Ch 3 State Regulations Governing Broker-Dealers and Agents Flashcards
The USA refers to an individual who represents a BD in the sale of securities as an ________.
agent.
A client of a Canadian BD is visiting the U.S. 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.
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.
True or False: BDs must file retail communication with the Administrator.
True
Is an individual who represents the issuer of a private placement considered an agent?
No, since the individual is involved in an exempt transaction.
Identify the acronym: CRD
Central Registration Depository
True or False: On Form U4, a person must disclose any aliases or previously used names.
True. An alias or previously used name could simply include a person’s maiden name.
A _________ bond is posted to cover the potential costs of legal action taken against certain persons.
surety bond
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.
A BD must maintain its books and records for a minimum of ____ years.
3 years.
Is an individual who represents a BD in the sale of stock to a bank considered an agent?
Yes, since anyone representing a BD in the sale of securities is 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.
May an agent of a BD located in Mexico do business with a client in the U.S. without registering in the state?
No. BDs of Mexico are required to register in the U.S. to effect securities transactions in a state.
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 disqualification.
If a firm meets the BD definition in the state, are there any exemptions from registration under the USA?
No. Firms that meet the BD definition are required to register in the state.
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
True or False: A partner, officer, or director of a BD is always considered an agent of the BD.
False. A partner, officer, or director is deemed an agent of a BD if she is involved in the purchase/sale of securities.
If a BD or an IA ceases operations, how long must it maintain a surety bond?
three years after the firm ceases operations.
True or False: In state law, individuals representing issuers in effecting securities trades are ALWAYS deemed agents.
False. Individuals are not deemed agents if representing issuers of exempt securities or effecting exempt transactions.
An _______of an ________ is an individual who represents an issuer in effecting transactions with the general public.
agent of an issuer
An individual who represents an issuer in selling registered, non-exempt securities for compensation is an ________.
agent.
True or False: An agent whose client moves to a new state may not contact the client until registered in the new state.
False. The agent may engage in transactions with the client for 60 days if registration is pending in the new state.
Is Jim an agent if he works in ABC’s retirement dept. and, once a year, places ABC stock in employees’ accounts?
No, Jim is representing the issuer in an exempt transaction.
True or False: A Consent to Service of Process must be filed by BDs, but not their agents.
False. A Consent to Service of Process is required of all registrants.
Under the USA, is a bank holding company that occasionally executes securities trades excluded from the BD definition?
No. Under the USA, bank holding companies are not excluded from the BD definition.
True or False: A Consent to Service of Process is an example of an exculpatory clause.
False. Exculpatory clauses are waivers absolving agents from wrongdoing. The waivers are null and void under the USA.
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.
True or False: If a BD registers in a state on March 3, it must pay a registration fee for the full year.
True