Chapter 2 - The USA - Registrations Flashcards
Registration of BDs, Agents, IAs, and IARs
In practice, most _______ and _________ must be registered with FINRA and are regulated by FINRA and the SEC.
Broker-Dealers and Agents
_______________ must either register with the SEC or register with the state where they have a place of business or any states where they have ____ or more retail clients.
Investment Advisers; 6
Form ______ with the SEC is required by IAs to register with the SEC.
ADV
If an IA is required to register with the SEC, they will not have to “register” with the state but may be required to make a “__________” of their Form ADV with the state.
Notice Filing
An AUM (assets Under Management) of $110 million or more an IA firm MUST register with the ________.
SEC
If AUM (assets under management) is $110 million or less an IA must register at the _______ level.
State
An ____________________________ are only registered at the state level. There is no federal registration requirement.
Investment Adviser Representative (IAR)
True or False: An IA or an IAR are exempt from registration because they have no place of business in the state, AND their only clients in the state are not members of the public.
True. Excluded are Investment companies, other IAs, FCAs, BDs, Banks, Trust Companies, savings and loan associations (BSTs), Insurance companies, employee benefit plans ($1million+), Govt agencies and other institutional investors
During a period of ____ consecutive months, IAs and IARs who do not direct business communications in the state in any manner to more than ____ retail clients, are exempt from registration. ______ or more clients would require registration.
12 ; 5 ; 6
The Five client exemption does not apply to _______ ________ or _________.
Broker-Dealers or Agents
True or False: It is unlawful for any BD and/or agent of a BD to solicit or transact business in a state unless both the agent and BD are registered in the state.
True
True or False: Registration of a BD and an IA automatically constitutes registration of any agent/IAR who is a partner, officer or director, or a person occupying a similar status or performing similar functions.
True
Agents of BDs must renew their registration by _______________ of each year.
December 31st
True or False: Registration as an IA, BD or Agent means that the firm is approved or qualified.
False
When a BD or IA firm first files for registration, the initial registration is active for the remainder of the current year until _____________ and then will be renewed annually.
December 31st
Renewal applications for Canadian BDs and agents must be filed annually by ________________.
December 1st
A state administrator may require registered BDs, IAs and individual agents of a BD (but not IARs) to post a ___________ with the state Admin if they are going to have custody of or discretion over clients’ assets.
Surety Bond (aka Fidelity Bond)
A surety bond must be kept in force for as long as the registrant is in business and for ___ years thereafter.
3
Broker-Dealers who have custody of client funds or securities or have discretion over client’s accounts may be required to have ___________ capital, _________ bond and examinations of ___________ and ____________ as determined by the Administrator.
Minimum; Surety, Books and Records
True or False: Agents have minimum capital requirements.
False
True or False: For BDs, IAs and Agents there is no set minimum requirement for a surety bond amount and the administrator sets the amount.
True
True or False: Minimum capital applies to BDs, IAs and Agents.
False; minimum capital does not apply to agents.
Administrators have the authority to require examinations for firms and individuals. The administrator can administer written exams, oral exams, or both.
True
True or False: For IAs registered with the state, the IA is responsible of prompt notification of the administrator.
True
True or False: For Federal Covered Advisors, the IAR is responsible for prompt notification of the administrator.
True
Terminations of agents and IARs are reported on form _____.
U5
______________ allows the Administrator to be served with legal documents when the applicant is being sued. Serving the Administrator with legal documents would be as binding as serving the applicant.
Consent to Service of Process
True or False: Salaries of officers and partners as well as the names and SSNs of all employees have to be disclosed during the registration process of BDs and IAs.
False; SSNs do not have to be disclosed
_____________ is the Uniform Application for Broker-Dealer Registration. BDs must file this form to register with the SEC, the SROs, and jurisdictions through the CRD, operated by FINRA.
Form BD
Form _____ is used by representatives of broker-dealers, investment advisers, or issuers of securities to register with the appropriate jurisdictions and/or self-regulatory organizations (SROs).
U4
True or False: The Administrator may not require an applicant to publish an announcement in one or more specific newspapers published in the state.
False
Registration becomes effective when determined by the administrator. If there is no denial order in effect and proceedings pending, registration will automatically become effective at ______ on the ____ day after the application is filed.
Noon; 30th
True or False: A BD or IA that reorganizes in the middle of a registration period may file an application to register the successor firm (whether in existence or not) for the unused portion of the year.
True
The Administrator may by order deny, suspend or revoke any registration, or bar or censure any registrant from employment with a registered BD or AR if they have been convicted within the past ____ years of any misdemeanor involving securities. And has been convicted of any ________ at any time.
10; felony
Withdrawal from registration becomes effective ____ days after receipt of application for withdrawal (or sooner if determined by the administrator) provided no proceedings are pending.
30
True or False: For a new issue of securities to be offered to the public, the securities must generally be registered with the states in which they will be sold, unless they are exempt from registration or qualify as a Federal Covered Security.
True
An _____________ means that the issuer does not have to file a registration statement or advertising material with the state.
Exemption
A ___________________ is a security that is registered with the SEC only, not with the states.
Federal Covered Security
It is unlawful for any person to offer or sell a security in a state unless it’s:
Registered under the act, exempt from registration, or a federal covered security
True or False: AN OTC corporate security that is being sold intrastate MUST register if there are no exemptions, are not federal covered or as defined under the USA.
True. Example; Penny Stocks
True or False: No registration with FINRA or other SRO such as NASAA or the MSRB is listed as a requirement under the USA.
True
_____________ is a form of registration generally used by Federal Covered Securities or by an established company which has a registration statement on file with the SEC.
Filing (Notice Filing)
For a Notice Filing: must have a total net worth of $____ million or have a total net worth of $___ million and net pretax income from operations before allowances for extraordinary items for at least ___ of the ____ preceding fiscal years.
4; 2; 2; 3
________________ is a form of registration generally used for new issues whose registration is pending with the SEC. Any security for which a registration statement has been filed with the SEC may be registered by __________________.
Coordination. Example: An IPO of a new NASDAQ stock
_________________ is a form of registration generally used when the new issue of securities is not going to be registered with the SEC but only in the state of issuance.
Qualification. Intrastate offering
True or False: Under registration by Qualification. Such registration becomes effective when the administrator so orders.
True
True or False: The administrator may not issue a stop order denying effectiveness to a registration statement or suspending or revoking the effectiveness of any registration statement if he finds that the order is in the public interest.
False, they may
No stop order may be entered without the appropriate prior notice to:
The applicant or registrant, the issuer and the person on whose behalf the securities are to be or have been offered.
Can the administrator institute a stop order simply because a company is a new company and has no operating history?
No
Under the USA is an SRO (FINRA) required to be notified of a stop order?
No
The ______ ______________ must be received by customers purchasing new issues not later with their purchase confirmation. The administrator may require that a prospectus be sent before the sale of the security.
Final Prospectus
True or False: After a registration for a security becomes effective, the registration statement may only be amended to change the amount of securities to be offered or sold, but the public offering price or syndicate compensation arrangements may not be changed.
True
A buyer of securities in a private placement receives _____________ securities.
unregistered
True or False: According to the USA, securities of a newly formed company for which federal registration has been filed would be registered using coordination. Registration by coordination becomes effective when federal registration becomes effective.
True
True or False: State registration by coordination is only available if a federal registration statement has been filed under the securities act of 1933 in connection w/ the same offering.
True
Under the USA, a method of registration is generally used for new issues whose registration is filed with and/or pending with the SEC is known as _____________ registration.
Coordination
True or False: IAs and IARs must be registered in a state if advisory services are to be offered to the public.
True
This method is used for well-established companies that meet certain financial criteria. It involves a simple notice filing with the state, indicating that the company intends to offer securities. This is often the quickest and least burdensome method.
Registration by Notification
This method is used when a company registers securities with both the SEC and state securities administrators simultaneously. The state registration becomes effective at the same time as the federal registration.
Registration by Coordination
This method is used when securities do not qualify for notification or coordination. It requires a more detailed disclosure and review process by the state securities administrator. This method is often used for intrastate offerings.
Registration by Qualification
When a company registers securities with both the SEC and state securities administrators simultaneously this is called.
Registration by Coordination
A method for well-established companies to register securities with a simple notice filing, indicating their intent to offer securities.
Registration by Notification
A detailed disclosure and review process by the state securities administrator, often used for intrastate offerings.
Registration by Qualification
Which registration method is the quickest and least burdensome?
Registration by Notification
Which registration method involves simultaneous federal and state registration?
Registration by Coordination.
True or False: One of the unique characteristics of registration by qualification is that the registration becomes effective
only when determined by the Administrator.
True
Rule ______ was created as a safe harbor under the statutory intrastate offering exemption which is provided by the Securities Act of 1933. The rule (also referred to as the intrastate
exemption) allows companies to raise capital from their in-state investors.
147
Rule _________ is designed to update and modernize the existing intrastate offering framework and permit a company to raise money from investors who reside within its state without being required to register the offers and sales at the federal level.
147A
Under Rule ______, the SEC exempts intrastate offerings from federal registration. However, the offering may still need to be registered with the state in which it’s being sold.
147
Under Regulation ____, if an issuer offers a new issue of securities valued at $75 million or less sold over a 12-month period, the offering is exempt under the Act.
Regulation A
True or False: Administrators have the authority to issue a stop order to deny, suspend, or revoke a registration if the registrant fails to pay the proper filing fee.
True
True or False: according to NASAA, viatical investments are securities under state laws and must be registered in the states in which they’re sold.
True
Investors with a minimum net worth of $__________ and an annual income of more than $_________, or a minimum net worth of $_________. The net worth calculations may not include the value of the investor’s home. No more than 10% of each person’s net worth should be invested in viatical investments.
$150,000; $100,000; $250,000
Accredited investors, according to Regulation D of the Securities Act of 1933. Generally, accredited investors are financial institutions and individuals with an annual income of at least $_________, or a minimum net worth of $____million (again, the net worth excludes the value of their residence).
200,000; 1
