Ch 8 Administration of the USA Part II Flashcards
Statute of limitations for USA civil violations is _____ yrs. of occurrence or ___ yrs. of discovery, whichever is first.
three yrs. of occurrence or two yrs. of discovery, whichever is first.
True or False: The Administrator may confiscate records.
False. The Administrator may inspect records, but cannot confiscate them.
Is the payment of a stock dividend considered an offer or sale?
No
True or False: An Administrator may cancel a registration without the opportunity for a hearing.
True. Cancellation may be due to the death of an agent or a firm no longer being in business.
A person may appeal a stop order that is issued by the Administrator within _____ days.
60 days.
True or False: An Administrator may require a mutual fund to file its advertising.
False. Mutual fund advertising is filed with FINRA, not the Administrator.
With newspaper offers, no offer is made if more than __________ of the circulation is outside of the publishing state.
two-thirds
When may the Administrator cancel a registrant’s registration?
If the registrant has died, ceased doing business, been declared mentally incompetent or cannot be located
For how long does the Administrator maintain jurisdiction over a registrant after a withdrawal of registration?
One year
Define assessable stock.
Stock that allows the issuing entity to demand additional funds from existing stockholders
True or False: The exercise of convertible securities is considered a sale under the USA.
False
True or False: Registration denial orders issued by an Administrator are final, binding, and may not be appealed.
False. If denied, a person is entitled to written notification and findings of fact and an opportunity for a hearing.
If a cease-and-desist order is issued against an agent, the agent may file an appeal within _____ days.
60 days.
Can a BD punish one of its agents for responding to a subpoena?
No. This is a prohibited action.
Is being charged with a felony or securities-related misdemeanor grounds for statutory disqualification?
No. Statutory disqualification is due to conviction for any felony or securities-related misdemeanor in the past 10 yrs.
The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.
five years.
If found civilly liable for violating the USA, what is the penalty?
The original amount paid, plus the legal rate of interest, attorney fees, and court costs, minus any cash received
True or False: The Administrator may bring a case in a civil court.
True. Both the Administrator and a private citizen may bring a case in civil court.
True or False: A gift of non-assessable stock is considered a sale.
False. However, the gift of assessable stock IS considered both an offer and a sale.
If the Administrator believes a person has violated or is about to violate the USA, may he issue an injunction?
No. The Administrator may not issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.
True or False: A stock dividend is considered a sale.
False
A customer must respond to a letter of rescission within _____ days or lose the right to sue.
30 days
When will an offer fall under an Administrator’s jurisdiction?
If the offer originated in, was directed in, or was accepted in the Administrator’s state
Is the conversion of a bond into stock considered an offer or sale?
No
True or False: Registration may be denied due to ANY misdemeanor convictions.
False. Registration may be denied for ANY felony conviction or securities-related misdemeanor conviction.
What is a letter of rescission?
An offer to buy back a security from a client when that security was sold in violation of the USA
At the state level, who may appoint an officer to lead an investigation?
The Administrator
May the Administrator revoke the registration of a federally covered adviser?
No. However, she may require the IA to notice file.
May the Administrator initiate criminal or civil liability action against a registrant?
Yes. An Administrator may initiate action, but may not impose fines or penalties for violations.
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?
Both states
Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days.
60 days.
If an offer is made using television or radio, where is the offer considered to have been made?
In the state in which the broadcast or telecast originated
May the books and records of a federal covered adviser be subject to inspection by an Administrator?
Yes
When conducting an investigation of wrongdoing, is the Administrator limited to state boundaries?
No. The Administrator may subpoena books, records, and witnesses from inside and outside the state.
What are some reasons for the Administrator denying the registration statement for a securities offering?
Filing false registration documents, issuer’s business is illegal, spread is unfair, or failing to pay the filing fee.
A person subject to an order by an Administrator may appeal the order to the state court within _____ days.
60 days.
If an agent has been enjoined (forced to cease activity) and a hearing is requested, when must the hearing be held?
Within 15 days of the receipt of a written request from the agent
Does the appeal of an administrative order act as a stay of the order?
No. The order remains in effect until the outcome of the hearing.
