Chapters 1,2,3 Flashcards
Ch 1 LAWS, REGULATIONS, AND GUIDELINES OVERVIEW Ch 2 STATE REGISTRATION OF SECURITIES Ch 3 STATE REGULATIONS GOVERNING BROKER-DEALERS AND AGENTS
Who is excluded from the definition of a person?
A minor or an individual who is mentally incompetent
What must an agent of an issuer who is compensated for selling securities publicly do?
Must be registered
Is an agent of an issuer of exempt securities subject to registration?
No
Is an agent of a broker-dealer involved in the purchase or sale of an exempt security subject to registration?
Yes
What can an agent whose securities registration is pending sell?
Fixed annuities
The term guarantee can apply to which aspects of an investment?
- Principal
- Interest
- Dividend
Is universal life insurance considered a security?
No
What type of securities are exempt from state registration?
Federal covered securities
When do state securities registrations expire?
One year from their effective date
Are viatical investments classified as securities?
Yes
What type of filing are investment company shares and securities issued under Rule 506 of Reg. D subject to?
Notice Filing
What must broker-dealers selling securities in a private placement perform?
Due diligence
Are securities issued by insurance companies exempt from registration?
Yes, but variable annuities are not exempt
What is the status of securities sold under Regulation A?
- Exempt from federal registration with the SEC
- Subject to state registration under the Uniform Securities Act
What are the exemption criteria for promissory notes as debt securities?
- Issued in minimum denominations of $50,000
- No more than nine months to maturity
- Rated in one of the three highest credit categories by NRSRO
Can unregistered employees of a broker-dealer accept customer orders?
No, until their registration becomes effective
What can unregistered employees of a broker-dealer do regarding customer orders?
Write down the details of a customer order
Who must register as an agent?
An individual who represents a broker-dealer in effecting or attempting to effect transactions in securities
Is an individual required to register as an agent if representing an issuer in certain transactions?
No, under specific conditions
Is an agent’s assistant who takes phone messages to buy or sell securities considered an agent?
No
Must a person who simply provides quotes register as an agent?
No
Where must a broker-dealer register?
In every state in which it has an office
For how long must a broker-dealer maintain a surety bond after ceasing operations?
Three years
What must a broker-dealer that sponsors a wrap program register as?
An investment adviser
What does custody include?
Holding third-party checks for more than three business days
Who receives limited registration, broker-dealers and agents of Canada or Mexico?
Canada
What does the Securities Investor Protection Corporation (SIPC) protect against?
Insolvency of a broker-dealer
What must be given to all retail customers who open a new brokerage account?
Customer Relationship Summary (Form CRS)
How long must broker-dealer books and records be kept?
Three years, with the first two years in an easily accessible location
What is filed by broker-dealers, agents, IAs, and IARs?
Consent to Service of Process
Can agents split commissions with other agents of the same broker-dealer?
Yes, if registered in the same state
When do state registrations for broker-dealers and their agents expire?
December 31 each year
Can an agent transact business with existing clients temporarily in another state without being registered?
Yes
What additional requirement is there for electronic communication created by a broker-dealer?
Must include additional disclosures
Are advertisements that promote exempt securities required to be filed with the Administrator?
No
