Which of the following would not be considered a sale under the Uniform Securities Act?

1.  To minimize duplication of the federal and state reg. requirements

2.  To prevent fraud

An individual OR a legal entity.  Under the USA, a LEGALISTIC definition is applied to the term "person."  therefore, person would include individuals as well as corporations, partnerships, associations, trusts, unincorporated organizations, and governments  or government sub-divisions

Who does the term "person" not include?

Does the term "person" include minors?

Any person engaged in the business of effecting transactions in securities for the accounts of others  or for his own account.  Two ways business can be done:  Broker and Dealer

Broker = Executes trades on behalf of others; does not own assets; paid on commission Dealer = Executes trades on his own behalf; owns assets; paid on spread

Any individual who represents a Broker-Dealer or an Issuer in effecting or attempting to effect purchases or sales of securities.  Refers to employees of a brokerage firm or a company issuing securities who execute transactions in the purchase or sale of securities to the investing public. Reg. Reps are agents of their brokerage firms. 

An individual that represents an issuer in the sale of an interest in a limited pertnership, IS or IS NOT an agent?

Who is an individual that represents an issue in the sale of an interest in a limited partnership?

Is receipt of commissions a requirement for being an agent?

Who does the term Agent not include? (Issuer Exclusions)

1. Exempt Transactions in the secondary market: 
2. US gov Securities
3. Muni's Securities
4. Canadian Gov. Securities
5. Banks
6. Promissory Notes & Investment Contracts
7. Covered Securities (means Federal)- sold to qualified purchases or private placements
8. Transactions with investing employees, partners, or directors of the issuer if NO commission or remuneration is paid

Who does the term Agent not include?(Broker Dealer exclusions)

1. Individual who represents a B/D in one state when service an existing client

in another state.(30 days or less)
2. A partner, officer, or director of a B/D or issuer; unless they personally effected a transaction

If the president of a broker-dealer files required reports with the state Securities Administrator, would they be considered a principal or an agent of a broker dealer?

A representative secretary, who is authorized to accept orders from clients is considered an agent. Anyone representing a broker/dealer in transacting listed securities would be considered an agent.

An officer of a firm of a B/D is not an agent. An individual representing an issuer who affects transactions only in state exempt securities is not an agent.

If the president of a broker-dealer executies securities transactions for clients, they would be acting as an:

Define Agent of an Assistant.  What can't they do?

agents may hire Unregistered assistants who post and update account records under teh direction and supervision of the agent but such assistants may NOT handle trades or make recommendations to clients under any circumstances.

Define Investment Advisor

a person who, FOR COMPENSATION, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities.  This includes those who issue analyses or reports concerning securities

Portfolio managers and financial planners

The key points of the definition of an IA are ABC:

1.  Provide Adviseabout securities directly or indirectly

2.  As a Business

3.  For Compensation in any form, such as advisory fees

If a company provides advice about securities issued by businesses on the Excluded list (banks, publishers, etc.), are they excluded from the definition of an IA?

Can an IA also be registered as a BD and be paid an advisory fee seperate from any commissions earned?

Yes.  acting in Both capacities on the same transaction REQUIRES A DISCLOSURE to the client

A.M.S.S.S

Any individual, partner, officer, director, employee or associate who:

Advises or makes recommendations

Manages cliet accounts or portfolios

Suitability (determines)

Solicits, sells or negotiates advisory services

Supervises employees who perform above services

IAR DOES NOT INCLUDE employees who:

a. perform clerical tasks

b. Only solicits sales of fixed annuities

Is an employee of an IA who answers the telephone and does clerical work considered an IAR?

Is and investment advisor who comes within the definition of an IA under the federal Investment Advisers Act of 1940. Such and IA must register with the SEC only. The Federal Covered Advisor is exempt from state registration as federal law preempts state law, but may be required to file a notice with the states in which 6 or more clients transact business with the Federal Covered Advisor. 

who else is included in the definition of an IA:

1. An advisor to a REGISTERED INVESTMENT COMPANY  or

2. Any IA who manages an investment portfolio of $25MM or more (An IA who manages less than $25MM must register with the state in which they do business)

Who is EXCLUDED  from the definition of Federal Covered Advisor and therefore exempt from SEc registration?

1. IAs who give advice on US Gov. securities only

2. Banks

3. Publishers of general advice about securities

4. LATE professionals

Could a BD also be an issuer?

Yes, if it was selling its own securities

If a corp. is issuing CERTIFICATES OF INTEREST IN OIL, GAS, OR MINING TITLES OR LEASES, is it considered an issuer?

Are companies that issue certificates of interest in oil, gas, or mining titles or leases considered issuers?

NO
even though their the certificates of interests are considered securities

Define the following transaction:  An individual investor selling stock that he or she owns to another investor

Considered a NON-ISSUER TRANSACTION

If an individual investor is selling stock that he or she owns to another investor would he be considered an issuer?

NO - it would be a non-issuer transaction

Define Institutional Investors

Organizations that trade large volumes of securities such as bansk, insurance companies, and employee benefit plans AND ANY OTHER PERSONS WHO ARE DESIGNATED AS SUCH BY RULE OR ORDER OF THE ADMINISTRATOR

ANY evidence of an interest in a common enterprise in which the investor expects a profit from the promoter's managerial efforts

Examples that are specifically excluded from of USA definition of a security.

1. fixed life insurance policies
2. endowment policies
3. fixed annuity contracts
4. commodity futures contracts
5. collectibles, including antiques
6. precious metals
7. real estate

Security that is "covered" by federal law under Act of 1933 and is registered with the SEC only. States are not premitted to require registration of these securities. 

List of Federal Covered Securities

1. Securities listed or authorized for listing on a national exchange

2. Investment co. or pooled investment shares (mutual funds)

3. Securities sold to QUALIFIED PURCHASERS with a net worth of $5MM or more or a trust sponsored by qualified persons

4.  transactions that are exempt from Act of 1933 - US Gov., Muni bonds offered outside that state of issue, Reg. D offering

Excluded from a Federal Covered Security (may require registration by a state)

Securities issued by non-profit organizations, Muni bonds offered only in the state where issuer is located, Intrastate offerings, A security issued with a guarantee from another entity as to principle, interest or dividends. (safer in the eyes of the investor) 

What constitutes an OFFER or OFFER TO SELL?

any attempt to solicit a purchase or sale of a security for VALUE

an offer is considered to have been made when:

1. It originates in the state

2. It is directed to the state

3. It is accepted in the state

Is a radio or TV signal originating from outside the statebut heard and seen in many states considered an offer?

What is considered a Sell or Sale?

any contract of sale or contract to sell a security for value - as opposed to a bona fide gift.

Is receiving a security as a bonus for buying another security or product as Sale?

If you received rights or warrants to buy another security, would that be a Sale?

Is the gift of Assessable stock a sale?

True or False: A gift of assessable stock would not be considered a sale.

False. A gift of assessable stock is considered both an offer and a sale and is regulated by the USA.

The following transactions would NOT be considered a Sale

1. A bona fide pledge or loan of securities

2. Stock dividend

3. Shares acquired as a result of a merger or reorganization

4. Converting a bond to a stock

Is a Purported Gift, viewed as a gift

No, it is not a bona fide gift

Intentional misrepresentation, concealment, or omission of the truth for the purpose of deception. 

According to the USA, an IA can be compensated based a share of the gains or appreciation in an account but there are two critical components:

1. Based on the total value

2. Must be over a defined period

Does the USA allow performance-based fees?

NO, but an Administrator does have the ability to allow such arrangement by rule or order.

Does the Act of 1940 allow performance-based fees?

Yes, for Qualified Clients only.  Defined as an investor with a net worth of $1.5MMor $750M in assets under mgt.

Can an assignment of an investment contract be done without the consent of the client?

Under the Uniform Securities Act, an investment advisory contract must contain (in writing) all of the following provisions EXCEPT:

A) the adviser, if a partnership, must notify the client of any change in the partnership's membership. B) the investment adviser's compensation shall not be based on capital gains in client accounts. C) on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account. D) no assignment of the investment advisory contract may be made without the client's consent.

The correct answer was: on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account.

Would a change from sole proprietorship to a partnership be considered an assignment?

yes and is not permitted without stated in writing.

If the advisory company is a partnership, does it have to notify the cleint if there is a change in the membership of the partnership?

Under the Uniform Securities Act, an investment advisory contract must contain (in writing) all of the following provisions EXCEPT:

A) the adviser, if a partnership, must notify the client of any change in the partnership's membership. B) the investment adviser's compensation shall not be based on capital gains in client accounts. C) on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account. D) no assignment of the investment advisory contract may be made without the client's consent.

The correct answer was: on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account.

If the Advisor's address or telephone number changed, does the client have to sign a revised contract?

Who must Broker-Dealers by registered with?

FINRA
&

(dual registration) with states they do business in as well

regulated by FINRA & SEC

Investment Advisors must be registered with ____?

IAs need only be registered with the SEC OR the states, NOT BOTH. 

Investment Advisor Representatives are only registered at the _____ level?

Can an IAR register at the federal level?

Can an IA that is required to be registered, employ a non-registered IAR?

Can a broker-dealer or an issuer employ an agent that is unregistered?

If a BD is registered in State A, but the Agent is not, can the agent solicit business in State A?  The agent only has one client in State A

No!  It is unlawful unless BOTH the Agent and the BD are registered in the state.  (the five client exemption is only for IAs)

If a BD is not registered in a state, may an agent of the BD do business in the state without being registered there?

Yes, if the agent is dealing with an existing client that is temporarily in the state.

Does the registration of a BD automatically constitute registration of any agent who is a partner, officer, or director, or a person occupying a similar status or performing similar functions?

Yes and is the case for both new and successor firms.  IS BASED ON WHETHER OR NOT THE INDIVIDUAL IS ACTING IN AN AGENCY OR ADVISORY ROLE, respectively

Does the registration of an IA automatically constitute registration of any agent who is a partner, officer, or director, or a person occupying a similar status or performing similar functions?

Yes and is based upon whether or not the individual is ACTING IN AN AGENCY OR ADVISORY CAPACITY, respectively

When a BD or IA firm first files for registration, is the initial registration fee normally pro-rata or full fee?

Pro-rata for the remainder of the current year and will then be renewed at year-end thereafter

When do changes of a material fact (e.g., a change in ownership) need to be reported?

Promptly to the Administrator

Broker-Dealers who have CUSTODY of client funds or securities or have discretion over client accounts may be required to have:

a. Minimum Capital - set by administrator

b. Surety Bond - determined by Administrator.  May be cash or securities

c. Examinations or books and records as determined by Administrator

What may be required of Agents that have discretionary authority over client funds required to have?

1. Surety Bond - as determined by Administrator
r deposit of cash or securities
2. Qualification Examinations - Administrator determines
3. NO minimum Capital Requirements

Investment Advisors who have CUSTODY of client funds or securities or have discretion over client accounts may be required to have:

a. Minimum Capital as set by Administrator

b. Surety Bond - may be cash or securities and set by Administrator

c. Examinations of books and records

What kind of notice must be given if an IA has custody of client funds or securities?

Notice must be given to Administrator. 

Can an Administrator prohibit an IA from having custody of client funds or securities?

What are the bonding requirements for an IAR?

this is left to the Administrator

What is the minimum capital requirment for Agents?

Zero.  this only apples to BDs and IAs

What steps must take place on the initial registration filing?

1. Application
2. Registration Fee
3. Consent to Service of Process (allows Administrator to be served when applicant is sued)
4. A bond - at the Administrators discretion for B/D, agents & IA's

Are the fingerprints of the officers and principals need for initial registration?

Are salaries of officers and partners included in the application for registration?

Are the names and SSNs of all employees disclosed in an application for registration?

Can the Administrator require an applicant to publish an announcement in a newspaper?

When does registration become effective?

Determined by Administrator.  If no denial, registration will automatically become effective at noon on the 30th day after the application is filed. 

Can an Administrator advance or delay the effective date?

The Administrator my deny, suspend, or revoke registration if the applicant was convicted within the past __ years of a misdeanor involving securities

The Administrator may deny, suspend or revoke registration if the applicant has been convicted of a felony within ___ years

Has been convicted of any felony at any time

Withdrawal from registration becomes effective ____ days after receipt of application

It is unlawful for any person to offer or sell any security in a STATE unless:

1. the security is REGISTERED UNDER THE ACT

2. the security or transaction is EXEMPT FROM REGISTRATION

3. the security is a FEDERAL COVERED SECURITY

Who generally uses Filing (Notice Filing)

A company that has issued securities before

Who generally uses the registration method of Coordination?

New issues whose registration is pending with the SEC

If a security has already filed a registration statement with the SEC, by what method may they register with the state?

Under Coordination, when does state registration become effective?

When the federal registration becomes effective

What method of registration is used when the new issue of securities is not going to be registered with the SEC but ONLY IN THE STATE OF ISSUANCE?

Can the Administrator enter a denail order if a registrant has failed to pay the proper filing fee?

Can an administrator institute a stop order simply because a company is new or has no operating history?

The buyer of securites in a private placement receives registered or unregistered securities?

Is a FIXED ANNUITY offered by an insurance company subject to the anti-fraud provisions of securities law?

No, because it is not a security

Are corporate bonds exempt from state registration?

If a private placement is sold to 5 retail investors, is it exempt from registration?

Yes.  Private placements are exempt if sold to 10 or less retail (other than institutional) investors

Can an administrator publish information about a violation?

Does an administrator have the power to enjoin?

Can an administrator indict individuals?

can an administrator confiscate property?

What is the punishment for failure to obey any order by an Administrator?

If an administraor believes that a violation may or is about to happen, issue a cease and desist order without a prior hearing?

Can an administrator appoint a receiver or conservator in order to enforce an order?

Can an Administraor disgorge commissions charged by a BD?

The maximum criminal penalty for violations of the USA is ____ years in prison and/or up to a $______ fine.

what is the statute of limitations for civil liabilities under the USA?

No person may sue more than three years after the contract of sale or two years after discovery

are hearings public or private?

Public, unless the administrator deems otherwise

Orders by Administrators may be APPEALED IN COURT WITHIN ___ DAYS AFTER THE ORDER IS ISSUED

the burden of proving an exemption or an exception from a rule is on the administrator or the person claiming it?

What must the Administrator provide in any proceeding where denial, suspension, or revocation of registration occurs?

a. appropriate prior notice
b. opportunity for a hearing
c. written findings of fact & conclusions

(does not need to provide when investigating

If an administrator is INVESTIGATING  a firm or individual, does the administrator need to offer notice, hearings, or written conclusions?

The administrator may or may not suspend or revoke against a BD based on lack of qualification of any person other than the BD himself or agent of the BD

The administrator may or may not suspend or revoke against an IA based on lack of experience of any person other than the IA himself or an IAR

The administrator may or may not institute suspension or revocation based solely on lack of experience if the applicant is qualified by training or knowledge

Does a UIT need to file advertising and sales literature?

How many years must records be preserved for?

determined by the state administrator or Federal law

How many years must a BD retain blotter records?

According to the USA's post-registration provisions, which of the following would be true?

1. An Administrator may only do an on-site examination of an investment adviser if the IA has an office in that Administrator's state.
2. Record-keeping requirements are only required of broker-dealers that carry customer accounts.
3. Investment advisers may not be required to maintain the same books and records as a broker-dealer.
4. Administrators must be informed "promptly" of any documents filed with the Administrator when they become inaccurate or incomplete.

[A] I and II [B] I and III [C] II and IV [D] III and IV

According to the USA, an agent has willfully violated the antifraud provisions of the USA if he or she intentionally performs which of the following acts?

1. The agent knowingly sells non-exempt new issues of securities and does not deliver a prospectus to each purchasing client.
2. The agent tells his or her clients when selling a bond issue, that the bond issue yields 7.5% when in reality, it yields 0.75%.
3. The agent misleads his or her clients, telling them that the revenue bonds from a nearby toll road are actually general obligation tax bonds backed by the county.
4. The agent ensures clients that they will receive a minimum of a 17.5% annualized return on their investments.

[A] I and II only [B] I, III and IV only [C] II, III and IV only [D] I, II, III and IV

Which of the following statements is true with regards to the power of an Administrator to take action when there are violations of the Uniform Securities Act?

[A] Officers may be appointed by the Administrator to conduct investigations [B] The Administrator must get a court order in order to subpoena witnesses [C] Investigations may not be conducted outside the state [D] Information concerning violations must be kept confidential

A  The Administrator has the power to appoint or designate officers to conduct investigations within or outside of the state

Which of the following actions taken by an investment advisor would require customer consent?

1. The investment advisor and its accounts are acquired by a larger firm
2. The investment advisor acquires a small firm and its accounts to enhance its geographic coverage
3. The investment advisor wishes to retire and transfer its accounts to another investment advisor

[A] III only [B] I and II [C] I and III [D] I, II, III

Any States Securities Administrator may require a new investment advisor who files a registration application in a State to:

1. Announce the opening of the advisory firm in the local newspapers.
2. Pass an oral qualification examination.
3. File with the Administrator any advertising or communications to be disseminated to the public.

[A] I only [B] II only [C] II and III [D] I, II, III

The definition of an "agent" in the Uniform Securities Act includes persons who are in the business of:

1. Advising clients about securities for compensation
2. Selling securities listed on a major stock exchange
3. Representing an insurance company during the issue of securities
4. Effecting commission-free securities transactions

[A] I and II only [B] II and III only [C] II, III, and IV only [D] I, II, III, and IV

C.

Agent is defined as any person who represents a broker/dealer or issuer in effecting or attempting to effect purchases or sales of securities.

According to the Uniform Securities Act, which of the following are included in the definition of a broker/dealer?

[A] Agents [B] Issuers of securities [C] Out-of-state broker/dealers servicing only other broker/dealers [D] One who effects transactions in securities for the accounts of others or solely for the firms own account

D.

Choice 'A', 'B', and 'C' are specifically excluded from the definition of broker/dealer, but choice 'D' defines a firm acting in the capacity of a broker (accounts of others) and a dealer (the firms own account) and would therefore be considered a broker/dealer by definition.

As stated in the Uniform Securities Act, federal-covered advisers

[A] can be required to give notice to Administrators in states in which six or more clients transact business with the federal-covered adviser. [B] are always required to register with state Administrators in states in which six or more clients transact business with the federal-covered adviser. [C] only can conduct business with federal government agencies. [D] are required to register with the Administrator of the state in which the main place of business exists.

A.

Although a federal-covered adviser cannot be required to register with the states in which they do business, the states may require the federal covered adviser to notify the Administrator if the IA transacts business with 6 or more clients within the state.

If employed by a federal covered IA, is an IAR required to register in all states in which she is conducting business?

No. If the IAR has no place of business in the state, no state registration is required

Of the following individuals that are employed by a federal-covered adviser, which individual would be required to register as an IAR in a state?

[A] A person who manages 20 pension plans and 2 individuals as clients [B] A person advising 5 mutual funds and managing individual retirement accounts for 8 relatives [C] A person advising 10 mutual funds and 6 individuals, 4 of whom are officers of the investment advisor [D] An individual whose sole function is writing a column for the IA's weekly newsletter about upcoming IPOs

B.

If an IAR has more than 5 clients in a state, the IAR must register in that state. Institutional investors and officers of the IA are disregarded when counting clients.

Prior to taking any disciplinary action with respect to a registration under the Uniform Securities Act, the Administrator must do which of the following?

1. Obtain prior approval of the appropriate state court
2. Find that the action is in the public interest
3. Cite a cause listed in the Act

[A] I and II only [B] I and III only [C] II and III only [D] I, II, and III

C.

Choices II and III are correct regarding disciplinary action concerning registration. Choice I in incorrect because state court approval is not needed. It can be determined by the administrator.

According to the Uniform Securities Act, whenever it appears that someone has violated the act, the administrator may:

1. issue a cease and desist order after conducting a hearing on the matter.
2. issue a cease and desist order before conducting a hearing on the matter.
3. seek a court order requiring the violator to make restitution to clients.

[A] I, II [B] I, III [C] II, III [D] I, II, III

The USA regulates what investment advisers can say to clients. Which of the following may an IA legally state to a client?

1. The adviser can state that they are registered
2. The adviser can state that the Administrator has verfied all information on the IA's registration
3. The adviser can state that the Administrator has passed on the competence of the IA

[A] I only [B] III only [C] I and II only [D] II and III only

Under the Uniform Securities Act, every investment advisory contract must be in writing and must include

[A] that assignment of the contract is prohibited [B] that the IA's liability is limited [C] that the IA's compensation is based on a share of capital gains [D] the specific time period for which services are contracted

D.

Assignment of the contract is permitted with the written consent of the client. The IA may not limit its liability or as a general rule share in the capital gains of the accounts of clients.

According to the Uniform Securities Act, which of the following would be considered an exempt transaction:

[A] the sale of mutual fund shares by an issuer to an individual for which the issuer receives a commission [B] the purchase of securities from an issuer by an unregistered broker/dealer for its own account [C] the sale of a real estate limited partnership interest by a registered broker to a public customer [D] the purchase of restricted securities by an executive at the firm.

B.

The purchase of securities by an unregistered broker/dealer for their own account from an issuer would be considered exempt because the broker/dealer is unregistered and the transaction is not being done for a client or for the benefit of a client.

Which of the following are Federal Covered Securities assuming state fees have been paid in a timely manner?

1. Maine state bonds offered in Florida
2. Securities sold without a public offering
3. Securities listed on the New York Stock Exchange
4. Los Angeles City Bonds offered only in California

[A] I and IV [B] II and III [C] I, II, and III [D] I, II, III, and IV

C.

EXPLANATION

I, II, and III are defined as Federal Covered Securities. Municipal Bonds issued and offered within a state would not be defined as Federal Covered Securities.

According to the Uniform Securities Act, registration is required of investment advisors who are directing advice regarding which of the following securities:

1. stock of corporation listed on the NYSE
2. bonds issued and guaranteed by a state
3. investment contracts issued in connection with an employee stock purchase plan

[A] II [B] I, II [C] I, III [D] I, II, III

D.

All choices offered represent securities by definition according to the Uniform Securities Act and therefore require persons giving advice about such securities to be registered.

According to the Uniform Securities Act, which of the following is true regarding proceedings conducted by the administrator:

[A] The Administrator may issue a separate order to revoke an exemption. [B] An order is issued to revoke an exemption is made retroactively. [C] The burden of proving an exemption is on the administrator. [D] Before issuing a summary report to deny an exemption, the administrator must provide the report to all parties.

A.

Administrators can issue separate orders to revoke an exemption if it is deemed to be in the public's interest but the Administrator cannot make such revocations retroactive. The burden of proving an exemption is placed on the person claiming it, not on the Administrator.

An IA, who is compensated for their services, must register under the USA if advice rendered relates to which securities listed below? one, two or all three?

1. Treasury Bonds issued by the United States of America
2. Bonds issued by a local school district
3. Corporate bonds where the stock of the issuer is listed on the NYSE

all three - Under the Uniform Securities Act, there are no exemptions from registration related to giving advice on specific securities.  Because of this, all IAs must be registered when giving advice on any of the securities listed.  In the Investment Advisors Act of 1940, there is a specific exemption for Federal Covered Investment Advisors who solely give advice on Government Securities (Covered in Ch. 4, Sect. 1, B., 3., e.).  Be sure to differentiate between the two acts.

Stella has made a business of advising her clients as to the value of securities that are listed on the New York Stock Exchange. She does not perform any transactions for her clients. Even though she does not effect transactions for her clients, she must still comply with which of the following provisions of the Uniform Securities Act?

1. The antifraud provisions
2. Provisions related to broker-dealer registration
3. Provisions related to investment adviser registration

[A] I only [B] III only [C] I and II [D] I and III

D.

An investment advisor (IA) that only gives advice about listed securities and does not execute or effect any transactions would have to be registered as an investment adviser (IA) but would not have to be registered as a broker-dealer.

When may an investment adviser (IA),  share in profits and losses of a client's account?

[A] Only when the state Administrator permits it by rule or order. [B] Only when the IA and client have agreed in a written contract [C] Only when the IA is deducting advisory fees from profits that have been earned by the client. [D] Only when capital gains are realized, not on-paper profits.

B.

When an investment advisor shares in profits and losses in a clients account it must be agreed to in a written contract between the IA and client.

A security listed on the NYSE would be a(n):

[A] Exempt transaction. [B] Security which must be registered in every state. [C] Exempt security. [D] None of the above.

If no denial order is in effect and no other securities related proceedings are pending, according to the Uniform Securities Act, an application filed for the registration of a broker/dealer would automatically become effective:

[A] 30 days after the application is filed. [B] 45 days after the application is filed. [C] 7 business days after the application is filed. [D] only when the administrator approved the registration application.

An individual must be an investment adviser representative to do which of the following:

[A] The person must be an IAR to issue or propose the issuance of a security for sale. [B] The person must be an IAR to manage an investment adviser's clerical staff. [C] The person must be an IAR to manage a portfolio of commodities. [D] The person must be an IAR to make recommendations to clients regarding securities.

D. The statutory definition of an "investment adviser representative" includes rendering advice or giving recommendations with regard to securities. Commodities are not considered "Securities."

An IA, who is compensated for their services, must register under the USA if advice rendered relates to which securities listed below? one, two or all three?

1. Treasury Bonds issued by the United States of America
2. Bonds issued by a local school district
3. Corporate bonds where the stock of the issuer is listed on the NYSE

all three - Under the Uniform Securities Act, there are no exemptions from registration related to giving advice on specific securities.  Because of this, all IAs must be registered when giving advice on any of the securities listed.  In the Investment Advisors Act of 1940, there is a specific exemption for Federal Covered Investment Advisors who solely give advice on Government Securities (Covered in Ch. 4, Sect. 1, B., 3., e.).  Be sure to differentiate between the two acts.

Which of the following are true regarding violations of the Uniform Securities Act?

1. The Administrator may issue a cease-and-desist order without a prior hearing.
2. Violators may incur a criminal penalty of a $5,000 fine or three years in jail, but not both.
3. There is no statute of limitations on civil proceedings.

[A] I only [B] I and II only [C] II and III only [D] I, II, and III

A. Choice I is correct. Choice II is incorrect because BOTH a $5,000 fine and imprisonment for three years can both be incurred by violators. Choice III is incorrect because the statue of limitations is three years for civil liabilities.

An investment advisory firm's offices are located in State X. The IA exclusively services financial institutions such as insurance companies. This IA firm must
a. be fully registered with the SEC under the Investment Advisors Act of 1940 and perform a notice filing registration with State X.
b. be fully registered with State X but need not register with the SEC under the Investment Advisors Act of 1940.

b.
With the information provided, the investment advisory firm must register with the state where it has it's principal place of business, State X, and does not need to register at the federal level with the SEC.

Regulated by the Uniform Securities Act, which of the following responses would have to be registered by qualification?

1. XYZ Corporation is one year old. A primary offering of its stock will be offered in all states at the same time.
2. The RDC Corporation, formed two years ago, originally made an offering of its stock in several states but now wants to make a new offering of stock in just one state.
3. SHZ Incorporated plans to offer its stock in one state and therefore will not file a federal registration statement.

[A] III [B] I and II [C] II and III [D] I, II and III 

C. Qualification generally means that the offering is not filed with the SEC, but is "qualified" in the state of issuance.  Choice I is incorrect because the stock will be offered in all states.  Choices II & III would registered using qualification because they will offer stock in just one state

An agent has made suitable recommendations to a customer. The customer rejects the recommendations. The customer requests an order be executed in a security which is not a suitable investment in the agent's opinion. The agent should do which of the following?

[A] The agent is prohibited from executing the order. [B] The agent can execute the order only if sufficient funds are in the account when the order is entered. [C] The agent is required by law to execute the order. [D] The agent can execute the order but it would be wise to obtain from the customer a written statement stating that the transaction is unsolicited and not recommended by the agent.

D. Since the agent feels the order is unsuitable, as protection the agent would mark the order ticket unsolicited and most likely have the client sign a non-solicitation letter.

According to the Uniform Securities Act, which of the following is true regarding proceedings conducted by the administrator:

[A] The Administrator may issue a separate order to revoke an exemption. [B] An order is issued to revoke an exemption is made retroactively. [C] The burden of proving an exemption is on the administrator. [D] Before issuing a summary report to deny an exemption, the administrator must provide the report to all parties.

A.

Administrators can issue separate orders to revoke an exemption if it is deemed to be in the public's interest but the Administrator cannot make such revocations retroactive. The burden of proving an exemption is placed on the person claiming it, not on the Administrator.

Which of the following would not be considered an agent under the Uniform Securities Act?

Which of the following transactions are exempt under the Uniform Securities Act?

Which of the following is not defined as a broker

Which transaction is included in the definition of sale under the Uniform Securities Act?