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Series 66 BL > Bl 66 > Flashcards

Bl 66 Flashcards

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Series 66 flashcards
1
Q

Non person

A

Dead stupid
Teenager

Deceased
Incompetent
Minor

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2
Q

Broker/dealer

A

Person engaging in securities transactions for the benefits of others or themselves

Others broker

Themselves dealer(from own inventory)

Must register as broker dealer if

If you have physical location like office or you have client who is resident in that state

Can be any kind of client and any number of clients

Not required to register if you

Have no physical office

No clients that reside in that state.
If they are institutions or issuers(not general public)

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3
Q

What is an agent(RR)

A

They accept or place orders for securities transactions

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4
Q

agent must register when

A

accepting or placing orders for securities transactions

company’s who accept or place orders for securities transactions are non exempt issuer

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5
Q

agent doesn’t need to register when

A

sales assistants or interns. They need to register if they accept or place orders for securities transactions

with exempt issuer- bank, muni, gov, non profit, religious, etc

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6
Q

Investment adviser definition

A

in the business of providing investment advice

holds themselves out to the public as investment advisor

receives economic benefit for that advice.

MUST LATCH ON TO IN THE BUSINESS. it is a FIRM.

considered a FIDUCIARY

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7
Q

are BDs under fiduciary obligation

A

no

agents are not
banks are not
individuals who work for IA are not

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8
Q

Excluded from definition of IA

A

LATE

lawyers
accountants
teachers
engineers

if its cpa provides investment advice for fee he must register

finance professor gives investment seminars on weekend for fee. must register

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9
Q

national securities markets improvement act of 96

A

Separate advisers into 2 categories

FED l State

here is fed

If IA manages client assets in excess of 110 mill they then only register with the feds, but still must pay filing feels with state.

States may also enforce anti fraud.

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10
Q

what authority does state administrator have over a fed covered adviser

A

anti fraud

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11
Q

what defines state registered IA under ISMIA 96

A

those advisors managing less than 100 million in assets under management

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12
Q

Fed covered Advisor

A

must register with SEC only if manage over 110 mill under management

investment advisers of mutual fund companys

not register if private advisor
manages venture capital fund
foreign adviser

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13
Q

state registered advisors and registration

A

must register if they have office in the state or clients who are residents of that state.

dont need to register if dont have an office

no more than 5 clients (deminimus exemption)

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14
Q

investment adviser representative

and registration

A

natural living person.

Do we work for fed covered adviser or state covered adivsor?

fed covered ADV
must register with state administrator
must register where home office is or any state where you maintain an office.

not required to register if you have no office

state IAR
must register if have an office in state or clients who are residents in that state unless you have no more than 5 clients.

no register if you have no more than 5 clients
no office

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15
Q

agents and IARS registration procedures

A

applications
fingerprints
felony CONVICTION over past 10 years will disqualify
securities midemeanors disqualify

must sign consent to service of process
must pay filing fees
must pay test
registration becomes effective on noon on the 30th day
administrator must clear

registration expires every dec 31. ***

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16
Q

B/Ds and IAS registration procedures

A

net capital requirements
IA’S NCR is 10k or 35k
if IA physically holds possession of customer assets, then they have higher financial requirements
NCR must be for home state

B/Ds ncr no more than what SEC requires
may be required to post serety bond(ether cash or securites can replace this)

a successor firm(one firm buys another) must refile application. do not pay a filing fee.

have post registration requirements- books and records
ias 5/2, bds is 3/2 . required to be readily accessible

advertising always has to be filed with home state

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17
Q

cloud service

A

firms must have written supervisory procedures in place to handle data storage and cyber security.

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18
Q

what if an IA falls below minimum net capital

A

must notify the administrator within one day and then submit a plan 1 day from notification for how they plan to fix this problem.

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19
Q

investment adv act 1940

A

federal

Registration of federally covered advisers with form adv
name goes on adv, education, criminal background, affiliations
net capital requirement for fed covered advisers is nothing
rigistration effective 45 days
withdraw is 60

all advisors have brochure rule(form adv part 2)
State advisors at least 48 hours prior to contact or customer gets auto 5 day free look period**

resend- if there are material changes or if customer requests them

fed brochure rule. at or before to contract
must resend annually within 120 days of fiscal year end

advisor contract- no assignment(involved with verger and application) no assingment without written client consent)***

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20
Q

everything is 30 for . who is 45

A

states

fed covered advisors

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21
Q

what is not a security

A

fixed insurance
commodities
futures contracts

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22
Q

coordination

becomes effective when

A

if there is fed registration requirement then you do coordination

coordinates state with fed

becomes effective when cleared by SEC

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23
Q

instrate offering uses coordination or qualification

cleared by who

A

qualification

administrator

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24
Q

only 2 methods for registration

A

coordination and qualification

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25
Q

notice filing

A

for those securities that are federally covered.

method for paying filing fees

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26
Q

all new mutual funds use what between coordinatio nqualification notice filing

A

notice filing

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27
Q

exempt securities under state law

A 
munis
gov
bank/insurance
non profits religious orgs
canadian gov securities(all branches)
any other foreign gov(fed only)
common carriers(transportation companies)
Comerical paper(less than 270 days)
28
Q

is it illegal to sell unregistered non exempt securites

A 
yes except for exempt transactions like 
if they are unsolicited transactions
between financial institutions 
private placements(accredited investor)
up to 10 non accredited solicitations 
sales of unregistered securities that are involved with sheriff sale or bankruptcy
29
Q

administrator authority(jurisdiction)***

suspending registrations rules

A

authority over any offer or sale of securities that originates in there state, directed to their state, or accepted in their state.**

authority to deny revoke or suspend a registration. must have 2 reasons and one must be in the publics interest**

Other reasons
insolit(bankrupt) could be reason
felony conviction within 10 years could be reason
disenjoined by some other regulatory authority.
combination of lack or experience knowledge training(can’t be just lack of experience)

30
Q

if supervisor of bd is suspended.

A

agents are temporarily suspended. Has 30 days to change bds

31
Q

criminal penalties under usa

statute of limitation for being sued for some illegal activity

A

3 years prison/ or 5000 fine for criminal penalties

3 years from occurance of the illegal activity or 2 years from discovery(which ever date comes first)

32
Q

right of recission

A

opportunity for customer to get all money back plus the administrator has standard interest rate they have to pay plus give back legal fees. dividends /interest is subtracted.

or customer can keep security.

has 30 days to make up mind.

33
Q

SEC release IA 1092

A 
financial planner(must register as IA)
sports or entertainment agent(must register as IA)
Pension consultants(must register as AI)
34
Q

IA solicitor

A

find this in book

35
Q

communications cant do
who can use RIA
hedge clauses
past performance

A

advertisement testimonials(saying you are client of firm)
firm can use RIA. you cannot
cant say firm is sec approved
no hedge clauses
past performance history as long as you use all past performance.

36
Q

compensation**

A

can get fees and commissions(can get at same time and from multiple sources)

you can give discount on fees as long as it is disclosed in brochure

compensated by performance- prohibited except for an individual client who has 2 million in net worth and at least 1 million invested. and except for hedge funds.
must be percentage of net gain and has to be for specific time period and against peer portfolio.

37
Q

wrap fee vs performance

A

fixed percentage this is not performance based compensation

38
Q

current asset

A

cash equivalents
marketable securities
accounts receivable
inventories

39
Q

fixed assets

A

plant and equipment

40
Q

current liabilities

A

accounts payable

interest paid this year

41
Q

long term liabilities

A

remaining interest

42
Q

current ratio

A

Current assets/current liabilities

43
Q

quick ratio from brian lee

A

ca(excluding inventories)/cl

44
Q

range

A

difference between largest number and smallest

45
Q

beta

A

measure of systematic risk as compared to overall market

46
Q

alpha

A

difference between current beta and historic beta

unsystematic risk

47
Q

correlation

A

you want negative

48
Q

standard deviation

A

how much did it move away from its average.

49
Q

risk adjusted return

sharpe ratio

A

av return- risk free return/standard deviation

50
Q

want npv to be

A

greater than 0

51
Q

duration

A

how long it takes bond to repay principle through interest

52
Q

what law regulates unit investment trusts

A

securities act 1933

53
Q

closed end management

etfs

in relation to nav

A

price can be above or below actual value of nav

54
Q

which sales load offers contingent deferred sales charge

A

B

55
Q

UIT

A

A unit investment trust (UIT) is a type of investment company whose units are sold in the secondary market and is generally unmanaged, or passively managed as the money manager initially selects the securities to be included in the portfolio and then holds those securities until they mature or the UIT terminates.

56
Q

ease of formation chart

liability

taxes

A 
sole prop(full)(owner)
llc(limited)(owner)
s corp(lim)(owner)
gen part(full)(owner)
c corp(lim)(business/owner)
57
Q

simple trust

A

income must be distributed on annual basis

58
Q

complex trust

A

can accumulate income

59
Q

life trusts

A

created while someone living

60
Q

testamentary trust

A

will involved

created while someone is dead

61
Q

grantor

A

settlor

person who is providing the assets to the trust

62
Q

how does trustee determine how assets are invested when multiple beneficiaries are in trust

A

based off of investment objective in trust agreement

63
Q

what happens if bene dies in trust

A

assets go to heirs(remanderman)

64
Q

per stirpes

A

split original beneficiaries portion

65
Q

Alternative Minimum Tax

A

interest on industrial Development Revenue Bond

Series 66 BL (3 decks)

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