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Series 66 > Administration of the USA > Flashcards

Administration of the USA Flashcards

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Series 66 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
Q

Does the appeal of an administrative order act as a stay of the order?

A

No. The order remains in effect until the outcome of the hearing.

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26
Q

What is a letter of rescission?

A

An offer to buy back a security from a client when that security was sold in violation of the USA

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27
Q

A customer must respond to a letter of rescission within _____ days or lose the right to sue.

A

A customer must respond to a letter of rescission within 30 days or lose the right to sue.

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28
Q

True or False: The Administrator may bring a case in a civil court.

A

True. Both the Administrator and a private citizen may bring a case in civil court.

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29
Q

Define jurisdiction.

A

The power to interpret and apply the law or the territorial range of authority or control.

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30
Q

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

A

An offer (offer to sell) is any attempt or solicitation to dispose of a security for value.

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31
Q

Can a BD punish one of its agents for responding to a subpoena?

A

No. This is a prohibited action.

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32
Q

True or False: An individual may be denied registration due to lack of experience.

A

False. However, a lack of training, knowledge, and experience may be grounds for denial.

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33
Q

A registration withdrawal is effective ____ days after filing.

A

A registration withdrawal is effective 30 days after filing.

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34
Q

May the Administrator revoke the registration of a federally covered adviser?

A

No. However, she may require the IA to notice file.

35
Q

What action may an Administrator take on receipt of a complaint regarding an ad that originated from another state?

A

Investigate the complaint

36
Q

True or False: The Administrator may enjoin (issue an injunction) a registered individual or firm.

A

False. The Administrator may only issue a cease and desist order. The Administrator may not issue an injunction.

37
Q

True or False: An Administrator is not required to provide written findings of fact when revoking a registration.

A

False. The Administrator must provide written notification, written findings of fact, and an opportunity for a hearing.

38
Q

True or False: To revoke registration, Administrators must send registrants all documents created in the investigation.

A

False. The Administrator must provide written findings of fact. However, providing all documents is not required.

39
Q

True or False: An agent may be arrested by the Administrator for refusing to cooperate with an investigation.

A

False. The Administrator does not have the authority to arrest a person who violates state law.

40
Q

True or False: If FINRA issues an order against a firm, an Administrator may take action against a BD’s registration.

A

True

41
Q

True or False: An Administrator may not retroactively enforce orders and revocations.

A

True

42
Q

True or False: Administrators are permitted to issue summary orders denying certain exemptions.

A

True

43
Q

May the Administrator audit the books and records of a registered firm?

A

Yes. The Administrator may subpoena, audit, and inspect the books and records of registered firms.

44
Q

If a client has been defrauded by an BD or IA, the firm may be required to ________ commissions/fees.

A

If a client has been defrauded by an BD or IA, the firm may be required to disgorge commissions/fees.

45
Q

If a client has been defrauded by her BD or IA, what costs may she sue to recover? 6

A
  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
Q

At the state level, who may appoint an officer to lead an investigation?

A

The Administrator

47
Q

If an agent has withdrawn registration, the Administrator may still take action for ___ year(s) after the withdrawal.

A

If an agent has withdrawn registration, the Administrator may still take action for one year after the withdrawal.

48
Q

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?

A

Both states

49
Q

Under the Uniform Securities Act, the statute of limitations for fraud is ____ years.

A

Under the Uniform Securities Act, the statute of limitations for fraud is five years.

50
Q

The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.

A

The statute of limitations for criminal violations of the Uniform Securities Act is five years.

51
Q

May an Administrator subpoena records in another state to investigate potential violations that occurred in his own state?

A

Yes, the Administrator has broad inspectorial power, which stretches beyond his own state.

52
Q

May the books and records of a federal covered adviser be subject to inspection by an Administrator?

A

Yes

53
Q

True or False: An Administrator may cancel a registration without the opportunity for a hearing.

A

True. Cancellation may be due to the death of an agent or a firm no longer being in business.

54
Q

If a cease-and-desist order is issued against an agent, the agent may file an appeal within _____ days.

A

If a cease-and-desist order is issued against an agent, the agent may file an appeal within 60 days.

55
Q

Is being charged with a felony or securities-related misdemeanor grounds for statutory disqualification?

A

No. Statutory disqualification is due to conviction for any felony or securities-related misdemeanor in the past 10 yrs.

56
Q

True or False: The exercise of convertible securities is considered a sale under the USA.

A

False

57
Q

True or False: A warrant attached to the sale of a bond is considered a sale of the warrant.

A

True

58
Q

May the Administrator initiate criminal or civil liability action against a registrant?

A

Yes. An Administrator may initiate action, but may not impose fines or penalties for violations.

59
Q

True or False: A gift of non-assessable stock is considered a sale.

A

False. However, the gift of assessable stock IS considered both an offer and a sale.

60
Q

For how long does the Administrator maintain jurisdiction over a registrant after a withdrawal of registration?

A

One year

61
Q

If the Administrator believes a person has violated or is about to violate the USA, may he issue an injunction?

A

No. The Administrator may not issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.

62
Q

A person may appeal a stop order that is issued by the Administrator within _____ days.

A

A person may appeal a stop order that is issued by the Administrator within 60 days.

63
Q

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

A

The maximum criminal penalty for violations of the USA is three years in prison and/or up to a $5,000 fine.

64
Q

The statute of limitations for criminal violations of the USA is ____ years.

A

The statute of limitations for criminal violations of the USA is five years.

65
Q

Statute of limitations for USA civil violations is _____ yrs. after occurrence or ___ yrs. after discovery, whichever is first.

A

Statue of limitations for USA civil violations is three yrs. after occurrence or two yrs. after discovery, whichever is first.

66
Q

A person subject to an order by an Administrator may appeal the order to the state court within _____ days.

A

A person subject to an order by an Administrator may appeal the order to the state court within 60 days.

67
Q

Define assessable stock.

A

Stock that allows the issuing entity to demand additional funds from existing stockholders

68
Q

Under the provisions of the USA, a hearing will be held ____ days after a written request.

A

Under the provisions of the USA, a hearing will be held 15 days after a written request.

69
Q

What are some reasons for the Administrator denying the registration statement for a securities offering?

A

Filing false registration documents, issuer’s business is illegal, spread is unfair, or failing to pay the filing fee.

70
Q

True or False: The Administrator may issue an injunction.

A

False. Only a court may issue an injunction; however, the Administrator may issue a cease and desist order.

71
Q

The Administrator has the power to issue a _____ ___ ______ order, but not an __________.

A

The Administrator has to power to issue a cease and desist order, but not an injunction.

72
Q

True or False: Registration denial orders issued by an Administrator are final, binding, and may not be appealed.

A

False. If denied, a person is entitled to written notification and findings of fact and an opportunity for a hearing.

73
Q

When is an offer subject to a specific state’s securities laws?

A

When it originates in, is directed to and received in, or is accepted in the state

74
Q

True or False: An Administrator may require a mutual fund to file its advertising.

A

False. Mutual fund advertising is filed with FINRA, not the Administrator.

75
Q

True or False: The Administrator may confiscate records.

A

False. The Administrator may inspect records, but cannot confiscate them.

76
Q

If a regulation is violated, an Administrator has what four basic tools that they may use to enforce the USA?

A
  1. Orders issued by the Administrator
  2. Actions against registration
  3. Civil actions
  4. Criminal actions
77
Q

An administrator will have jurisdiction regarding an offer under what circumstances? 3

A
  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
Q

If an offer is made through a newspaper (and doesn’t get the 2/3 exception), which Administrator has jurisdiction?

A

The Administrator of the state in which the newspaper is published has jurisdiction.

79
Q

If an offer is made using television or radio, where is the offer originating from?

A

The state in which the camera or microphone is located.

80
Q

When would the state in which an offer, being received by mail not have jurisdiction?

A

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
Q

Who/what falls under the definition of registrants under the USA? 5

A
  1. BDs
  2. IAs
  3. Agents
  4. IARs
  5. Securities sold in the state
82
Q

An Administrator may deny, suspend, or revoke a registration for punitive reasons; however, the ___________ or ___________ of registration is done for non-punitive reasons.

A

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
Q

Laws apply to __________, rules apply to __________ __________, and orders apply to ____________ ___________.

A

Laws apply to everyone, rules apply to defined persons, and orders apply to a specific person.

84
Q

No prison sentence will be imposed if a person charged with criminal liability can do what?

A

Prove that they had no prior knowledge of the rule or order violated.

Series 66 (12 decks)

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