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S 66 > Ch. 8 > Flashcards

Ch. 8 Flashcards

1
Q

T/F: If FINRA issues an order against a firm, an Administrator may take action against a BDs registration.

A

T

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2
Q

T/F: Registration denial orders issued by an Administrator are final, binding, and may not be appealed.

A

F; If denied, a person is entitled to written notification and findings or fact and an opportunity for a hearing

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3
Q

The appeal of an administrative order is made before a court of ___________.

A

Competent jurisdiction (state court)

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4
Q

T/F: The Administrator may enjoin (issue an injunction) a registered individual or firm.

A

F; the Administrator may only issue a cease and desist order. The Administrator may not issue an injunction.

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5
Q

A customer must respond to a letter of rescission within _____ days or lose the right to sue.

A

30

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6
Q

If a cease and desist order is issued against an agent, the agent may file an appeal within ______ days.

A

60

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7
Q

The maximum criminal penalty for violations of the USA is _____ years in prison and/or up to a $_____ fine.

A

Three; $5,000

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8
Q

Is being charged with a felony or securities related misdemeanor grounds for statutory disqualification?

A

No. Statutory disqualification is due to conviction for any felony or securities related misdemeanor in the past 10 years.

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9
Q

T/F: Registration may be denied due to ANY misdemeanor convictions.

A

F; Registration may be denied for ANY felony conviction or securities related misdemeanor conviction

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10
Q

What is a letter of rescission?

A

An offer to buy back a security from a client when that security was sold in violation of the USA

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11
Q

What are some reasons for the Administrator denying the registration statement for a securities offering?

A

Filing false registration documents, issues business is illegal, spread is unfair, or failing to pay the filing fee

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12
Q

T/F: Administrators are permitted to use summary orders denying certain exemptions.

A

T

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13
Q

Define assessable stock.

A

Stock that allows the issuing entity to demand additional funds from existing stockholders

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14
Q

Define jurisdiction

A

The power to interpret and apply the law or the territorial range of authority or control.

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15
Q

Administrative cease and desist orders may be appealed in a state court if application is maker within _____ days.

A

60

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16
Q

If the Administrator believes a person has violated or is about to violate the USA, may he issue an injunction?

A

No. The Administrator may not issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.

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17
Q

T/F: An Administrator may not retroactively enforce orders and revocations.

A

T

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18
Q

If an agent has been enjoined (forced to cease activity) and hearing is requested, when must the hearing be held?

A

With 15 days of the receipt of a written request from the agent

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19
Q

A registration withdrawal is effective _____ days after filing.

A

30

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20
Q

If the Administrator believes a person has violated or is about to violate the USA, may a stop order be issued?

A

Yes.

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21
Q

T/F: A gift of assessable stock is considered both an offer and sale.

A

T

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22
Q

May the Administrator revoke the registration of a federally coveted adviser?

A

No. However, she may require the IA to notice file

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23
Q

A prospectus is mailed by an agent in one state to a client in another state. I’m which state(s) is the offer being made?

A

Both states

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24
Q

At the state level, who may appoint an officer to lead an investigation?

A

The Administrator

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25
Q

If a client has been defrauded by an BD or IA, the firm may be required to ______ commissions/fees.

A

Disgorge

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26
Q

May the Administrator levy fines on a registrant?

A

No

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27
Q

T/F: The Administrator may confiscate records.

A

F; the Administrator may inspect records, but cannot confiscate them

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28
Q

T/F: The exercise of convertible securities is considered a sale under the USA.

A

F

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29
Q

If an agent has withdrawn registration, the Administrator may still take action ___ year(s) after the withdrawal.

A

One

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30
Q

If found civilly liable for violating the USA, what is the penalty?

A

The original amount paid, plus the legal rate of interest, attorney fees, and court costs, minus any cash received

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31
Q

The statute of limitations for criminal violations of the USA is ____ years.

A

Five

32
Q

T/F: A gift of non assessable stock is considered a sale.

A

F; however, the gift of assessable stock IS considered both an offer and a sale.

33
Q

A _______ is any agreement or contract to dispose of a security for value.

A

Sale

34
Q

A person may appeal a stop order that is issued by the Administrator within ____ days.

A

60

35
Q

Under the provisions of the USA, a hearing will be held _____ days after a written request.

A

15

36
Q

For how long does the Administrator maintain jurisdiction over a registrant after a withdrawal of registration?

A

One year

37
Q

What are the justifiable reasons for denying an individuals registration?

A

Conviction for any felony or securities related misdemeanor within the last 10 years

38
Q

If a client has been defrauded by her BD or IA, what cost may she sue to recover?

A

The cost of the security or the cost of the advice, commissions, legal fees, interest, less any income received

39
Q

The administrator has the power to issue a ______ ______ ________ order, but not an ________.

A

Cease and desist; injunction.

40
Q

The statute of limitations for criminal violations of the USA is _____ years.

A

Five

41
Q

When conducting an investigation of wrongdoing, is the administrators limited to state boundaries?

A

No. The administrator may subpoena books, records, and witnesses from inside and outside the state.

42
Q

May an Administrator subpoena records in another state to investigate potential violations that occurred in his own state?

A

Yes, the Administrator has broad inspectorial power, which stretched beyond his own state

43
Q

Is the conversion of a bond into stock considered an offer or sale?

A

No

44
Q

T/F: An Administrator may issue a cease and desist order before a violation has occurred.

A

T

45
Q

T/F: An Administrator may cancel a registration without the opportunity for a hearing.

A

T; cancellation may be due to the death of an agent or a firm no longer being in business

46
Q

Does the Administrator require proof of wrongdoing to initiate an investigation?

A

No, but she does need to be able to refer to a rule or order when starting the investigation.

47
Q

When is an offer subject to a specific states securities laws?

A

When it originated in, is directed to and received in, or is accepted in the state

48
Q

T/F: The Administrator may bring a case in a civil court.

A

T; both the Administrator and a private citizen may bring a case in civil court

49
Q

If shares of stock are freely given with the purchase of a bond, is this considered an offer and sale?

A

Yes

50
Q

T/F: An Administrator is not required to provide written findings of fact when revoking a registration

A

F; the Administrator must provide written notification, written findings of fact, and an opportunity for a hearing.

51
Q

Can a BD punish one of its agents for responding to a subpoena?

A

No. This is a prohibited action

52
Q

T/F: An individual may be denied registration due to lack of experience.

A

F; however, a lack of training, knowledge, and experience may be grounds for denial

53
Q

If an offer is made using television or radio, where is the offer considered to have been made?

A

In the state in which the broadcast or telecast originated

54
Q

T/F: The Administrator may issue an injunction

A

F; only a court may issue an injunction; however, the Administrator may issue a cease and desist order.

55
Q

May the Administrator initiate criminal or civil liability action against a registrant?

A

Yes. An Administrator may initiate action, but may not impose fines or penalties for violations.

56
Q

T/F: A warrant attached to the sale of a bond is considered a sale of the warrant.

A

T

57
Q

T/F: To revoke registration, Administrators must send registrants all documents created in the investigation.

A

F; the Administrator must provide written findings of fact. However, providing all documents is not required

58
Q

Under the USA, the statute of limitations for fraud is ____ years.

A

Five

59
Q

Is the payment of a stock dividend considered an offer or sale?

A

No

60
Q

An ____________ is any attempt or solicitation to acquire or dispose of a security for value.

A

Offer

61
Q

T/F: An Administrator may require a mutual fund to file its advertising

A

F; mutual fund advertising is filed with FINRA, not the Administrator

62
Q

Does the appeal of an administrative order act as a stay of the order?

A

No. The order remains in effect until the outcome of the hearing.

63
Q

If an offer is made using the mail, where is the offer considered to have been made?

A

In the state from which it originated and the state to which it is directed

64
Q

When will an offer fall under an Administrators jurisdiction?

A

If the offer originated in, was directed in, or was accepted in the Administrators state

65
Q

With newspaper offers, no offer is made if more than _________ of the circulation is outside of the publishing state.

A

Two-thirds

66
Q

May the books and records of a federal covered adviser be subject to inspection by an Administrator?

A

Yes

67
Q

Statute of limitations for USA civil violations is _____ yrs. of occurrence or ____ yrs. of discovery, whichever is first.

A

Three; two

68
Q

An ________ is any attempt or solicitation to dispose of a security for value.

A

Offer (offer to sell)

69
Q

T/F: A stock dividend is considered a sale.

A

F

70
Q

T/F: An agent may be arrested by the Administrator for refusing to cooperate with an investigation.

A

F; the Administrator does not have the authority to arrest a person who violates state law

71
Q

A person subject to an order by an Administrator may appeal the order to the state court within ______ days.

A

60

72
Q

When may the Administrator cancel a registrants registration?

A

If the registrant has died, ceased doing business, been declared mentally incompetent or cannot be located

73
Q

How may the failure to pay the proper filing fee be corrected?

A

By paying the appropriate amount

74
Q

May the Administrator audit the books and records of a registered firm?

A

Yes. The Administrator may subpoena, audit, and inspect the books and records of registered firms.

75
Q

What action may an Administrator take on receipt of a complaint regarding an ad that originated from another state?

A

Investigate the complaint

S 66 (12 decks)

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