ch.1

Question 1

Howey test

Answer 1

investment of $, common enterprise, profit, 3rd party management

Question 2

Person

Answer 2

any entity that may enter into a legally binding contract

Question 3

Non-person

Answer 3

minor, deceased individual, deemed legally incompetent

Question 4

Broker-Dealer

Answer 4

affects transactions in securities markets for own account or for others

Question 5

Agent

Answer 5

individual who represents issuer or BD in purchase or sale of securities with public

Question 6

Exempt issuers

Answer 6

U.S. govt. state & municipalities, foreign national govt recognized by U.S. commercial paper (maturity > 270 days & 50k+ denom) & contracts with pensions and others.

Question 7

issuer

Answer 7

person that issues or proposes to issue a security including corporations, U.S. govt and state and local govt

Question 8

nonissuer

Answer 8

anyone who does not issue or proposes to issue securities, all secondary market transactions.

Question 9

Investment adviser

Answer 9

actively involved in and receives a fee for issuing reports, advising clients on securities, pension consultant, any advice for a fee.

Question 10

pension consultants

Answer 10

anyone who advises employees on how to fund their plans.

Question 11

investment counsel

Answer 11

continuous and regular supervisory or management services

Question 12

Form ADV, what is it and what is provided to clients?

Answer 12

Provides detailed info about IA, has 4 parts 1A1B2A2B. Parts 2Aand 2B are provided to clients

Question 13

investment adviser registration database IARD

Answer 13

centralized clearinghouse for all investment adviser registrations.

Question 14

investment adviser representative

Answer 14

person under control of IA, inlcluding: officers & directors, partners, solicitors, supervisors. Clerical employees are not required to register

Question 15

Solicitor

Answer 15

anyone who actively seeks new business for IA for compensation. Must be registered.

Question 16

access person

Answer 16

anyone employed by IA with access to nonpublic info. or anyone that makes recommendations.

Question 17

institutional investor

Answer 17

person or firm who trades securities for his or her own account or for the accounts of others. note no minimum size for institutional acct.

Question 18

accredited investor

Answer 18

net worth of 1M excluding primary residence. or 200k annual earnings, or couple earning 300k+ annually

Question 19

qualified purchaser

Answer 19

individual with 5M in investments, or family-owned business with 5M in investments, trust sponsored by qualified purchasers

Question 20

private investment company

Answer 20

unregistered investment company or hedge fund that raises funds through sale of securuties to qualified purchasers

Question 21

offer

Answer 21

any attemp to solicit the purchase or sale of a security for value

Question 22

sale

Answer 22

ownership must be conveyed for value

Question 23

guarantee

Answer 23

someone other than the issuer guarantees the interest, principal or dividends

Question 24

who can guarantee something?

Answer 24

us govt, insurance co, parent company

Question 25

contumacy

Answer 25

willful display of contempt for the administrator’s order.

Question 26

federally covered exemption

Answer 26

security listed on exchange (Nasdaq), investment co security, security sold to qualified purchaser

Question 27

escheatment

Answer 27

= dormant acct

Question 28

12B-1 fees

Answer 28

charged quarterly, calculated annually, 3 votes to start it, and annually reapprove it.

Question 29

three votes required to start 12B-1 fee

Answer 29

majority board of directors, noninterested board, and outstanding shares.

Question 30

two votes required to terminate 12b-1 fees

Answer 30

majority of noninterested board of directors, and outstanding shares