63 Flashcards
Official or agency administering the securities laws of a state
ADMINISTRATOR
Any Materials designed for use by newspapers, magazine, radio… or any other public medium to Solicit business
Advertisement
An individual who represents a broker/dealer or and issuer when selling or trying to sell securities to the investing public
Agent
Is a Salaried individual considered an Agent if he represents issuers in the sale of any securities that are exempt from state registration under the uniform securities act
No
Any Employee, Manager, Director, Officer or partner of a member broker/dealer or another entity (issuer, bank, ect…) or any person controlling, controlled by or in common control with that member is considered an associated person of that member
Associated Person
State Regulations governing the securities industry
Blue-Sky Laws
any person engaged in the business of effecting transactions in security for the account of other or for his own account
Broker/Dealer
What are not classified as broker/dealer
Agents, Issuers, Banks, Saving institutions, Persons who have no place of business in the state & only does business with existing customers who is temporarily in this state
creates jurisdiction for the state over any agent, broker/dealer or advisor registered in that state
Consent to Service of Process
An investment adviser that is regulated by the Securities Exchange Commission (SEC) under the Investment Advisers Act of 1940 rather than the State
Federal Covered Advisors
Federal Covered security
Securities exempt from State Regulations - The include new securities issued by companies who securities already trade on the NASDAQ National market system. And new securities issued by investment companies (mutual Funds)
Deliberate Concealment, Misrepresentation or omission of material information or the truth to deceive or manipulate another party for unlawful or unfair gain
Fraud
Securities that have a guarantee, usually from a source other that the issuer as to the payment of principle, interest or dividend
Guaranteed Security
Material and non-public information obtained or sued by a person for the purpose of trading securities
Inside Information
Any person that has non-public information (material information) about a corporation. Including directors, officers and stockholders who own 10% or more of any class of equity security of a corporation
Insider
an organization that trades large volumes of securities such as a mutual fund
Institutional Investor
Any person who for compensation (a flat fee or a % of Assets Managed) offer investment advice 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, or who for compensation and as part of a regular business, issue or promulgates analyses or reports concerning securities.
Investment Adviser
Is a bank, or trust company an investment advisor
NO
are professionals such as lawyers, accountants, teachers and engineers who perform investment services solely incidentally to the practice of their profession investment adviser?
NO
Is a person who sells market letter subscriptions directly to individuals a Investment advisor
Yes
IS a publisher of a financial publications of general regular and paid circulation considered an investment advisor
no
Any partner, officer, director or any other individual employed by or associated with an investment advisor who: Gives investment advice or makes recommendation, manages client accounts or portfolios, Determines which investment recommendations or advice should be given, offers investment advisory services or supervises employees involved in any of theses activities
Investment Adviser Representative
Is an Investment Adviser Representative and Investment Adviser
NO
any person who issues or proposes to issue any security
Issuer
An issuers transaction is also called___________
Primary Transaction
Federal Law designed to restructure the division of responsibilities between federal regulators and state securities administrators, especially in the areas of mutual fun regulations and the registration of investment advisors
National Securities Markets Improvements Act (NSMIA)
NSMIA
National Securities Markets Improvements Act
Liquid Capital (cash and assets readily convertible into cash) Maintained by broker/dealer as required by law for customer protection
Net Capital
A person other than the issuer of a security
Non-Issuer
a transaction in which the proceeds of the sale go to the selling stockholder
non-issuer transaction
most non issuer transactions are also called____________
secondary market transactions
And offer includes?
every solicitation to sell a security for value and every offer to buy a security for value
a sale is
the act of conveying ownership of a security for money or other value.
under the Uniformed Securities Act a “Person” is?
Individual, Corporation, partnership, estate, association, fund, joint stock company, unincorporated organization, trust in which the interest of beneficiaries are evidenced by security, and government or a political subdivision of a government
Legal document that must be given to every investor who purchases registered securities in a primary offering as required by the securities act of 1933
Prospectus
details of a company and particular offering , summary of registration statement filed with the SEC
Prospectus
All associated persons engaged in the investment banking and securities business
Registered Representative
Who is a Registered Representative
Securities sales person, Individual who supervise, solicit or conducts business in securities, and individuals who train people to supervise solicit or conduct business in securities
Securities Act of 1933
Federal Legislation requiring the full and fair disclosure of all material information about the issuance of new securities
Securities and Exchange Commission (SEC)
commission created by congress to protect investors , and enforce federal security laws
A Security
and instrument that can be traded for value
When is an investment considered a security
when a person invests his money in a common enterprise with the expectation of profit from the managerial efforts of a third party
Are insurance policies and fixed annuities considered to be securities?
NO
a Broker always acts as___________
an agent for the accounts of a customer
a Dealer always acts_____________
For his own account, buying and selling securities for his own inventory
A Broker/Dealer must register with?
SEC, NASD and state securities division
Offer To Sell
an attempt to solicit a purchase or sale in a security
What is not included in an offer to sell?
Bona fide pledges or loans, stock dividends, stockholder approved mergers, acts incident to approved corporate reorganizations
Must an agent register in every state they sell in?
Yes
Agent
Individual who represents a broker/dealer or issuer in effecting to purchases or sales of securities
how can an agent register in another state
filing an application, paying a registration fee and providing a consent to service process form. No separate exam is needed however the broker dealer the agent represents must be registered in the state for the agent to register
National Securities Markets improvement act of 1966 (NSMIA)
Eliminates duplicate registration requirements for investment advisors. And Advisor is either regulated by the state he conducts business or SEC not both
Who must Register with the SEC?
advisers managing $30 million or more I assets and those managing investment companies (mutual funds)
Net Capital Requirements
administrator may require a minimum amount of net capital for broker/dealer and investment advisory firms especially when the firm has custody of client funds or securities
Effective date of registration
unless denied by the administration registration becomes effective in 30days after the registration application has been filed or sooner at the administrations discretion. Every broker/dealer, investment advisor and agent registration expires Dec 31st unless renewed
Broker/dealer must keep there records for ? years
3
Investment advisors must keep there records for ? years
5
who must register as a Agent of Issuer
president of corporation or member of board sell stock of that corporation to the public and earn a commission for doing so
if a unregistered agent of a broker/dealer sells a security who has violated the law?
BOTH
6 exceptions to the definition of “security “are
Non Variable insurance policies, Life insurance endowment contracts, Fixed Annuities, Retirement plans, Checking/savings/passbook accounts, & Futures contracts (commodities)
Registration period
a securities registration is effective for one year from the effective date unless the underwriters are still attempting to distribute unsold shares in which case the effectiveness of the registration will be extended until the shares are sold
When can the administration issue a stop order?
It is in the public interest to do so, the registration statement is misleading or incomplete, any officer of the issuer has been convicted of a securities crime, the security is subject to court injunction, the offering is fraudulent, there are excessive or unreasonable offering expenses or promoters fees
are exempt securities exempt from the antifraud provisions of the uniform securities act?
NO
U.S. Government Securities
All securities issued or guaranteed by the US govt. Including Series EE and series HH savings bonds
Municipal Securities
Securities issued or guaranteed by any state or political subdivision of any state or any agency of a state or a subdivision also are exempt
Exempt Securities (10)
US Gov Securities, Municipal Securities, Any Recognized Foreign Government, Financial Institutions, Insurance Companies, Public Utilities and Common Carriers, Religious and Charitable Organizations, Commercial Paper, Employee pensions and profit-sharing, Federally Covered Securities
Recognized Foreign Government Securities
All securities issued by a recognized Foreign government are exempt. However Securities issued by foreign corporations are non-exempt
Financial institution Securities
all securities issued by and representing an interest in or a debt of any national bank or federal savings and loan association including CD’s are exempt. Securities issued by bank holding companies are not exempt
Insurance company Securities
any security that represent an interest in or debt of or is guaranteed by an insurance company is exempt. However Variable annuities, investment contacts and similar securities with payment depended on the performance of a separate account invested in securities are non-exempt
Public Utilities and Common Carriers Securities
any security issued or guaranteed by a railroad, trucking company, or another common carrier, public utility or a hold company that is subject to the jurisdiction of the Interstate Commerce Commission (ICC) or the Public Utility holding Company Act of 1935 is exempt
Commercial Paper Securities
Promissory notes issued by large corporations with maturity of less than nine months and under $50,000 and are rated In the three highest rating categories by a nationally recognized rating service (Moody’….) are exempt
Employee pensions and profit-sharing
Investment contracts issued in connection with employee profit-sharing, savings, or similar benefit plans are exempt if the state administrator is notified in writing at least 30 days before the commencement of such plan
What Transactions are exempt from Registration and advertising filing requirements of the Uniform Securities Act?
Isolated Non-issuer Transaction, Non-issuer Transactions in Outstanding Securities, Unsolicited Orders, Issuer Transactions, Transactions by certain Persons, Transactions with Financial Institutions, Private placement, Pre-Organization Certificates, Transactions with Existing security holders
Exempt Transaction
The Method by which the security is sold is exempt
Exempt Security
Securities that are exempt from both the registration requirements and advertising filing requirements of the Uniform Securities Act
Isolated Non-issuer Transaction
any transaction that does not directly or indirectly benefit and issuer. Initial (primary) offerings are considered issuer transactions. Transactions in the secondary market are considered non-issuer transactions
Non-issuer Transactions in Outstanding Securities
securities that are already traded in the secondary market they are exempt provided it has been outstanding in the hands of the public for at least 90 days
Unsolicited Orders
Unsolicited non-issuer transactions affected through broker/dealer are exempt . A Registered Representative’s client may purchase any securities he chooses in the secondary market
Issuer Transactions
Transactions between issuers and underwriters are exempt
Fiduciary
person who is responsible for something held in trust for another person
Private placement
a sale of non-exempt securities that is not made to the general public
The Uniform Securities Act stipulates the following requirements private placement
1, The number of people receiving the offer must be restricted to no more than 10 in a 12month period 2) all sales must be made to buyers who are purchasing for the purpose of investments 3) No Commissions or fees may be paid directly or indirectly
a Pre-Organization Certificate is exempt when the following conditions are met…
1) No commission or other remunerations is provided for soliciting prospective subscribers 2) The number of subscribers does not exceed 10 3) No Payment is made by any subscriber
Registration by Coordination
The type of state securities that become effective when the security is cleared by the SEC
What Is a transaction called when there is no benefit to the issuer
Non-issuer transaction
What is the official designation of the person or agency that enforces the Uniform Securities Act in each State
Administrator
What does “guaranteed” mean when the word is used to describe security
The Security has a backer that guarantees the payment of principal and interest
What is the difference between an offer and a sale
an offer is the attempt to sell, a sake is a binding contract to transfer a security for value
What is the smallest order that can be placed for an institutional account?
There is no limit on institutional order sizes
under the national de minimis investment advisers are exempt from state registration if they solicit how many clients within the year
less than 6
The National Securities Markets Improvement Act of 1996 affects federal and state laws in what ways?
Federal Law will preempt State Law
What type of Security registration allows the administrator to require any information he decides is necessary
Qualification
Which type of state security registration is used when a security is being registered simultaneously with the SEC under he securities act of 1933
Coordination
What ould exonerate a seller from civil suit resulting form an illegal sale made in a state
Seller offers to buy back the security sold
How long are Registration Statements effective
one year from the effective dae
a Customer is upset with her agent for not servicing her accoutns properly and sends him a complaint letter about his actions what should the agent do?
Bring the customer complaint to his employer immediately -
Name an example of market manipulation
creating the illusion of active trading
A customer living in one state revieves a phone call from an agent in another state. A transaction between the two occures in yet another state. Under whose jurisdiction does the transaction fall?
Administrators of all three states involved