Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 63 > Chapter 1 > Flashcards

Chapter 1 Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 63 flashcards
1
Q

Uniform Securities Act (USA)

A

Not the law of any particular state. Just covers the blueprint or the model

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

State administrator / Commissioner

A

The regulator for the Uniform Securities Act

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

North American Securities Administrators Association (NASAA)

A

-Responsible for updating the Uniform Securities Act through various NASAA Model Rules and Statements of Policy.
-Write our exam

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

National Securities Markets Improvement Act (NSMIA)

A

-A federal law; defines where federal regulations stop and state regulations begin.
-Reduced duplication of federal and state regulations
-Defined federal covered securities and federal covered advisers that are now exempt from state regulations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Person

A

-An individual, corporation, partnership, unincorporated organization, government or political subdivision of a government and certain trusts (any legal entity)
-The term does not include minors, anyone declared mentally incompetent or a deceased person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

State

A

-Any state, territory or possession of the U.S., including the District of Columbia and Puerto Rico

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Broker-Dealer

A

Sell securities for a fee (commissions)
-Must register with the state, FINRA and the SEC
-Agent/Registered Representatives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Investment Adviser (IA)

A

Advises people for a fee
-Must register with the state (Administrator) OR SEC
-Investment Adviser Representatives (IARs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Agents/ Registered Representatives

A

Must register with the state Administrator and FINRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Investment Adviser Representatives (IARs)

A

Must register with state Administrator

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Security Definition (4)

A

-Under Howey Test, a security involves:
A) Investment of money
B) In a common enterprise
C) With the expectation of profits
D) Derived from the efforts of others

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Securities include (12):

A
  1. Stocks (including treasury stock)
  2. Notes, bonds and debentures (debt)
  3. Rights and warrants
  4. Investment contracts
  5. Preorganization certificates
  6. Certificate of participation in any profit sharing agreement
  7. Certificate of participation in an oil, gas, or mining lease
  8. Investment company shares (Mutual funds)
  9. Limited partnerships
  10. Variable contracts
  11. Options
  12. Viatical investments

-All regulated under FINRA under the USA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Not a security (4):

A
  1. Life insurance
  2. Endowment policies
  3. Fixed annuities
  4. The Four Cs:
    a) Commodities
    b) Collectibles
    c) Currencies
    d) Condominiums as a place of business or residence
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Viatical Investment

A

-Refers to the purchase of an interest in an insurance policy covering an individual’s life.
-Since it’s unknown when the insured will die, the investment is considered illiquid.
-NASAA has established rules for the buying of this security including;
a) Accredited investors according to Reg D or:
i) Minimum net worth of at least $150K (not including their residence and an annual income of $100K
ii) Minimum net worth of at least $250K (not including their residence)

-Viaticals are considered speculative and highly risky

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Issues are generally required to (3):

A

1) Pay a filing fee
2) Disclose the amount of securities being offered in a state
3) Disclose the other states in which a registration statement has been filed
*A state administrator may require a prospectus to be sent to any person to who an offer is made

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Effective date

A

-Granted by the administrator and represents the date on which the securities can be sold publicly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

When does a securities registration expire?

A

One year after its effective date

18
Q

What are the 3 methods of securities registration?

A
  1. Filing(Notification)
  2. Coordination
  3. Qualification
19
Q

Filing (Notification)

A

For larger issuers conducting follow-on interstate (selling in multiple states) offerings-
1. Issuers must meet stringent financial requirements and conditions (e.g. registration statement previously filed under Act of 1933, minimum of 36 months of continuous business, minimum of four market makers)
2. Becomes effective at the same time as the federal registration
**Rarely used

20
Q

Coordination

A

For smaller issuers conducting interstate offerings (likely IPOs):
1) State registration is coordinated with the federal registration under the 1933 Act (although it doesn’t need to be filed at the same time)
2) Becomes effective at the same as the federal registration

21
Q

Federally Covered Securities

A

Exempt under the USA

22
Q

Qualification

A

For issuers conducting intrastate (inside 1 state only) offerings:
1) Requirements are determined by the individual state; no federal registration is required
2) Becomes effective when determined by the Administrator (NOT THE SEC/State)

23
Q

The administrator can deny, suspend or revoke any registration statement if it’s in the public interest and (6):

A

1) The registration is incomplete or contains false or misleading information
2) The issuer’s enterprise is illegal
3) The offering is or may be fraudulent
4) The issuer, a partner, officer or director of the issuer, or an underwriter has willfully violated any provision of the USA
5) The underwriter’s compensation is unreasonable (10% is probably the cap/maximum)
6) The proper fee hasn’t been paid
* A stop order cannot be issued against an effective registration based on facts the administrator knew when the registration became effect unless proceedings are instituted within 30 days.

24
Q

Exempt Securities

A

-Typically based on the safety of the investment. For example;
1. Treasury bonds
2. Municipal bonds
3. Foreign government bonds
4. Commercial paper
5. Stocks/Bonds of banks
6. Federal Covered Securities (eg. listed securities)

25
Q

Exempt Transcations

A

-Typically based on the limited purchasers (ie. non-public). For example;
1. Private placements
2. Trades between institutions (between issuer and underwriter)

26
Q

Exempt Securities can be issued by (doesn’t need to register on the state level) (10)

A
  1. US Government
  2. Municipal governments
  3. Canadian government or Canadian provinces
  4. Foreign governments recognized by the US
  5. Banks, savings institutions, or trust companies; including federal savings and loan associations
  6. Insurance companies, but not annuity contracts
  7. Common carriers (eg. railroads)
  8. Public utilities regulated by the Public Utility Holding Company Act of 1935
  9. Non-profit organizations (including religious orgs).
  10. Short-term corporate debt (commercial paper) with the following characteristics:
    a) Nine-month max maturity
    b) Minimum denomination of $50K
    c) Rated in one of the 3 highest categories by nationally recognize statistical ratings organization
    *Under the Act of 1933, commercial paper is exempt if its maturity is 270 days or less.
27
Q

Federal Covered Securities

A

-Securities listed on the NYSE, Nasdaq, or regional exchanges
-Securities issued by an investment company (eg. mutual funds)
-Securities issued under Regulation D Rule 506
-Securities sold to qualified purchasers (any person that owns at least $5 millions of securities)
*Even if exempt from registration, securities remain subject to the anti-fraud provisions of both federal law and the USA.

28
Q

Notice Filing (3)

A

Although exempt from state registration, issuers of investment company shares and private placements under Reg D Rule 506 are subject to Notice Filing with the Administrator which involves:
1) Filing copies of any offering documents (prospectuses) that have been filed with the SEC
2) Filing a consent to service of process
3) Payment of a fee
*Notice Filing cannot be denie>d by an Administrator

29
Q

Exempt Transactions (5)

A

1) Non issuer transactions
2) Private placements
3) Institutional transactions
4) Fiduciary transactions
5) Mortgage-backed

30
Q

Non-issuer transactions

A

-Secondary market trades:
-Key words; isolated, non-recurring, or unsolicited trades
-Trades in securities subject to the 1934 Act (reporting companies)
-Trades in securities listed on the Toronto Stock Exchange

31
Q

Private Placements

A

-Limited to no more than 10 non-institutional investors
-Purchases must be made for investment purposes only
-No commission paid for soliciting non-institutional investors

32
Q

Institutional Transactions

A

-Those with banks, b/ds or other financial institutions, insurance, trust, or investment companies; between issuer and underwriter

33
Q

Fiduciary Transactions

A

-Those involving a trustee, administrator, executor, or sheriff

34
Q

Mortgage-backed

A

-Transactions is bonds that are secured by real estate mortgages (if sold as a unit)

35
Q

What federal law was created to prevent fraud in the sale of new issues?

A

The Securities Act of 1933

36
Q

What federal law requires broker-dealers to register with the SEC?

A

The Securities Exchange Act of 1934

37
Q

A non-clerical individual who represents an issuer in effecting securities transactions that involve the issuer’s securities with the public is referred to as an ?

A

Agent of an issuer

38
Q

Which act was created to eliminate the duplication of state and federal regulation of financial markets and certain professionals?

A

The National Securities Markets Improvement Act of 1996 (NSMIA)

39
Q

Which of the following activities is NOT performed by a person who’s defined as an investment adviser representative (IAR)?

A

Executing securities transactions on behalf oof the adviser’s customers

40
Q

What federal law removed some of the duplication of regulations that applied to investment advisers and securities?

A

The National Securities Markets Improvement Act of 1996 (NSMIA)

41
Q
A

Series 63 (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions