Authority Of The State Securities Administrator Flashcards
Every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value
Offer or offer to sell
True or false. A sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security
True
Every contract of sale, contract to sell, and disposition of a security or interest in a security for value
Sale or sell
refers to shares of stock for which the issuing company has the right to levy additional assessments on the stockholder.
“Assessable stock”
true or false. nonassessable stock is not considered a sale. However, if included as a free bonus with the purchase of something else (e.g. security, jewelry, a house). This would not be a gift and would in fact be considered an offer or a sale.
True
“a purported gift of assessable stock is considered to involve an offer and sale”
note
the legal authority to regulate securities activities that take place within the state
Jurisdiction
True or False.
The administrator always has jurisidiction over any offer made from his state, directed to his state, or accepted in his state.
true
a broker-dealer with no place of business in a state who deals with existing clients, who are temporarily in the state, is not defined as a broker-dealer in that state, and, therefore, need not register.
We call this the snowbird exemption
Note
Note
The admin would not have jurisdiction if the offer were made under any of the following circumstances
- Television or radio broadcast that originated outside of the state
- Bona fide newspaper or periodical published outside of the state
- Newspaper or periodical published inside the state but with more than two-thirds (66%)
of its circulation outside the state in the last year
Test topic alert
A radio or television program is considered to originate in the state where the microphone or camera is located, not the transmitter.
Who has jurisdiction in the case where a states newspaper finds that two thirds of their circulation is from outside the state?
no state would have jurisdiction
what is the difference between a rule and an order?
A rule applies to everyone, where as an order applies to a specific instance
A person may appeal an order of the Admin in court within _ days of order issuance
60 days
the composition or content of state securities law is the responsibility of the _ . not of _ agencies
state legislature, administrative agencies
Test topic alert
If the administrator of State wishes to investigate a BD registered in State A, but whose principal office is located in State B, does he need the okay of the State B Admin?
NO!
When can he go in?
The Admin can go in during normal business hours and doesn’t need to make an appointment
the legal term used to refer to a person who is the subject of an injunction
enjoined
a legal remedy in the form of a court order that compels a party to do or refrain from specific acts
injunction
If a party fails to comply with an injunction, they can be held in contempt of court and may face penalties such as fines or imprisonment.
Take Note
cease and desist orders are not the same as stop orders. C&Ds are directed to persons, requiring them to cease activities. Stop orders are directed to applications regarding registration of a security. Furthermore, stop orders require a hearing, while C&Ds do not.
has the power to deny, suspend, cancel, or revoke the registration of BDs, IAs, and IARs, as well as the registration of securities.
The Administrator
Test topic alert
If a person convicted of a misdemeanor in one state then moves to a state where that same crime is a felony, and the person were to then apply for registration, the Admin must consider the crime under the statutes of the state where it occured, not his own.
In other words, the Admin may only consider what is on the person’s record.
Test Topic Alert
If a person is subject to a disqualification by any SRO, even the NASD (before it became FINRA), for something that was not a violation of the USA, that would still be a possible cause for denial.
Test Topic Alert
Denial is generally limited to convictions for any felony or investment-related misdemeanor within the past 10 years.
However, these convictions (and even just being charged) must always be disclosed on the application for registration - there is no time limit.
Take Note
the public interest is not reason enough in itself to constitute denial. there must be an additional reason.
Test topic alert
other than when the Admin has acted summarily, no final order may be issued without the Admin:
- giving appropriate prior notice to the affiliated persons
- granting an opportunity for a hearing; and
- providing findings of fact and conclusions of law
Test Topic Alert
when conditions that led to the issuance of a stop order have changed for the better, the legal term used to describe the lifting of the stop order is Vacated (e.g. “the order has been vacated”)
