Chapter 4 - Regulation of Agents of Broker-Dealers and Agents of Issuers

Question 1

An agent has a nearly identical relationship to a broker-dealer or issuer as a ______ has to an IA

Answer 1

IAR

Question 2

Definition of an agent includes “attempting” to affect securities transactions, meaning that…

Answer 2

anyone who markets or attempts must be registered

Question 3

Agents representing broker-dealers DO NOT have to register with the state if:

Answer 3

• no place of business in the state and only clients are institutional
• they are registered in another state but client is on vacation (for up to 30 days) in that state and had a relationship with the agent for 30 days prior to the transaction
• they have an existing client moving to another state (must register within 10 days of learning of the move)
• work for a BD not selling securities (annuities, insurance, commodities)

Question 4

Agents representing issuers DO NOT have to register with the state if:

Answer 4

• they only work with exempt securities (same definition as Series 79 exempt securities)
• they only engage in exempt transactions (see next card)
• they engage in transactions only for affiliates of the issuer (employees, directors, partners) and their pay is not tied to how much they sell

Question 5

Exempt transactions include

Answer 5

• isolated non-issuer transactions
• transactions between issuers and underwriters
• private placements
• transactions for federal covered securities for qualified purchasers

Question 6

Silent partners who are not actively engaged in the business of a BD would or would not be registered as agents when the BD registers

Answer 6

Would not. Other partners, directors and officers are however

Question 7

A person is only considered to be an agent if they are under the ______ of the BD or issuer

Answer 7

control

Question 8

Clerical staff of BDs are usually exempt from registration. Here are some rules about that exemption:

Answer 8

• don’t solicit or accept orders
• they can give quotes if they were solicited
• can give out account information
• can fax documents for customer signatures
• CANNOT give investment advice
• CANNOT accept solicited or unsolicited orders

Question 9

BDs and issuers in a state may only employ properly registered agents in that _____

Answer 9

state

Question 10

An agent’s registration is only valid as long as he or she if actually _________ by a registered BD or issuer

Answer 10

employed

Question 11

Agent application becomes effective at _____ on the _____ after the application is filed

Answer 11

Noon on the 30th day. Must file a U4 to register

Question 12

Admin has _____ days to initiate a hearing

Answer 12

90 days

Question 13

Agent registration is effective until __________

Answer 13

midnight on Dec 31st

Question 14

Agents do or do not have a net capital requirement?

Answer 14

Do not.

Question 15

No post-registration requirements, but must help BD with _____ and ____

Answer 15

record keeping and audits

Question 16

Termination of an agent’s registration can happen for the following reasons:

Answer 16

• Denial in public interest
• Revocation if public harm
• Suspension for less serious stuff
• Withdrawal of registration (submit U5, effective after 30 days, still under jurisdiction for 1 year)
• Restriction/limitation to certain settings/capacities

Question 17

Whenever an agent begins or ends activities as an agent, must notify the Administrator _________

Answer 17

promptly (immediately)