Crunch Time : Chapter 2 Flashcards
Can an agent whose securities registration is pending sell fixed annuities?
Yes, since fixed annuities are not securities.
This allows agents to operate while their registration is being processed.
What can the term guarantee apply to in an investment?
Principal, interest, or dividend, but not capital gains.
This distinction is important for understanding investment risks.
Is universal life insurance considered a security?
No, universal life insurance is not a security.
This classification affects regulatory requirements.
What type of securities are exempt from state registration?
Federal covered securities.
These are typically registered at the federal level.
When do state securities registrations expire?
One year from their effective date.
This requires timely renewal to maintain compliance.
Are viatical investments considered securities?
Yes, viatical investments are securities.
They involve the sale of life insurance policies.
What are the requirements for investment company shares and securities issued under Rule 506 of Reg. D?
They are subject to Notice Filing.
This ensures regulatory oversight.
What is required of broker-dealers selling securities in a private placement?
They must review the issuer’s finances and management (perform due diligence).
This protects investors by ensuring informed decisions.
Are securities issued by insurance companies exempt from registration?
Yes, but variable annuities are not exempt.
This distinction is critical for compliance.
What is the status of securities sold under Regulation A?
They are exempt from federal registration with the SEC but subject to state registration under the Uniform Securities Act.
This dual requirement affects how these securities are marketed.
What are the conditions under which promissory notes are exempt?
Issued in minimum denominations of $50,000, have no more than nine months to maturity, and rated in one of the three highest credit categories by a Nationally Recognized Statistical Ratings Organization (NRSRO).
These criteria ensure a level of investor protection.
