Chapters 8 & 9 Flashcards
Ch 8 ADMINISTRATION OF THE USA Ch 9 FEDERAL SECURITIES ACTS
What can the Administrator issue but not an injunction?
A cease-and-desist order
What is considered both an offer and a sale?
A gift of assessable stock
What is the exercise of a stock option considered?
A sale
Is the Administrator of State A required to notify the Administrator of State B if it begins an investigation?
No
Who can the Administrator provide evidence of violations to?
The state’s attorney or district attorney
What jurisdiction does the Administrator have?
Over an offer to buy or sell a security made or accepted in his state
How is an offer made in a state defined?
If it originated in, or was directed to and received in, the state
Under what condition can registration be denied?
If an individual has been convicted of a securities violation in a foreign country within the past five years
What is a statutory disqualification event related to licensing?
The revocation of a person’s insurance license within the past 10 years
What can the Administrator do regarding subpoenas?
Subpoena witnesses both inside and outside the state
Can the Administrator cancel a registration without prior notice?
No
How long is a letter of rescission valid?
30 days
What are the criminal penalties for willful violations of the USA?
Up to three years in prison and/or a $5,000 fine
What is the time limit for civil liabilities to be brought to suit?
Within three years from the date of the violation or two years of discovery, whichever comes first
What do civil liabilities include?
- Purchase price
- Interest
- Court costs
- Attorney’s fees
How is a closed-end fund priced?
Independently of its NAV
How soon must a mutual fund pay its shareholders after redemption?
Within seven calendar days
What are 12b-1 fees used for?
To pay agents distribution fees
What may be given to potential investors during the cooling-off period under the Act of 1933?
A red herring
What do information barriers (Chinese walls) ensure?
Underwriters don’t share information with other departments or the public
Under Reg. D, how many non-accredited investors may securities be sold to?
No more than 35
Who qualifies as an accredited investor under Reg. D?
- Individuals with a net worth over $1 million
- Individuals with an annual income of $200,000 or more ($300,000 for spouses)
What is the maximum 12b-1 fee for a no-load mutual fund?
May not exceed .25% of fund’s average net assets per year
Under the Act of 1933, how long do civil suits have to be filed?
Within three years from the date of the violation or one year of discovery, whichever comes first
What are the penalties for willful violations of the Act of 1933?
A fine of $10,000 and/or imprisonment for five years
What do Forms 10-Q and 10-K disclose?
Financial performance of SEC reporting companies
Who files Schedule 13D?
Any person who acquires more than 5% of the voting stock of a company
What type of firms file Schedule 13F?
Advisers that control more than $100 million in equity securities as of the last day of any month
Are bond ratings required to be disclosed on a trade confirmation under the Securities Exchange Act of 1934?
No
What must employees of a broker-dealer do with material, non-public information?
Cannot use it for personal trades, trades for customers, or forward it to other departments
What does the acronym ‘AML’ stand for?
Anti-money laundering
