upon discovery that the broker-dealer's license had been suspended in another state
D
An account where a securities professional may invest the client's money, without consulting the client about the amount or type of security for the trades that are placed for the account, is known as A) a wrap account B) a margin account C) an advisory account D) a discretionary account
D
An agent is discussing an equity index annuity purchase with a client. The agent explains that there are several which she feels are equally suitable for the client, but one of the companies is offering a trip for 2 to Las Vegas for reaching certain sales goals. She continues by stating that this sale will put her over the goal and win her the trip. If the client purchases that annuity, the agent A) should only sell what is suitable for the client based on all available information B) will probably be disciplined for failure to disclose the potential conflict of interest C) should pack her bags and leave the firm before the compliance department learns of her actions D) should pack her bags for the trip; she earned it
D
An agent's license could be revoked if he were any of these EXCEPT A) declared insolvent B) convicted of a nonsecurities-related felony C) convicted of a securities-related misdemeanor D) under 21 years of age
D
An investment adviser is registered in New Jersey and has offices in Georgia and Arkansas. One of their IARs lives in Georgia and in addition to his local clients, has one client who lives in Arkansas. The IAR would be required to register in A) Georgia and New Jersey B) Georgia and Arkansas C) Georgia, Arkansas and New Jersey D) Georgia
D
As fiduciaries, investment adviser representatives owe their clients an affirmative duty of utmost good faith and full disclosure of all material facts. This affirmative duty of disclosure is required by the investment adviser representative in all of the following situations EXCEPT A) when the advice being provided is outside the scope of the services provided by the investment adviser and is not under supervision or control of a supervisory person B) when a family member has a beneficial interest in a private medical equipment firm that the IAR recommends to a client C) when compensation is received from the affiliated broker-dealer for transactions that are executed through the brokerage house D) when donating funds to a nonprofit medical research institute that owns securities the IAR has recommended
D
Conceptual Financial Solutions (CFS), a broker-dealer registered in States S, B, F and G, has a television commercial broadcast on a station whose studio is located in State S. An individual client who resides in State B, makes an offer to buy based on that advertisement. The State B Administrator would have jurisdiction A) at the time the broadcast is received in State B B) only if the security or the transaction was not exempt C) when the client made the offer D) when CFS accepts the buyer's offer
D
It is a violation of the Uniform Securities Act if an agent A) engages in honest or ethical business practices B) offers or sells any security unless it is registered C) makes any material representation in the offer or sale of a security D) files a fraudulent application
D
Mr. Thompson is a registered agent with First Securities Corporation, a broker-dealer registered in, among other states, Illinois and Ohio. Ms. Gordon is one of Mr. Thompson's best clients and she will be spending the months of January and February in Palm Springs, California, rather than Chicago. She asks if there is a First Securities Corporation office nearby that she can visit to watch the Ticker Tape and is informed that the firm has no offices in California. During her stay, Mr. Thompson calls Ms. Gordon on a number of occasions with stock recommendations, some of which result in sales. Which of the following statements regarding the licensing and registration requirements of the Uniform Securities Act are TRUE?Mr. Thompson is violating the USA if he is not registered in California.Mr. Thompson is not violating the USA if he is not registered in California.First Securities Corporation is violating the USA if it is not registered in California.First Securities Corporation is not violating the USA if it is not registered in California. A) I and IV B) I and III C) II and III D) II and IV
D
The issuance of a stop order by a state securities Administrator requires A) an issuance of an injunction by a court with jurisdiction over such issues B) the subject to stop the activity without the opportunity for hearing C) an issuance of criminal charges D) the subject of the stop order be given an opportunity for a hearing
D
Under the Uniform Securities Act, an agent is a(n) A) individual who represents an issuer in a transaction exempt from the act B) individual who represents an issuer in an exempt transaction C) broker-dealer who sells registered securities to the general public D) individual representing a broker-dealer who sells federal covered securities
D
Under the Uniform Securities Act, an investment adviser would be exempt from registration in a state in which he has no place of business if he A) had no more than 10 retail clients in that state within the past 12 months B) had no more than 15 retail clients in that state within the past 12 months C) is registered as a broker-dealer D) had no more than 5 retail clients in that state within the past 12 months
D
Under the Uniform Securities Act, an offer to sell would NOT includestock acquired through a mergerthe issuance of warrants or convertible securitiesthe issuance of stock rights to existing shareholders A) II and III B) I, II, and III C) I and III D) I only
D
Under the Uniform Securities Act, the Administrator may require the filing of advertising and sales literature in which of the following offerings? A) Sale of a U.S. Treasury bond maturing in more than 10 years B) Sale of the bonds of AGI insurance company organized under the laws of the state C) Sale of preferred stock of a long-established company registered with the SEC whose common shares trade on the New York Stock Exchange D) Sale of an IPO limited to residents of the state
D
Under the Uniform Securities Act, which of the following statements regarding investigations conducted by the Administrator is TRUE?Information regarding violations must be kept confidential.Investigations may be conducted across state lines.The Administrator may obtain a court order to have a receiver appointed over a violator's assets. A) I and II B) I, II, and III C) I and III D) II and III
D
Under the Uniform Securities Act, willful violation of the act by an agent could NOT subject the agent to A) civil liabilities B) criminal penalties C) action taken by the Administrator to deny, suspend, or revoke the agent's registration D) arbitration
D
Unless qualifying for an exemption, which of the following advisory fee structures is NOT allowed under the USA? A) Fees based on an hourly rate B) Fees based on a percentage of the aggregate value of funds under management C) Fees based on a fixed dollar schedule tied to the value of funds under management D) Fees based on a percentage of the change in value of funds from quarter to quarter
D
When a broker-dealer's registration under the Uniform Securities Act is revoked, which of the following occur? A) Registrations of agents of the firm are still in effect. B) The agent's registration is held in escrow until a hearing. C) The Administrator will choose a local broker-dealer to oversee activities of the agents until the broker-dealer's registration is reinstated. D) Registrations of agents of that firm are no longer in effect.
D
Which of the following is NOT required to register as an agent under the Uniform Securities Act? A) An individual pursuing a graduate degree in finance, hired for the summer as an intern, who receives $10 for each prospect turned into a client B) A person who attempts to sell mutual fund shares by telephone and is paid a straight salary C) A person who attempts to sell mutual fund shares by direct mail and is paid an hourly wage D) A person who represents the issuer selling U.S. government or municipal bonds
D
Which of the following practices is considered unlawful under the Uniform Securities Act? A) A broker-dealer maintaining its records electronically B) An agent accepting indications of interest in securities that are in the process of registering with the SEC C) An individual, with no place of business in the state, claiming to be registered and authorized to solicit business in the state in which the prospective client resides D) An agent soliciting orders from retail clients for unregistered, nonexempt securities
D
Which of the following sales would be exempt from the antifraud provisions of the Uniform Securities Act? A) Sale of a nonexempt security B) Sale of an exempt security C) Sale of an exempt security in an exempt transaction D) The sale of a modified endowment policy
D
Which of the following statements relating to notice filing are CORRECT?It is available only to federal covered securities.A notice filing is effective for 1 year beginning from the later of filing with the Administrator or the effective date determined by the SEC.Renewal is accomplished by filing with the state a copy of records filed with the SEC along with a signed consent to service of process.Failure to pay required fees could lead to the issuance of a stop order. A) I and III B) I, II, III, and IV C) II, III, and IV D) I, II, and IV
D
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? A) The secured agreement B) The hypothecation agreement C) The loan consent agreement D) The credit agreement
D The hypothecation agreement permits the broker-dealer to pledge the client's margin securities as collateral for a loan that the BD takes out. In simple terms, there are two loans taking place: The loan from the BD to the client with the client's securities used as collateral. That is covered in the credit agreement The loan from a bank to the BD with the client's securities used as collateral for the BD's loan. The authorization for the BD to use those securities is found in the hypothecation agreement.
Which of the following statements is (are) TRUE?A person with a place of business in the state who transacts business exclusively for the accounts of banks and savings institutions is not a broker-dealer under the Uniform Securities Act.A person excluded from the definition of investment adviser under the Investment Advisers Act of 1940 who offers investment advice to individual investors residing in this state, and has less than $100 million in assets under management, is subject to the jurisdiction of the state Administrator.A person required to register as an investment adviser under the Investment Advisers Act of 1940, who manages funds on a regular business headquartered in this state, may be subject to notice filing fees required by the state Administrator.Broker-dealers who supply incidental investment advice and make securities recommendations to customers who pay commissions for the execution of their trades are not investment advisers subject to state or federal registration. A) I and II B) III and IV C) I and IV D) II and III
B Under the NSMIA, any person excluded from the definition of investment adviser under the Investment Advisers Act of 1940 is considered a federal covered adviser. Therefore, regardless of the amount of money under management, the state has no jurisdiction. A federal covered adviser may be subject to payment of notice filing fees. Broker-dealers who supply investment advice incidental to their business and receive no special compensation for it are not investment advisers. A person who conducts business exclusively with banks and savings institutions is a broker-dealer under the USA if he has a place of business in the state. Had the person no place of business in the state and conducted business exclusively with banks and savings institutions, he would not be considered a broker-dealer subject to the regulatory control of the state Administrator.
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 A) 45 days B) 60 days C) 30 days D) 15 days
D
In the Howey decision, the U.S. Supreme Court held that a security must represent A) an interest in a publicly traded corporation whose managers are engaged in a regulated business enterprise B) an investment of money in a common enterprise with the expectation of profit or tax deductible losses from the managerial efforts of others C) an investment of money in a common enterprise with the expectation of profit from the efforts of the investor D) an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others
D
In the securities industry, when a person is acting in an agency capacity, the form of compensation received is A) fees B) account maintenance charges C) markup or markdown D) commission
D
Under the Uniform Securities Act, there are certain cases when a person in the business of effecting securities transactions for itself or its clients is not considered to be a broker-dealer in the state. In order for this exception to exist, all of the following conditions must be present EXCEPTthe person must not deal with any employee benefit plans with assets of not less than $1 millionthe person must limit its business activities to other broker-dealers and financial institutionsthe person must not have a place of business in the stateall employees must be licensed as agents with the Administrator in at least one state A) III only B) II and IV C) II and III D) I and IV
D It is critical to catch the EXCEPT in this question. We are looking for statements that are not true. If the employee benefit plans they deal with have assets of less than $1 million, the exception does not apply. And, there is nothing in the USA that requires a broker-dealer to register every employee, only those that are involved somehow in the sale of securities.
In order for the Administrator to suspend an agent's registration, compliance with the requirements of the Uniform Securities Act would NOT require that A) the agent receives court-appointed defense counsel if she can't afford her own B) the agent is presented with an opportunity for a hearing C) notice is given of the proposed action and hearing D) notification is given to the employing broker-dealer of the final order
A
A security has been registered under Qualification. Which of the following statements is CORRECT?The registration is valid for one year from the effective date.The registration is valid for one year from the effective date unless the underwriter or issuer still has some unsold shares.The registration is valid until the next December 31st.The registration statement may be amended to increase the number of shares in the offering as long as the public offering price and the underwriter's compensation is not changed. A) II and IV B) I and IV C) I and III D) II and III
A
An Administrator wishing to set the net capital requirement for a broker-dealer may not require an amount greater than that A) required under the Securities Exchange Act of 1934 B) of the state in which the broker-dealer maintains its principal office C) of the state where the broker-dealer is registered with the lowest capital requirement D) under FINRA rules
A
If Ann Smith, an agent with ABC Securities, Inc., sold a security to an investment company registered under the Investment Company Act of 1940, this sale would be considered an example of a(n) A) exempt transaction in a security B) sale of an exempt security C) agent exemption from registration D) broker-dealer registration exemption
A
The most common way in which to distinguish whether social media content is static or interactive is A) the ability for others to change it B) the ability for others to link to it C) the ability for others to comment on it D) the ability for others to like it
A
The sole proprietor of a retirement planning business that exclusively provides advice on fixed income annuity contracts A) need not register under any securities laws B) must register as a broker-dealer with the SEC C) must register as an investment adviser under the Investment Advisers Act of 1940 D) must register as an investment adviser representative under the USA
A
Under industry rules, customers who wish to trade options must receive a copy of the Options Disclosure Document (ODD): A) at or before account approval. B) at or before the mailing of the confirmation representing the first options trade. C) at or before the mailing of the next monthly statement. D) within 15 days of account approval.
A
Under the Uniform Securities Act, an investment adviser may legally have custody of money or securities belonging to a clientif the Administrator has not prohibited this practiceif the investment adviser has notified the Administrator that it has custodyas long as the adviser does not also have discretionary authority over the account A) I and II B) II and III C) I and III D) I only
A
Under the Uniform Securities Act, an offer is made in a state whenit originates in that stateit is broadcast by radio or TV from outside the stateit is contained in a newspaper published outside the state but delivered to an address in that state A) I only B) I and III C) I, II, and III D) II and III
A
Under the Uniform Securities Act, the term security includes asingle payment insurance contract guaranteed by a highly rated insurance companysingle payment deferred variable annuity contract issued by an insurance company licensed to do business in this statevaluable collection of coins and currency conservatively valued for estate purposesclient's $100,000 mortgage on his primary residence A) II only B) I and II C) I, II, and III D) III and IV
A
Under the Uniform Securities Act, when an agent changes broker-dealers, who must notify the Administrator?The agentThe former employer broker-dealerThe new broker-dealer A) I, II, and III B) I and II C) I and III D) II and III
A
Under the Uniform Securities Act, which of the following is a broker-dealer? A) Corporation that sells interests in an oil and gas limited partnership to investors with the proceeds going to the issuer B) Credit union that issues its own stock C) Issuer D) Agent
A
Which of the following are NOT included in the definition of an agent in the Uniform Securities Act?A licensed broker-dealerAn officer of an issuer who only represents the issuer in selling shares to a broker-dealer underwriting the company's securitiesAn officer who represents an issuer of non-exempt securities in the sale of those securities to the public without receiving any compensationAn employee of a broker-dealer whose only transactions are with institutional clients A) I and II B) II and IV C) I and III D) III and IV
A
Which of the following are not specifically excluded from the definition of an investment adviser under the Uniform Securities Act?An investment adviser representative of an advisory firm who makes securities recommendations on a regular basis for compensationA temporary employee hired to assist in administrative responsibilities of an advisory firmAny person who is a federal covered investment adviserA person who, on a regular basis for compensation, offers specific investment advice to clients as to the value of securities A) IV only B) I and IV C) II and III D) II and IV
A
Which of the following situations would require registration as an investment adviser?A broker-dealer provides investment research services to a customer and charges a fee for the serviceAn agent of a broker-dealer recommends the purchase of ABC securities to a customer, who then purchases 100 shares, and the agent earns a commissionAn agent of a broker-dealer prepares a complete financial plan for a customer with a one-time charge of $950. The plan recommends specific securities transactions, which the customer orders. The agent earns commissions on the securities transactionsA broker-dealer charges its customers a fee for collecting dividends and account maintenance, in addition to commission charges for transactions executed A) I and III B) I, II, III, and IV C) I, III, and IV D) I and II
A
A Canadian broker-dealer with no offices in this state has a Canadian client who is on a temporary work assignment in this state. To accept orders from this client, the broker-dealer mustfile an application for limited registration with the Administrator in the form required by the jurisdiction in which it has its head officefile a consent to service of processprovide the Administrator with evidence that it is currently in good standing as a broker-dealer in the jurisdiction from which it is effecting securities transactionsbe a member of a recognized self-regulatory association or stock exchange in Canada A) II, III, and IV B) I, II, III, and IV C) I and III D) I, II, and IV
B
Alpha Electronics Company wishes to raise capital by issuing some securities in its home state. They have been advised by their legal counsel that registration with the Administrator is unnecessary because the issue is exempt. Should Alpha be served with an order, the burden of proving its issue is exempt is on the A) court B) company C) Administrator D) lawyers
B
If a manufacturing company in the registration process with the SEC is considering registering its securities in a state, the method that it would use to register in the state is A) notice filing B) coordination C) qualification D) implementation
B
If a nonexempt company has authorized a stock split that will give each shareholder 2 shares for every 1 share owned without charge, this transaction A) must be registered because it is the issuance of new nonexempt securities B) need not be registered because it is an exempt transaction C) need not be registered because the shares of the corporation have already been registered D) must have the prior written approval of each state Administrator in which the shares trade
B
Nobody Walks Motor Company, a licensed automobile dealer, is running a promotion offering anyone who purchases a car over the weekend to receive a $1,000 corporate bond at no additional cost. Under the Uniform Securities Act, in order to make this offer A) there are no specific requirements because the company is a licensed automobile dealer and, as a result of the free offer, no sale of securities is involved B) Nobody Walks Motor Company must be registered as a broker-dealer in the state C) Nobody Walks Motor Company may not pay a commission on the sale of a car to any salesperson who is not registered with the Administrator as an agent D) the offer must be made available to anyone who purchases a car during the specified period
B
Registration by coordination automatically becomes effective with federal registration if all the following conditions are satisfied EXCEPT A) the registration has been on file with the Administrator for at least 10 days, or some other period designated by the Administrator B) a consent to service of process is filed no later than 5 days after the effective date C) no stop order is in effect D) maximum and minimum proposed offering prices and maximum underwriting discounts and commissions have been on file for 2 full business days
B
The Uniform Securities Act requires that an administrative order appeal must be requested within how many days after the order has been entered? A) 45 days B) 60 days C) 15 days D) 30 days
B
The president of a manufacturing company sells his or her company's common stock to the public and receives a commission substantially lower than others selling that stock. Under the USA, the president is acting A) as an agent of a broker-dealer B) as an agent of the issuer C) in a capacity that excludes him or her from the definition of an agent D) as a broker-dealer
B
Traditionally, banks have been excluded from the definition of a broker-dealer. However, under recent federal legislation, a bank is included in the definition if it A) conducts securities custodial activities B) bought and sold securities on behalf of customers in a wholly owned brokerage subsidiary C) conducts personal trust activities D) refers customers to a clearly identified third-party brokerage house not under the control of the bank
B
Under the Uniform Securities Act, when an IAR acting in the capacity of trustee of a family trust executes a transaction on behalf of the trust, it is A) an exempt security B) a nonexempt transaction C) an exempt transaction D) a violation of the trustee's fiduciary responsibility
B
Under the Uniform Securities Act, which of the following statements regarding the consent to service of process are TRUE?A consent to service of process makes legal process served on the Administrator as legally binding as process served on the registrant personally.Only out-of-state applicants need to file a consent to service of process.Investment advisers and investment adviser representatives must file a consent to service of process to become registered. A) I, II and III B) I and III C) II and III D) I and II
B
Under the antifraud provisions of the Uniform Securities Act, agents are prohibited from all of the following EXCEPT A) employing any device, scheme, or artifice to defraud B) omitting non-material information from a sales presentation C) engaging in any fraudulent or deceitful practice in the normal course of business D) engaging in any practice that the Administrator defines by rule as unethical
B
While the Administrator has great power, the USA does place some limitations on the office. Which of the following statements regarding those powers are NOT true? A) An Administrator in State A may only enforce subpoenas from State B if the alleged violation would be a violation of the State A's statutes. B) Investigations of serious violations must be open to the public. C) In conducting an investigation, an Administrator can compel the testimony of witnesses. D) An Administrator may, by order, deny the registration of a securities professional who has been convicted of any felony within the past 10 years.
B
An individual with a place of business in State A manages client assets on behalf of a covered investment adviser. This individual wishes to expand his client base by working one day per week out of the firm's office in State B. Which of the following actions must the person take to practice within that particular state? A) Become licensed as a broker-dealer B) Pay state registration fees if required by the Administrator C) Pass an oral or written examination D) Comply with the notice filing requirements of the state
B
A broker-dealer is registered in State X. It has no offices in State Y, although it does do business in that state. Under the Uniform Securities Act, registration in State Y is required if the client is a(n) A) issuer whose securities are involved in the transactions B) bank C) state employee D) broker-dealer
C
A client is unsure of her financial objectives and does not give you any personal financial information. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, you A) refuse to accept this person as a client B) put the client into one of your model portfolios C) may only accept unsolicited orders until suitability has been established D) make recommendations based on your best estimate as to what would be a good fit for the client
C
A consent to service of process allows the Administrator to A) verify the accuracy and completeness of registration without obtaining the registrant's prior approval B) terminate a registrant's application C) exercise the power of attorney on behalf of the registrant D) ensure that the legal appeal process is expedited as a result of the Administrator's access to information
C
A customer with liquid net worth of $25,000 tells an agent that she has $1,000 to invest. Explaining how diversification can reduce risk, the agent recommends that the customer purchase 8 different over-the-counter stocks, each trading at approximately $1 per share. With regard to the above situation, A) the recommendation is suitable for the customer because the agent recommends a diversified stock portfolio B) the agent may be exhibiting a pattern of excessive commissions (churning) in his customer's account C) high-risk penny stocks are not suitable recommendations for this low-net-worth customer D) once the customer agrees to the agent's recommendation, it is no longer considered an unsolicited transaction
C
A president of a bank sells shares of the bank to public investors. Under the Uniform Securities Act, he or she is A) underwriting the issue in the role of a broker-dealer B) an investment adviser C) not defined as an agent under the Uniform Securities Act D) an agent under the Uniform Securities Act
C
An Administrator may deny or revoke a security's exemption A) if the Administrator determines that an exemption applicable to federal covered securities is inconsistent with state securities law B) for a federal covered security if its issuer is in violation of state law C) without a hearing if the issuer is given an opportunity for a hearing after the revocation D) by providing the burden of proof that the exemption is not deserved
C
An agent puts together a recommendation for a customer but is unable to attend the meeting. Another agent from the firm meets with the customer and presents the recommendation, but omits some material facts. According to the Uniform Securities Act, this is A) permitted if the recommendation pertains to an exempt security B) permitted if the second agent receives no compensation for presenting the recommendation C) considered a fraudulent act D) permitted if the second agent was unaware of the omission
C
An individual wishing to register as an agent for a broker-dealer would be required to file an application for registration that would include all of the following EXCEPT A) the appropriate fees B) a consent to service of process C) the applicant's fingerprints D) citizenship information
C
An investment adviser is preparing an advertisement. Which of the following would be acceptable?An endorsement on radio or TV from a celebrity who is a client of the firmIdentifying its best investment recommendations for the past 6 monthsOffering to provide its investment recommendations for the past 12 monthsPromoting its system of charts and formulas while mentioning its limitations and difficulties A) II and III B) I and IV C) III and IV D) I and II
C
If a licensed agent believed that interest rates were about to fall and contacts all of her clients and suggests they purchase high quality debt securities with long-term maturities, this action A) is probably not in violation of any suitability standards as long as the bonds are of high quality B) may be acting on material inside information C) has probably violated the Uniform Securities Act's suitability standards D) is in error as a drop in interest rates will cause bond prices to fall, leading to a loss in the client's accounts
C
Opening a margin account involves significant documentation. Which of those documents discloses the interest rate charged by the broker-dealer, including the method of interest computation and situations under which interest rates may change? A) The hypothecation agreement B) The loan consent agreement C) The credit agreement D) The interest computation agreement
C
Steven is registered as an agent with Maple Leaf Securities, a Canadian broker-dealer located in Toronto with no offices in the United States. One of Steven's clients has recently made a permanent move to Florida. Which of the following statements with respect to Steven is CORRECT? A) Steven and Maple Leaf Securities must register with both FINRA and the State of Florida. B) Under no circumstances is Steven permitted to have any dealings with this client once residence in Florida has been effective for more than 30 days. C) As long as the only dealings with this client are with a previously established Canadian tax qualified retirement plan, Steven only has to file an application and a consent to service of process. D) Steven 's current Canadian registration is sufficient to deal with a client who moves to another country.
C
The NASAA Model Rule on Agency Cross Transactions requires that an investment adviser send a written disclosure document to affected clients that includes such items as the total number of agency cross transactions during the period for the client, as well as the total amount of all commissions or other remuneration the investment adviser has received in connection with agency cross transactions for the client during the period no less frequently than A) semiannually B) quarterly C) annually D) within a reasonable period of time following any transaction made in reliance upon this rule
C
The Uniform Securities Act provides for all of the following EXCEPT A) criminal penalties for violations of the act B) exemption from registration for federal covered securities C) specific civil penalties for up to three times the amount of money invested for willful violation of the act D) subpoena power for the state Administrator
C
Under the USA, all of the following issues would be exempt from registration EXCEPT A) bonds issued by the city of New Orleans B) stock issued by savings and loan association authorized to do business in this state C) stock issued by an insurance company not offering policies in this state D) an investment contract issued in connection with an employee stock purchase plan
C
Under the Uniform Securities Act, a sale includes all of the following EXCEPT a A) contract to sell B) disposition of a security for value C) pledge of securities for the purpose of obtaining a margin loan D) contract of sale
C
Under the Uniform Securities Act, all of the following statements regarding a broker-dealer withdrawing its registration are true EXCEPT A) it must be in writing B) it cannot take effect if the Administrator is instituting a revocation proceeding C) it prevents the broker-dealer from re-registration in the future D) it is generally effective 30 days after written notification
C
Under the Uniform Securities Act, if an investment adviser takes custody of client assets, which of the following statements are TRUE?Clients must receive monthly statements.Clients must receive quarterly statements.The adviser must be audited at least annually.The adviser must be audited at least semiannually. A) I and IV B) I and III C) II and III D) II and IV
C
Under the Uniform Securities Act, the Administrator may deny or revoke the exemption from registration for which of the following?A security issued by a nonprofit organizationInvestment contracts of employee benefit plansAn exempt transaction not involving a federal covered security A) I and III B) I only C) I, II, and III D) II and III
C
Which of the following are NOT agents as defined in the USA?A broker-dealer acting on behalf of a properly registered issuerAn individual representing the U.S. government in the sale of its securitiesAn individual who, acting on behalf of a broker-dealer, sells exempt securities or engages in an exempt transactionAn individual who represents an issuer selling a nonexempt security in a nonexempt transaction A) II and III B) I and III C) I and II D) III and IV
C
Which of the following persons are NOT excluded from the definition of, or exempt from registration as, a broker-dealer under the Uniform Securities Act? A) A trust company with an office in the state that deals with the general public B) A broker-dealer with no office in the state that effects trades exclusively with other broker-dealers in the state C) A broker-dealer with no office in the state that has no more than 5 retail clients resident in the state within a 12 month period D) A broker-dealer with no office in the state that effects securities trades exclusively with trust companies or other broker-dealers
C
Which of the following transactions would constitute a violation of the Uniform Securities Act?An individual representing the issuer of a non-exempt security in an exempt transaction without registration as an agentWhile acting on behalf of an issuer, an individual, who is not registered as an agent, sells shares of an unregistered nonexempt security to fewer than 15 noninstitutional clientsThe sale of a Canadian government bond to the resident of a state in which the agent is not registeredRepresenting an issuer of municipal bonds without being registered as an agent in the issuer's state A) I and III B) II and IV C) II and III D) I and IV
C
A client enters an order for 1,000 shares of GEMCO common stock, listed on the Chicago Stock Exchange (CHX). The agent intentionally purchased 1,200 shares. This would be A) prohibited because anything in excess of 1,000 shares would not be suitable for this client B) permitted if the client profited from the purchase of the additional 200 shares C) permitted if the client agreed to accept the additional 200 shares prior to completion of the transaction D) prohibited because the additional 200 shares represents an unauthorized transaction
D
According to the Uniform Securities Act, a person representing an issuer in the sale of which of the following securities would have to be registered as an agent? A) Securities of a federally chartered bank B) Municipal bonds C) Securities issued by the Government of Brazil D) Securities issued by a federal credit union
D
According to the Uniform Securities Act, a person who sells securities in violation of state securities laws is civilly liable for which of the following?Principal Interest Court costs Attorney's fees A) I and II B) II and III C) I and IV D) I, II, III, and IV
D
An agent based in Alabama directs a solicitation to a customer who lives in Connecticut while the customer is temporarily in Indiana. The customer does not accept the offer until he arrives back in Connecticut. According to the Uniform Securities Act, the Administrators of which of the following states have jurisdiction? A) Indiana and Connecticut B) Alabama and Connecticut C) Alabama and Indiana D) Alabama, Connecticut, and Indiana
D
An agent may borrow securities from a customer A) with the customer's oral permission B) only in connection with an exempt transaction C) only with the customer's written permission D) only if the client is in the business of lending securities
D
An individual walks into the office of a broker-dealer wishing to open a new account. Which of the following information would NOT be required on the new account form? A) Citizenship B) Name of employer C) Physical address D) Marital status
D
An issuer of federal covered securities, whose registration is effective under the Securities Act of 1933, would use which of the following procedures to permit sale of its securities in a specific state? A) Coordination B) Qualification C) Registration D) Notice filing
D
Securities issued by which of the following are exempt from registration?Any savings and loan association organized under the laws of any stateAny bank organized and supervised under the laws of any stateAny bank organized under the laws of the United StatesAny federal credit union A) I, II, and IV B) I, III, and IV C) I and II D) II, III, and IV
D
The Administrator maydeny a registration if the registrant does not have sufficient experience to function as an agentlimit a registrant's functions to that of a broker-dealer if, in the initial application for registration as an investment adviser, the registrant is not qualified to act as an advisertake into consideration that the registrant will work under the supervision of a registered investment adviser or broker-dealer in approving a registrationdeny a registration, if it is prudent in view of a change in the state's political composition A) I and IV B) III and IV C) I and II D) II and III
D
The Uniform Securities Act defined many terms. Among them is the term sale. Which of the following would be included in the definition of sale?An offer of common stock in a new issue properly registered or exempt from registration in the stateA gift of assessable stockAn investor exercising preemptive rights previously received directly from the issuerAn investor elects to forgo a cash dividend and receive the equivalent in stock instead A) III and IV B) I and II C) I and IV D) II and III
D
Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following are required for an agent to lawfully share in the profits of a customer's account?The customer's written approvalThe broker-dealer's written approvalThe agent may share only in proportion to his or her own financial contribution to the account A) I, II, and III B) I and III C) II and III D) I and II
D
Under the National Securities Markets Improvement Act of 1996, certain securities are designated as federal covered. This means that the Administrator may require all of the following of a federal covered security EXCEPTpaying a filing feeproviding a consent to service of processsubmitting copies of any information filed with the SECusing a state sanctioned legend on the offering documents A) II and IV B) I and II C) I, II, and III D) IV only
D
Under the USA, each of the following is specifically excluded from the definition of a broker-dealer EXCEPT an A) international bank B) issuer C) agent D) investment adviser
D
Under the Uniform Securities Act, which of the following is TRUE regarding the registration of securities? A) Registration by coordination becomes effective on a date ordered by the Administrator. B) The effectiveness of a registration statement assures the completeness of the information contained in the statement. C) The Administrator may require that a prospectus be delivered to every purchaser of a registered security no sooner than the time at which the security is delivered. D) State registration by coordination is only available if a federal registration statement has been filed under the Securities Act of 1933 in connection with the same offering.
D
Under the Uniform Securities Act, which of the following persons is responsible for proving that a securities issue is exempt from registration? A) There is no need to prove eligibility for an exemption B) Underwriter C) State Administrator D) The person claiming the exemption
D
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.A cease and desist order is valid for a maximum of 30 days.A cease and desist order may be used to suspend the offering of a security. A) II and IV B) I only C) I, II and III D) I and II
D
When an agent terminates employment with a broker-dealer registered with the SEC and affiliates with a broker-dealer registered solely in this state A) only the agent must notify the Administrator promptly B) only the agent and the state-registered broker-dealer must notify the Administrator C) only the agent and the SEC-registered broker-dealer must notify the Administrator promptly D) the agent, the former broker-dealer, and the current broker-dealer must all notify the Administrator
D
Which of the following are exempt transactions under the Uniform Securities Act?XYZ Company signs an agreement to sell 1 million shares of its stock to ABC broker-dealer, who will then act as an underwriter in marketing the shares to the public.A non-issuer sale of securities listed on the Nasdaq Stock Market to several individual clients of the agent.Mr. Jones sells 100 shares of an unregistered security he owns to his next--door neighbor for $1,000.A customer calls a registered agent and asks to buy 1,000 shares of SPHG, a company the agent is not familiar with, and the agent fills the order. A) I and II B) I and III C) II and IV D) I, III, and IV
D
Which of the following is considered a sale of securities under the Uniform Securities Act?Redemption of mutual funds shares worth $10,000Dividends of common stock for which no consideration was given for the dividendsWith the approval of the board of directors, an exchange of common stock for the stock in another company under a mergerDisposition of stock for which cash consideration is received A) I, II, and III B) II and IV C) II and III D) I and IV
D
You inform a customer that you are not allowed to solicit an order for a stock but will accept that customer's buy order if placed. This is A) an offer to purchase B) an unsolicited trade C) an offer to sell only if it is accepted D) an offer to sell
D