2 Uniform Securities Act - Registrations Flashcards
The Administrator of North Carolina has been investigating some activity related to QRS Advisers, an investment advisory firm which is registered in North Carolina. QRS Advisers has its only physical offices located in South Carolina, where it is also registered. The Administrator of North Carolina receives a complaint that QRS Advisers has violated provisions of the Uniform Securities Act related to the sale of securities in North Carolina. Which of the following is true with regards to the authority of the Administrator of North Carolina?
[A] The Administrator of North Carolina is permitted to investigate and begin proceedings against QRS Advisers, since QRS Advisers is registered in North Carolina and the violation took place in North Carolina.
[B] The Administrator of North Carolina is permitted to further investigate QRS Advisers, but since QRS Advisers has its only physical offices in South Carolina, the Administrator from North Carolina must refer their findings to the Administrator of South Carolina.
[C] The Administrator of North Carolina is permitted to refer the case to the Administrator from South Carolina, but is not permitted to perform a full investigation of QRS Advisers, since QRS Advisers has no physical office in the State of North Carolina.
[D] The Administrator of North Carolina has no jurisdiction in this matter and may perform no actions related to the complaint.
[A] The Administrator of North Carolina is permitted to investigate and begin proceedings against QRS Advisers, since QRS Advisers is registered in North Carolina and the violation took place in North Carolina.
The Administrator of a State has jurisdiction over what occurs in that State. Administrators are charged with enforcing the securities laws of a particular state in order to protect the residents of that state from securities laws violations. In this case, the Administrator of North Carolina received a complaint of a violation within their State. This Administrator is well within their jurisdiction when it comes to performing an investigation. Had the violation taken place in South Carolina but was reported to the Administrator of North Carolina, it would be likely that the violation would be referred to the Administrator of South Carolina.
Chapter 2 Section 1
The Uniform Securities Act (USA) states that when an agent of a broker-dealer sells securities the
[A] security must be listed on a national securities exchange.
[B] agent must be registered with the SEC.
[C] security must be exempt, federally-covered, or registered.
[D] security must be listed on NASDAQ.
[C] security must be exempt, federally-covered, or registered.
The USA states that when an agent of a broker-dealer sells securities, the securities must be registered, exempt, or is a federal-covered security.
Chapter 2 Section 3
An agent at a broker-dealer is making sales to various clients. When it comes to exempt transactions, which of the following would be exempt?
I. The sale of stock to a mutual fund
II. The sale of stock to a pension fund
III. The sale of stock to a banking institution
IV. The sale of stock to several large insurance companies
[A] I and II only
[B] I and III only
[C] I, II, and III only
[D] I, II, III, and IV
[D] I, II, III, and IV
Each of the entities listed would be considered a financial institution or institutional investor. For this reason, transactions with all of the entities listed would be considered exempt.
Chapter 2 Section 4
Under the provisions of the Uniform Securities Act, which of the following are true regarding the withdrawal of a registration?
I. Generally, withdrawal becomes effective automatically 30 days after the application for withdrawal is filed.
II. If a disciplinary proceeding is underway or is instituted, the Administrator may determine when and under what circumstances withdrawal shall become effective.
III. Once withdrawal becomes effective automatically, the Administrator no longer has the power to institute disciplinary proceedings against the registrant.
[A] I and II only
[B] I and III only
[C] II and III only
[D] I, II, and III
[A] I and II only
Choices I and II are correct regarding withdrawal of registration but choice III is not true because the administrator can still institute disciplinary actions even though registration has been withdrawn.
Chapter 2 Section 1
The Administrator may by order deny, suspend, or revoke any registration, or bar or censure any agent or registrant from employment with a registered broker-dealer or investment adviser, if he finds that the order is in the public interest and that the applicant or registrant:
I. filed an application which is false, misleading, or was incomplete
II. has willfully violated or failed to comply with the Uniform Securities Act
III. has been convicted within the past 10 years of any misdemeanor involving securities
IV. has been convicted of any felony at any time
[A] I, II, & IV
[B] I, III, & IV
[C] II, III
[D] I, II, III, IV
[D] I, II, III, IV
Any injunction involving securities is sufficient grounds for an Administrator to deny registration. A revocation of an insurance license doesn’t involve securities. A conviction of a misdemeanor in the last 10 years must be for a securities misdemeanor to be grounds for a denial. A discharge in bankruptcy is a civil determination that a bankrupt person is no longer legally liable for former debts and would not have to be reported. Also, if the applicant was enjoined by a foreign court, for example, Canadian Court would be grounds to deny registration.
Chapter 2 Section 2
Under the Uniform Securities Act, which of the following is not true with regard to the registration requirements of a Broker-Dealer?
[A] If a broker-dealer files for initial registration in the middle of a year, they will be required to pay the filing fee.
[B] Any agent that is a partner, officer, or director of the broker-dealer must register with the Administrator separately from the broker-dealer.
[C] A broker-dealer will be required to maintain net capital standards.
[D] Registration may be cancelled if the broker-dealer ceases doing business.
[B] Any agent that is a partner, officer, or director of the broker-dealer must register with the Administrator separately from the broker-dealer.
All statements are true except “B”. Any agent that is a partner, officer, or director of a broker-dealer is automatically registered with the registration of the broker-dealer firm. This is a function of reducing redundancies in paperwork. These persons and their business history/information must be included in the B/D’s registration. However, these persons may still be required to take qualification exams.
Chapter 2 Section 1
Under the Uniform Securities Act, an investment adviser is required to advise a client about:
I. Change of address.
II. Addition of new partners to the advisory partnership.
III. Change of adviser’s phone number.
IV. Addition of new client accounts.
[A] I and III
[B] II and IV
[C] I, II, III
[D] I, II, III, IV
[C] I, II, III
Investment Advisers must disclose to clients any change in the address of the Adviser, any addition of new partners of the advisory partnership, and any change in the Advisers phone number, but do not have to disclose the addition or deletion of clients of the Adviser.
“Changes of material fact (change of ownership or the filing of complaints) must be reported promptly to the Administrator”
18.k
Chapter 2 Section 1
Which of the following statements would be true with regard to the registration of an Agent of a Broker-Dealer under the Uniform Securities Act?
I. The Administrator may deny or revoke an application for registration or an existing registration if the Administrator finds that it is in the public’s interest.
II. The Administrator may not deny any registrant from registration until they have violated a rule while registered.
III. The Agent’s registration must be renewed by December 31st each year.
IV. The Agent’s registration would only require renewal if the Agent changes Broker-Dealer affiliation.
[A] I & III only
[B] II & IV only
[C] I & IV only
[D] II & III only
[A] I & III only
Under the Uniform Securities Act, an Administrator may deny an Agent’s registration if the Administrator finds that it would be in the best interest of the public. An Agent’s registration must be renewed by December 31st each year.
Chapter 2 Section 1
According to the Uniform Securities Act, which of the following is NOT an exempt transaction?
[A] The sale of US government securities by a registered government securities dealer
[B] Pre-organization subscription transactions
[C] A sale of securities by the executor of an estate
[D] A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid
[A] The sale of US government securities by a registered government securities dealer
Choices B, C, & D are specifically listed as Exempt Transactions. Although Government “securities” are exempt securities, transactions in government securities are not included in the list of exemption transactions.
Chapter 2 Section 4
Under the Uniform Securities Act, when an Investment Adviser has 13 clients in one particular state and does not have a place of business in that state, that IA would not be required to register in that state if all of the IA’s clients were:
I. Married couples building assets for retirement
II. High net worth individuals
III. Institutions such as banks and insurance companies
IV. Broker-dealers and Investment Advisers
[A] I & II only
[B] III & IV only
[C] I, II & III only
[D] I, II, III, IV
[B] III & IV only
Both IA’s and IARs are exempt from registration under the USA if they have no place of business in a state and: 1. Their only clients are banks, broker-dealers, insurers, investment companies, trust companies, other investment advisers, or other financial institutions. 2. They have directed communications to not more than 5 clients in the state in the last 12 months.
Chapter 2 Section 1
Under the Uniform Securities Act when an investment advisory firm terminates an investment adviser representative, what filing must the firm perform?
[A] Letter of resignation from the IAR to the IA Firm
[B] U-5 Registration Form
[C] Form ADV
[D] Letter of termination from the IA Firm to the IAR
[B] U-5 Registration Form
Under the Uniform Securities Act, the termination of an Agent or an Investment Adviser Representative will be reported by the filing of a U-5 Form. Form U-4 is completed when a person is hired and becomes registered, U-5 is used when termination occurs.
Chapter 2 Section 1
When an Administrator of a state reviews the effectiveness of the registration statement for a security to be offered in their state, such registration may be denied based on which of the following?
I. The issuer intends to offer services which are illegal in the state
II. Compensation to the underwriters is disproportionally high based on the offering
III. The company is a start-up company and has no history of previous operations
IV. The registration documents have been found to include inaccurate data
[A] I & II only
[B] I, II, & IV only
[C] III & IV only
[D] I, II, III, IV
[B] I, II, & IV only
The Uniform Securities Act specifically lists I, II, and IV as reasons for the Administrator to deny the effectiveness of a registration statement/application. Choice III may be a contributing factor in the Administrator’s decision, but cannot be the basis for denial of registration.
Chapter 2 Section 2
Under the provisions of the Uniform Securities Act, which of the following securities would have to be registered by qualification?
I. XYZ Company has been in business one year. An initial offering of its stock will be offered in several states at once.
II. The WLC Company, formed two years ago, has previously made an offering of its stock in several other states and now wishes to make a new offering of stock in a state.
III. RED Inc., plans to make an offering of its stock in only one state and so it will not file a federal registration statement.
[A] III only
[B] I and II only
[C] II and III only
[D] I, II, and III
[C] II and III only
Choice I would require registration by coordination since it will be offered in several states. Choice II would only require registration by qualification since the new offering will only be sold in one state. Choice III would only require registration by qualification since it will only offer stock in one state and is not filing with the SEC.
Chapter 2 Section 3
Which of the following securities are listed as exempt when it comes to the registration and advertising filing requirements of the Uniform Securities Act?
I. Securities of a corporation that trade over-the-counter
II. Securities that are issued by the US Government or the Canadian Government
III. Securities of a railroad company operating intrastate
IV. Securities of a company that was once non-profit but is now a for-profit entity
[A] I and III
[B] I and IV
[C] II and III
[D] II and IV
[C] II and III
Of the securities listed, the securities of the governments of the US and Canada, as well as those of a common carrier, the railroad company, would be exempt from registration as well as the advertising filing requirements of the Uniform Securities Act. Over-the-counter securities are not automatically exempt. Securities of a company that is now for-profit would also not be exempt.
Chapter 2 Section 4
According to the Uniform Securities Act, which of the following is true regarding registration of investment adviser representatives?
[A] Representatives are automatically registered when they become employed by a registered investment adviser.
[B] A representative’s registration remains in effect even during a period when the representative is not employed by a registered investment adviser.
[C] Registration in the state where a representative has his or her business office enables the representative to do business in any state.
[D] To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process
[D] To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process
Of the choices offered the only choice which is correct is “D”. In order to register, an investment adviser representative would have to submit an application, a filing fee, and a signed consent to service of process. Registration is NOT automatic.
Chapter 2 Section 2
