Question 1

State securities laws are based on a model law called

Accepted Answer

The Uniform Securities Act (USA) Ch 01(R)

Question 2

The two main purposes of the USA

Accepted Answer

1). Minimize duplication of federal and state registration requirements. 2). Prevent Fraud (Blue Sky Laws). Ch 01(R)

Question 3

Person (under the USA)

Accepted Answer

``` An individual OR legal entity, including: 1). individuals 2). corporations 3). partnerships 4). associations 5). trusts 6). unincorporated organizations 7). governments (or govt sub-divisions) Person does NOT include MINORS Ch 01(1) ```

Question 4

It is unlawful for any "person" (compensated or not) to

Accepted Answer

1). Employ any device to scheme or defraud. 2). Make any untrue statements of a material fact, or to omit a material fact. Ch 01(1)

Question 5

Broker-Dealer

Accepted Answer

A broker-dealer is any person (brokerage firm) engaged in the business of Effecting transactions in securities for others or for his own account. 1). Agency. Broker. Commission. 2). Dealer. Principal from own inventory (mark-up/mark-down). Ch 01(1)

Question 6

Persons excluded from the term B-D

Accepted Answer

1). Agents 2). Issuers 3). Banks, Savings Institutions, and Trust Companies 4). Person who has no place of business in a state - if the firm effects transactions exclusively with or through other non-public institutional clients (e.g. other BDs). 5). Person who has no place of business in this state (e.g. a BD does not have to register in the state that a client is vacationing in to do business). Ch 01(1)

Question 7

USA was designed to protect

Accepted Answer

the Investing Public (individual investors / individual persons). - Private sector employees (e.g. corps, small businesses, business owners) & - Public sector employees (e.g. federal, state, local government) Ch 01(1)

Question 8

Agent

Accepted Answer

An agent is any individual who represents EITHER a broker-dealer OR an issuer in effecting purchase or sales of securities. - RRs are employees of brokerage firms & must register as an Agent. - An individual who represents an Issuer must register as an Agent. ``` You are an agent if you effect purchases or sales of securities on behalf of clients (getting paid a commission is not a requirement). Ch 01(1) ```

Question 9

Dual Registration Req

Accepted Answer

``` If an agent represents MORE than 1 BD firm, registration with and supervision BY both firms is required. Ch 01(1) ```

Question 10

Agent -- Issuer Exclusions

Accepted Answer

You’re not going to be registered as an Agent if you are an individual who works for an issuer in effecting transactions in: 1). U.S. Govt Securities 2). Municipal Securities 3). Canadian Govt Securities 4). Banks 5). Promissory Notes and Investment Contracts Ch 01(1)

Question 11

Situations where you would have to register as an Agent

Accepted Answer

You would have to be register as an Agent if you were going to sell securities issued by - Insurance Companies and - Federal Savings & Loans Assoc. (these are exempt securities, but those who transact them are not exempt from having to reg as Agents) Ch 01(1)

Question 12

What are Exempt Transactions under Agent -- Issuer Exclusions?

Accepted Answer

Isolated non-issuer transactions: 1). Normal secondary market trades that happen all day long, every day by investors. 2). Transactions in certain covered securities. 3). Transactions w/ investing employees, partners, or directors of the issuer if no commission (or other renumeration) is paid. Ch 01(1)

Question 13

Agent — Broker/Dealer Exclusions

Accepted Answer

Agent would also not include: 1). Individual who represents a BD in one state, and is servicing an existing client who is temporarily in another state. ``` 2). Partner, Officer, or Director of a Broker-Dealer or Issuer. (Such executives would only be considered an agent if they personally effect transactions aka. have clients). Ch 01(1) ```

Question 14

What can an Assistant of an Agent be? What can they do and not do?

Accepted Answer

Can be unregistered. May - Post and update account records - Directed and supervised by the agent May not - Handle trades for clients - Make recommendations to clients ``` Assistants or interns who are registered are permitted to act as Agents. Ch 01(1) ```

Question 15

Investment Adviser

Accepted Answer

Is a person (not necessarily a human being) Primarily talking about an investment advisory firm — a person WHO for compensation — engages in the business of advising others either directly -or- indirectly (through publications or writings). In order to be defined as an Investment Advisor: A). written or oral Advice B). engaged in the Business of giving advice about securities. C). receive Compensation for services. Ch 01(2)

Question 16

Investment Advisor — Exclusions

Accepted Answer

1). Investment Advisor Representatives (IARs) 2). BANKS, Savings Institutions, Trust Companies, and Investment Companies. (Excluded even if they charge an advisory fee for their services.) 3) . The Late People ( Lawyers Accountants Teachers, and Engineers) Are excluded if their advice is incidental to the practice of their profession. 4) . BDs and Agents are excluded if their advice is Incidental to normal brokerage activities and NO extra compensation is charged. 5) . Publishers who give general advice about securities that is not specific to certain clients, and does not respond to specific questions from readers. 6) . Federal Covered Advisors ``` 7). Employee Benefit Plans (401k Plan) Ch 01(2) ```

Question 17

Acting as an IA & BD on the Same Transaction

Accepted Answer

``` An Investment Advisor may also be registered as a Broker-Dealer, and be paid an Advisory fee SEPARATE from any commissions it earns on securities transactions. But when a firm acts in BOTH (as an IA and a BD) capacities on the same transaction, it requires written disclosure to the client that the firm is acting as the Broker-Dealer and as an Investment Advisor. Ch 01(2) ```

Question 18

Investment Advisor Representative (IAR)

Accepted Answer

An Investment Advisor Representative is defined as any individual partner, officer, director, employee, or associate of an IA who: Makes recommendations or gives advice regarding securities Manages clients’ accounts or portfolios Determines the suitability of recommendations Solicits, sells, or negotiates investment advisory services Supervises employees who perform the previous listed services. Ch 01(2)

Ch 01 Uniform Securities Act - Definitions Flashcards

Understand USA terminology.

Brainscape's Knowledge GenomeTM

Ch 01 Uniform Securities Act - Definitions Flashcards

Understand USA terminology.

Brainscape's Knowledge Genome^TM