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Series 66 > Administration of the USA > Flashcards

Administration of the USA Flashcards

1
Q

What are the justifiable reasons for denying an individual’s registration?

A

Conviction for any felony or securities-related misdemeanor within the last 10 years

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2
Q

True or False: A gift of assessable stock is considered both an offer and sale.

A

True

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3
Q

Is the payment of a stock dividend considered an offer or sale?

A

No

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4
Q

Is the conversion of a bond into stock considered an offer or sale?

A

No

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5
Q

If shares of stock are freely given with the purchase of a bond, is this considered an offer and sale?

A

Yes

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6
Q

True or False: An Administrator may issue a cease-and-desist order before a violation has occurred.

A

True

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7
Q

Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days.

A

Administrative cease-and-desist orders may be appealed in a state court if application is made within 60 days.

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8
Q

An ________ is any attempt or solicitation to acquire or dispose of a security for value.

A

An offer is any attempt or solicitation to acquire or dispose of a security for value.

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9
Q

A _______ is any agreement or contract to dispose of a security for value.

A

A sale is any agreement or contract to dispose of a security for value.

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10
Q

True or False: Registration may be denied due to ANY misdemeanor convictions.

A

False. Registration may be denied for ANY felony conviction or securities-related misdemeanor conviction.

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11
Q

How may the failure to pay the proper filing fee be corrected?

A

By paying the appropriate amount

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12
Q

If an offer is made using television or radio, where is the offer considered to have been made?

A

In the state in which the broadcast or telecast originated

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13
Q

If an offer is made using the mail, where is the offer considered to have been made?

A

In the state from which it originated and the state to which it is directed

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14
Q

With newspaper offers, no offer is made if more than __________ of the circulation is outside of the publishing state.

A

With newspaper offers, no offer is made if more than two-thirds of the circulation is outside of the publishing state.

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15
Q

When may the Administrator cancel a registrant’s registration?

A

If the registrant has died, ceased doing business, been declared mentally incompetent or cannot be located

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16
Q

True or False: A stock dividend is considered a sale.

A

False

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17
Q

May the Administrator levy fines on a registrant?

A

No

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18
Q

When will an offer fall under an Administrator’s jurisdiction?

A

If the offer originated in, was directed in, or was accepted in the Administrator’s state

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19
Q

If the Administrator believes a person has violated or is about to violate the USA, may a stop order be issued?

A

Yes

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20
Q

Does the Administrator require proof of wrongdoing to initiate an investigation?

A

No, but she does need to be able to refer to a rule or order when starting the investigation.

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21
Q

When conducting an investigation of wrongdoing, is the Administrator limited to state boundaries?

A

No. The Administrator may subpoena books, records, and witnesses from inside and outside the state.

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22
Q

If found civilly liable for violating the USA, what is the penalty?

A

The original amount paid, plus the legal rate of interest, attorney fees, and court costs, minus any cash received

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23
Q

If the Administrator enjoins an agent’s registration and a hearing is requested, when must the hearing be held?

A

Within 15 days of the Administrator receiving a written request from the registrant

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24
Q

The appeal of an administrative order is made before a court of _________________________.

A

The appeal of an administrative order is made before a court of competent jurisdiction (state court).

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25
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.
26
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
27
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.
28
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.
29
Define jurisdiction.
The power to interpret and apply the law or the territorial range of authority or control.
30
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.
31
Can a BD punish one of its agents for responding to a subpoena?
No. This is a prohibited action.
32
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.
33
A registration withdrawal is effective ____ days after filing.
A registration withdrawal is effective 30 days after filing.
34
May the Administrator revoke the registration of a federally covered adviser?
No. However, she may require the IA to notice file.
35
What action may an Administrator take on receipt of a complaint regarding an ad that originated from another state?
Investigate the complaint
36
True or False: The Administrator may enjoin (issue an injunction) a registered individual or firm.
False. The Administrator may only issue a cease and desist order. The Administrator may not issue an injunction.
37
True or False: An Administrator is not required to provide written findings of fact when revoking a registration.
False. The Administrator must provide written notification, written findings of fact, and an opportunity for a hearing.
38
True or False: To revoke registration, Administrators must send registrants all documents created in the investigation.
False. The Administrator must provide written findings of fact. However, providing all documents is not required.
39
True or False: An agent may be arrested by the Administrator for refusing to cooperate with an investigation.
False. The Administrator does not have the authority to arrest a person who violates state law.
40
True or False: If FINRA issues an order against a firm, an Administrator may take action against a BD's registration.
True
41
True or False: An Administrator may not retroactively enforce orders and revocations.
True
42
True or False: Administrators are permitted to issue summary orders denying certain exemptions.
True
43
May the Administrator audit the books and records of a registered firm?
Yes. The Administrator may subpoena, audit, and inspect the books and records of registered firms.
44
If a client has been defrauded by an BD or IA, the firm may be required to ________ commissions/fees.
If a client has been defrauded by an BD or IA, the firm may be required to disgorge commissions/fees.
45
If a client has been defrauded by her BD or IA, what costs may she sue to recover? 6
1. The cost of the security or the cost of the advice, 2. commissions, 3. legal fees, 4. Court fees 5. interest, 6. less any income received
46
At the state level, who may appoint an officer to lead an investigation?
The Administrator
47
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.
48
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
49
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.
50
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.
51
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.
52
May the books and records of a federal covered adviser be subject to inspection by an Administrator?
Yes
53
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.
54
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.
55
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.
56
True or False: The exercise of convertible securities is considered a sale under the USA.
False
57
True or False: A warrant attached to the sale of a bond is considered a sale of the warrant.
True
58
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.
59
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.
60
For how long does the Administrator maintain jurisdiction over a registrant after a withdrawal of registration?
One year
61
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.
62
A person may appeal a stop order that is issued by the Administrator within _____ days.
A person may appeal a stop order that is issued by the Administrator within 60 days.
63
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.
64
The statute of limitations for criminal violations of the USA is ____ years.
The statute of limitations for criminal violations of the USA is five years.
65
Statute of limitations for USA civil violations is _____ yrs. after occurrence or ___ yrs. after discovery, whichever is first.
Statue of limitations for USA civil violations is three yrs. after occurrence or two yrs. after discovery, whichever is first.
66
A person subject to an order by an Administrator may appeal the order to the state court within _____ days.
A person subject to an order by an Administrator may appeal the order to the state court within 60 days.
67
Define assessable stock.
Stock that allows the issuing entity to demand additional funds from existing stockholders
68
Under the provisions of the USA, a hearing will be held ____ days after a written request.
Under the provisions of the USA, a hearing will be held 15 days after a written request.
69
What are some reasons for the Administrator denying the registration statement for a securities offering?
Filing false registration documents, issuer's business is illegal, spread is unfair, or failing to pay the filing fee.
70
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.
71
The Administrator has the power to issue a _____ ___ ______ order, but not an __________.
The Administrator has to power to issue a cease and desist order, but not an injunction.
72
True or False: Registration denial orders issued by an Administrator are final, binding, and may not be appealed.
False. If denied, a person is entitled to written notification and findings of fact and an opportunity for a hearing.
73
When is an offer subject to a specific state's securities laws?
When it originates in, is directed to and received in, or is accepted in the state
74
True or False: An Administrator may require a mutual fund to file its advertising.
False. Mutual fund advertising is filed with FINRA, not the Administrator.
75
True or False: The Administrator may confiscate records.
False. The Administrator may inspect records, but cannot confiscate them.
76
If a regulation is violated, an Administrator has what four basic tools that they may use to enforce the USA?
1. Orders issued by the Administrator 2. Actions against registration 3. Civil actions 4. Criminal actions
77
An administrator will have jurisdiction regarding an offer under what circumstances? 3
1. The offer originated in the state, or 2. The offer was directed to and received in a state, or 3. The offer was accepted in a state.
78
If an offer is made through a newspaper (and doesn't get the 2/3 exception), which Administrator has jurisdiction?
The Administrator of the state in which the newspaper is published has jurisdiction.
79
If an offer is made using television or radio, where is the offer originating from?
The state in which the camera or microphone is located.
80
When would the state in which an offer, being received by mail not have jurisdiction?
If the offer is only being received and accepted there because it was forwarded from another state (where the advisor had actually addressed it to). Note: The state in which the mail was forwarded from doesn't have jurisdiction either
81
Who/what falls under the definition of registrants under the USA? 5
1. BDs 2. IAs 3. Agents 4. IARs 5. Securities sold in the state
82
An Administrator may deny, suspend, or revoke a registration for punitive reasons; however, the ___________ or ___________ of registration is done for non-punitive reasons.
An Administrator may deny, suspend, or revoke a registration for punitive reasons; however, the cancellation or withdrawal of registration is done for non-punitive reasons.
83
Laws apply to __________, rules apply to __________ __________, and orders apply to ____________ ___________.
Laws apply to everyone, rules apply to defined persons, and orders apply to a specific person.
84
No prison sentence will be imposed if a person charged with criminal liability can do what?
Prove that they had no prior knowledge of the rule or order violated.

Series 66 (12 decks)

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