Ch. 3 Flashcards
Identify the acronym: CRD
Central Registration Depository
Is there a limit to the amount of net capital the Administrator may require of a BD?
Yes. The Administrator may not set a requirement that exceeds the federal (SEC) requirement.
What is a consent to service of process?
A document that appoints the Administrator as attorney for any non criminal legal complaints issued against a registrant
May the Administrator set net capital requirements for BDs?
Yes
If an agent has applied for registration, but has not yet heard back from the Administrator, what may she sell?
The agent is not permitted to sell securities. If she is properly licensed, she may sell life insurance or fixed annuities
May an agent whose client is visiting another state sell securities to the client without wing registered in that state?
Yes, provided the client is in the state temporarily
In state law, individuals who represent BDs in effecting securities transactions are referred to as ________.
Agents
What is the purpose of a consent to service of process?
To appoint the Administrator as the applicants attorney to receive and process any non criminal legal complaints.
T/F: In state law, individuals representing issuers in effecting securities trades are ALWAYS deemed agents.
F; individuals are not deemed agents if representing issuers of exempt securities or effecting exempt transactions
An individual who represents an issuer in selling registered, non exempt securities for compensation is an ________.
Agent
T/F: The USA requires all employees of a BD to register.
F; only those representing a BD in effecting transactions (as an agent) must register
T/F: An employee who is hired to assist in selling IPO shares is required to be registered.
T
If a BD or an IA ceases operations, how long must it maintain a surety bond?
Surety bonds must be maintained for three years after the firm ceased operations
A client of a Canadian BD is visiting the US. May the agent do business with her without registering in the state?
Yes. Since she is an existing client of the Canadian BD, business may continue in the state
A BD in New York gets an order from a client who is on vacation in Florida. Does the firm need to register in Florida?
No. Registration is not required since the client is an existing client who is temporarily in Florida
To apply for a securities license, a person must file Form ____ with FINRA.
U4
T/F: An agent may sell fixed annuities if she is not yet registered with the Administrator.
T; since fixed annuities are not securities, registration with the Administrator is not required
T/F: A consent to Service of Process must be filed by BDs, but not their agents.
F; a consent to service of process is required of all registrants
May the Administrator set minimum net capital requirements for BDs?
Yes, but the requirement on BDs may not exceed the federal (SEC) requirement.
Is an individual who represents a BD in the sale of Treasury bonds considered an agent?
Yes, since anyone representing a BD in the same of securities is an agent
Is an individual who represents a BD in the sale of a private placement considered an agent?
Yes, since anyone representing a BD in the sale of securities is an agent
T/F: On Form U4, a person must disclose any aliases or previously used names.
T; any Alia’s or previously used name could simply include a persons maiden name
T/F: Canadian agents cannot effect trades with existing Canadian clients who are temporarily in the US.
F; provided the relationship with the client existed prior to entering the US, trades may be effected
Is an individual who represents an issuer in the sale of registered stock considered an agent?
Yes. An individual who represents an issuer of securities being offered publicly must register as an agent
Who must sign a Consent to Service of Process?
Any issuer, BD, IAR, or agent initially registering to engage in business within a state
If a person works for a federally chartered bank, is her required to register with the SEC or a state Administrator?
No. Only non clerical employees of broker dealers and investment advisers are required to register
T/F: A partner, officer, or director of a BD is always considered an agent of a BD.
F; a partner, officer, or director is deemed an agent of a BD if she is involved in the purchase/sale of securites
Is an individual who represents an issuer in the sale of the issuers stock to its underwriter considered an agent ?
No, since the individual is involved in an exempt transaction
List some of the exclusions from the definition of a BD.
Agent, issuer, bank, or a BD with no office in the state that only deals with institutions or its existing clients
May an agent of a BD located in Mexico do business with a client in the US without registering in the state?
No. BDs of Mexico are required to register in the US to effect securities transactions in a state.
Under the USA, is a bank holding company that occasionally executed securities trades excluded from the BD definition?
No. Under the USA, bank holding companies are not excluded from the BD definition
Is a firm is considered a BD if it has an office in a state, but only deals with institutional clients in the state?
Yes, because the firm established an office in the state
BD records must be kept for at least ____ years.
Three
Is an individual who represents a BD in the sale of a banks stock considered an agent?
Yes.
T/F: If a BD registered in a state on March 3, it must pay a registration fee for the full year.
T
Who must file a Form U4 in order for an agent to register in a state?
Both the agent and the employing BD
If the Administrator requires an IA, BD, or agent to post a bond, is a deposit of cash or securities acceptable?
Yes. However, the Administrator determines the amount and types of securities that are appropriate.
Is an individual who represents an issue in the sale of stock to a bank considered an agent?
No, since the individual is involved in an exempt transaction
T/F: Under the USA, a Canadian BD may solicit a Canadian client to open up an account while he is in the US.
F; Canadian BDs may service existing accounts of Canadians who are in the US, but cannot open new accounts.
A BD that is located and licensed in Canada may contact what types of individuals in the US?
Existing clients who are temporarily in the US
If a firm meets the BD definition in the state, are there any exemptions from register action under the USA?
No. Firms that meet the BD definition are required to register in the state
Is a sale assistant for a BD who accepts unsolicited orders from clients considered an agent?
Yes.
Is an individual who represents the issuer in the sale of Treasury bonds considered an agent?
No, since the individual is involved in the sale of exempt securities
A _________ bond is posted to cover the potential costs of legal action taken against certain persons.
Surety
With whom may an agent split commissions?
Another agent who is registered with the same BD, or another BD that is under common control
Is there a registration exemption for agents who conduct business in a state? If so, what are the guidelines?
Yes, no place of business in state and a client visits that state or existing client moves to the state (regist. Pending)
Is a bank whose trust department occasionally executed securities transactions considered a BD?
No. Banks are excluded from the BD definition
T/F: An agent whose client moves to a new state may not contact the client until registered in the new state.
F; the agent may engage in transactions with the client for 60 days if registration is pending in the new state.
Is an agent who represents an issuer in the sale of municipal bonds considered an agent?
No. Since the individual is involved in the sale of exempt securities
Must the consent to service of process be renewed each year?
No. It is only required at initial registration
T/F: it is always prohibited for agents to split commissions.
F
An _______ of an ______ is an individual who represents an issuer in effecting transactions with the general public.
Agent ; issuer
May an agent continue to do business in a state if his BD has gone out of business?
No. An agents registration is only in effect while associated with a BD or issuer.
For financial professionals, state registration expires annually on ________.
December 31
Is a corporation considered a BD if it raises capital by selling new shares of its stock to the public?
No. The corporation is an issuer and issuers are excluded from the BD definition
Is an individual who represents a bank in the sale of its bond offering considered an agent?
No. Since the individual is representing the issuer in the sake of exempt securities
A BD must maintain its books and records for a minimum of _____ years.
3
When an agent ends her association with a BD, who must notify the Administrator?
Both the agent and the BD
Is an individual who represents a BD in the sale of stock to a bank considered an agent?
Yea.
Is Jim an agent if he works in ABCs retirement department and, once a year, places ABC stock in employees accounts?
No. Jim is representing the issuer in exempt transactions.
Is a firm considered a BD if it has no office in a state and only deals with institutional clients in the state?
No. The firm is excluded from the BD definition
T/F: BDs must file retail communication with the Administrator.
T
If a BD is not registered in a state, may an agent of the BD do business in the state without being registered there?
Yes, if the agent is dealing with an existing client that is temporarily in the state
When does state registration become effective?
At noon on the 30th day after filing an application, provided there are no proceedings pending.
If a firm wants to register as both BD and an IA, with whom must it register?
With the Administrator in the state in which it’s office is located, FINRA, and the SEC
If a registrant wishes to withdraw her registration, when does the withdrawal become effective?
If no action is pending, it is effective 30 days after filing the withdrawal request with the administrator.
T/F: A consent to service of process is an example of an exculpatory clause.
F; exculpatory classes are waivers absolving agents from wrongdoing. The waivers null and void under the USA
If a client moves to a new state, may the agent continue to do business while applying for registration in the state.
Yes. As long as the agent is registered in at least one other state and is not subject to disqualificatikn
Is an individual who represents the issuer of a private placement considered an agent?
No. Exempt transaction
T/F: An agent may sell limited partnerships if he is not yet registered with the Administrator
F; LPs are securities and an individual must be properly registered to sell them
Is an individual who represents a BD in the sale of muumuu APL bonds considered an agent?
Yes, since anyone representing a BD in the sale of securities is an agent.
The USA refers to an individual who represents a BD in the sales of securities as _________.
An agent
If a BD is registered with the SEC, is registration required in any state in which it intends to do business?
Yes. There are no exemptions from registration in the state as a BD.
