Ch 8 Administration of the USA

Question 1

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

Answer 1

offer (offer to sell)

Question 2

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

Answer 2

Yes

Question 3

May the Administrator levy fines on a registrant?

Answer 3

No

Question 4

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

Answer 4

Offer

Question 5

When is an offer subject to a specific state’s securities laws?

Answer 5

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

Question 6

Define jurisdiction.

Answer 6

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

Question 7

Under the Uniform Securities Act, the statute of limitations for fraud is ____ years.

Answer 7

five years.

Question 8

True or False: An agent may be arrested by the Administrator for refusing to cooperate with an investigation.

Answer 8

False. The Administrator does not have the authority to arrest a person who violates state law.

Question 9

True or False: If FINRA issues an order against a firm, an Administrator may take action against a BD’s registration.

Answer 9

True

Question 10

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

Answer 10

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

Question 11

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

Answer 11

three years in prison and/or up to a $5,000 fine.

Question 12

If an agent has withdrawn registration, the Administrator may still take action for ___ year(s) after the withdrawal.

Answer 12

one year

Question 13

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

Answer 13

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

Question 14

True or False: The Administrator may enjoin (issue an injunction) a registered individual or firm.

Answer 14

False. The Administrator may only issue a cease and desist order. The Administrator may not issue an injunction.

Question 15

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

Answer 15

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

Question 16

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

Answer 16

competent jurisdiction (state court).

Question 17

A registration withdrawal is effective ____ days after filing.

Answer 17

30 days after filing.

Question 18

True or False: An Administrator may issue a cease-and-desist order before a violation has occurred.

Answer 18

True

Question 19

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

Answer 19

five years.

Question 20

True or False: An Administrator is not required to provide written findings of fact when revoking a registration.

Answer 20

False. The Administrator must provide written notification, written findings of fact, and an opportunity for a hearing.

Question 21

The Administrator has the power to issue a _____ ___ ______ order, but not an __________.

Answer 21

cease and desist order, but not an injunction.

Question 22

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

Answer 22

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

Question 23

True or False: A warrant attached to the sale of a bond is considered a sale of the warrant.

Answer 23

True

Question 24

True or False: A gift of assessable stock is considered both an offer and sale.

Answer 24

True

Question 25

True or False: To revoke registration, Administrators must send registrants all documents created in the investigation.

Answer 25

False. The Administrator must provide written findings of fact. However, providing all documents is not required.

Question 26

True or False: An individual may be denied registration due to lack of experience.

Answer 26

False. However, a lack of training, knowledge, and experience may be grounds for denial.

Question 27

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

Answer 27

sale

Question 28

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

Answer 28

By paying the appropriate amount

Question 29

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

Answer 29

15 days

Question 30

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

Answer 30

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

Question 31

True or False: The Administrator may issue an injunction.

Answer 31

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

Question 32

True or False: Administrators are permitted to issue summary orders denying certain exemptions.

Answer 32

True

Question 33

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

Answer 33

Yes

Question 34

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

Answer 34

disgorge

Question 35

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

Answer 35

Investigate the complaint

Question 36

True or False: An Administrator may not retroactively enforce orders and revocations.

Answer 36

True

Question 37

What are the justifiable reasons for denying an individual’s registration?

Answer 37

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