Ch 8 Administration of the USA Part II

Question 1

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

Answer 1

three yrs. of occurrence or two yrs. of discovery, whichever is first.

Question 2

True or False: The Administrator may confiscate records.

Answer 2

False. The Administrator may inspect records, but cannot confiscate them.

Question 3

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

Answer 3

No

Question 4

True or False: An Administrator may cancel a registration without the opportunity for a hearing.

Answer 4

True. Cancellation may be due to the death of an agent or a firm no longer being in business.

Question 5

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

Answer 5

60 days.

Question 6

True or False: An Administrator may require a mutual fund to file its advertising.

Answer 6

False. Mutual fund advertising is filed with FINRA, not the Administrator.

Question 7

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

Answer 7

two-thirds

Question 8

When may the Administrator cancel a registrant’s registration?

Answer 8

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

Question 9

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

Answer 9

One year

Question 10

Define assessable stock.

Answer 10

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

Question 11

True or False: The exercise of convertible securities is considered a sale under the USA.

Answer 11

False

Question 12

True or False: Registration denial orders issued by an Administrator are final, binding, and may not be appealed.

Answer 12

False. If denied, a person is entitled to written notification and findings of fact and an opportunity for a hearing.

Question 13

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

Answer 13

60 days.

Question 14

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

Answer 14

No. This is a prohibited action.

Question 15

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

Answer 15

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

Question 16

The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.

Answer 16

five years.

Question 17

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

Answer 17

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

Question 18

True or False: The Administrator may bring a case in a civil court.

Answer 18

True. Both the Administrator and a private citizen may bring a case in civil court.

Question 19

True or False: A gift of non-assessable stock is considered a sale.

Answer 19

False. However, the gift of assessable stock IS considered both an offer and a sale.

Question 20

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

Answer 20

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

Question 21

True or False: A stock dividend is considered a sale.

Answer 21

False

Question 22

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

Answer 22

30 days

Question 23

When will an offer fall under an Administrator’s jurisdiction?

Answer 23

If the offer originated in, was directed in, or was accepted in the Administrator’s state

Question 24

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

Answer 24

No

Question 25

True or False: Registration may be denied due to ANY misdemeanor convictions.

Answer 25

False. Registration may be denied for ANY felony conviction or securities-related misdemeanor conviction.

Question 26

What is a letter of rescission?

Answer 26

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

Question 27

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

Answer 27

The Administrator

Question 28

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

Answer 28

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

Question 29

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

Answer 29

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

Question 30

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

Answer 30

Both states

Question 31

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

Answer 31

60 days.

Question 32

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

Answer 32

In the state in which the broadcast or telecast originated

Question 33

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

Answer 33

Yes

Question 34

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

Answer 34

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

Question 35

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

Answer 35

Filing false registration documents, issuer’s business is illegal, spread is unfair, or failing to pay the filing fee.

Question 36

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

Answer 36

60 days.

Question 37

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

Answer 37

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

Question 38

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

Answer 38

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