Administration of the USA Flashcards
What are the justifiable reasons for denying an individual’s registration? 2
- Conviction for any felony (any time) or
2. securities-related misdemeanor within the last 10 years
True or False: A gift of assessable stock is considered both an offer and sale.
True
Is the payment of a stock dividend considered an offer or sale?
No
Is the conversion of a bond into stock considered an offer or sale?
No
If shares of stock are freely given with the purchase of a bond, is this considered an offer and sale?
Yes
True or False: An Administrator may issue a cease-and-desist order before a violation has occurred.
True
Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days.
Administrative cease-and-desist orders may be appealed in a state court if application is made within 60 days.
An ________ is any attempt or solicitation to acquire or dispose of a security for value.
An offer is any attempt or solicitation to acquire or dispose of a security for value.
A _______ is any agreement or contract to dispose of a security for value.
A sale is any agreement or contract to dispose of a security for value.
True or False: Registration may be denied due to ANY misdemeanor convictions.
False. Registration may be denied for ANY felony conviction or securities-related misdemeanor conviction.
If an offer is made using television or radio, where is the offer considered to have been made?
In the state in which the broadcast or telecast originated
If an offer is made using the mail, where is the offer considered to have been made?
In the state from which it originated and the state to which it is directed
With newspaper offers, no offer is made if more than __________ of the circulation is outside of the publishing state.
With newspaper offers, no offer is made if more than two-thirds of the circulation is outside of the publishing state.
Under what situations may the Administrator cancel a registrant’s registration? 4
If the registrant has
- died,
- ceased doing business,
- been declared mentally incompetent or
- cannot be located
True or False: A stock dividend is considered a sale.
False
May the Administrator levy fines on a registrant?
No
When will an offer fall under an Administrator’s jurisdiction?
If the offer originated in, was directed in, or was accepted in the Administrator’s state
If the Administrator believes a person has violated or is about to violate the USA, may a stop order be issued?
Yes
Does the Administrator require proof of wrongdoing to initiate an investigation?
No, but she does need to be able to refer to a rule or order when starting the investigation.
When conducting an investigation of wrongdoing, is the Administrator limited to state boundaries?
No. The Administrator may subpoena books, records, and witnesses from inside and outside the state.
If found civilly liable for violating the USA, what is the penalty? 5
1. The original amount paid, plus 2. the legal rate of interest, 3. attorney fees, and 4. court costs, 5. minus any cash received
The appeal of an administrative order is made before a court of _________________________.
The appeal of an administrative order is made before a court of competent jurisdiction (state court).
Does the appeal of an administrative order act as a stay of the order?
No. The order remains in effect until the outcome of the hearing.
What is a letter of rescission?
An offer to buy back a security from a client when that security was sold in violation of the USA
A customer must respond to a letter of rescission within _____ days or lose the right to sue.
A customer must respond to a letter of rescission within 30 days or lose the right to sue.
True or False: The Administrator may bring a case in a civil court.
True. Both the Administrator and a private citizen may bring a case in civil court.
Define jurisdiction.
The power to interpret and apply the law or the territorial range of authority or control.
An _______ is any attempt or solicitation to dispose of a security for value.
An offer (offer to sell) is any attempt or solicitation to dispose of a security for value.
Can a BD punish one of its agents for responding to a subpoena?
No. This is a prohibited action.
True or False: An individual may be denied registration due to lack of experience.
False. However, a lack of training, knowledge, and experience may be grounds for denial.
If an agent has withdrawn registration, the Administrator may still take action for ___ year(s) after the withdrawal.
If an agent has withdrawn registration, the Administrator may still take action for one year after the withdrawal.
A prospectus is mailed by an agent in one state to a client in another state. In which state(s) is the offer being made?
Both states
Under the Uniform Securities Act, the statute of limitations for fraud is ____ years.
Under the Uniform Securities Act, the statute of limitations for fraud is five years.
The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.
The statute of limitations for criminal violations of the Uniform Securities Act is five years.
May an Administrator subpoena records in another state to investigate potential violations that occurred in his own state?
Yes, the Administrator has broad inspectorial power, which stretches beyond his own state.
May the books and records of a federal covered adviser be subject to inspection by an Administrator?
Yes
True or False: An Administrator may cancel a registration without the opportunity for a hearing.
True. Cancellation may be due to the death of an agent or a firm no longer being in business.
If a cease-and-desist order is issued against an agent, the agent may file an appeal within _____ days.
If a cease-and-desist order is issued against an agent, the agent may file an appeal within 60 days.
Is being charged with a felony or securities-related misdemeanor grounds for statutory disqualification?
No. Statutory disqualification is due to conviction for any felony or securities-related misdemeanor in the past 10 yrs.
True or False: The exercise of convertible securities is considered a sale under the USA.
False
True or False: A warrant attached to the sale of a bond is considered a sale of the warrant.
True
May the Administrator initiate criminal or civil liability action against a registrant?
Yes. An Administrator may initiate action, but may not impose fines or penalties for violations.
True or False: A gift of non-assessable stock is considered a sale.
False. However, the gift of assessable stock IS considered both an offer and a sale.
If the Administrator believes a person has violated or is about to violate the USA, may he issue an injunction?
No. The Administrator may not issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.
The maximum criminal penalty for violations of the USA is _____ years in prison and/or up to a $______ fine.
The maximum criminal penalty for violations of the USA is three years in prison and/or up to a $5,000 fine.
Define assessable stock.
Stock that allows the issuing entity to demand additional funds from existing stockholders
True or False: The Administrator may issue an injunction.
False. Only a court may issue an injunction; however, the Administrator may issue a cease and desist order.
When a broker-dealer has filed an application to withdraw its registration, when will it become effective?
When the Administrator determines whether there is an action for revocation of the firm’s license pending at the time the application was filed.
What could result in a denial of a broker-dealers application for registration with the Administrator?
-Any action for a foreign securities regulator may result in a denial
An agent offered and sold an unregistered, nonexempt security to several of his clients in State A. These clients subsequently lost a considerable amount of money in this investment. Under the Uniform Securities Act what can the clients do?
The clients may initiate a civil lawsuit to recover their losses
What action may the state securities Administrator take without giving the registrant an opportunity for a hearing?
Cancel a registration
What actions fall under the jurisdiction of a state securities Administrator?
- The purchase of options through the Internet by a state resident
- The offer of securities by an out-of-state broker to a resident of the state.
