Administrators

Question 1

Insider trading penalties:

Answer 1

Civil:
Three times profit plus disgorgement
Investors may sue for damages

Criminal:
$5m / 20 years
Corporations: $25m

Question 2

Four grounds for cancellation of registration:

Answer 2

1. No longer lives in state
2. Ceased to do business in state
3. Has been found mentally incompetent
4. Cannot be located after reasonable search

Question 3

When do withdrawals become effective?

Answer 3

30 days after filing

Question 4

Time limit of civil liability?

Answer 4

Earlier of:
Three years from violation or
Two years from discovery

Question 5

If person had no prior knowledge of rule violated, what’s maximum penalty?

Answer 5

$5k

If prior knowledge then 3 years jail

Question 6

What grounds may Administrator use to deny an agent registration?

Answer 6

Material facts: employment history, bankruptcy etc

Misdemeanours within last ten years only if securities related

Question 7

What grounds can an Administrator use to deny a BD registration?

Answer 7

History or condition of applicant or a controlling person (felony, suspension).
Insolvency of BD - but not of an individual controlling person

Question 8

Terms under which Administrator can deny, suspend or revoke a security registration?

Answer 8

Mostly common sense but includes seller fee too high.
Can’t do so based on facts known when became effective, unless proceedings started within 30 days.
Written notification and registrant can ask for a hearing which must happen within 15 days.

Question 9

If Firm A acquires Firm

B, a NY BD, what Firm A do?

Answer 9

Firm A must register in NY but need not pay fee for remainder of that year as Firm B had already paid it.

Question 10

Two additional requirements an Administrator might impose on a registrant…

Answer 10

1. Advertise intent

2. Take an exam

Question 11

How long must Surety Bonds be maintained for?

Answer 11

Three years after ceasing business

Question 12

Administrators allow what in lieu of posting a cash bond?

Answer 12

Securities. Retains discretion on type and amount.

Question 13

Are you considered an Agent of the Issuer is the issuer’s securities are exempt?

Answer 13

No

Also applies if transaction is exempt

Question 14

What must someone applying for registration as an agent disclose about financial position?

Answer 14

Any tax lien and unsatisfied judgement and any bankruptcy within last 10 years
Once registered - if occurs, disclose within 30 days

Question 15

An breaching offer is made but no sale occurs… who has jurisdiction?

Answer 15

No civil liability as no sale occurred and therefore damages can’t exist.
Administrator has jurisdiction