Definitions

Question 1

Broker dealer

Answer 1

Any person engaged in the business or effecting transactions in the securities for the account of others or for its own account.

Critical to remember the primary function of a broker dealer is making securities transactions.

In almost all cases, the must register with both the SEC and the state

Broker = on behalf of others
Dealer = on behalf of themselves

Question 2

Agent

Answer 2

Individual who represents a BD or issuer in effecting or attempting to effect purchase or sales of securities

Always neutral people, often referred to as registered representatives

Almost always work for BDs

Question 3

TTA!

3 defined non persons

Answer 3

Minors(anyone unable to enter into contracts with the laws of the state)

Deceased individuals (but their estate is a person)

Individuals declared mentally incompetent

Question 4

Person

Answer 4

Any individual, corporation, partnership, association, joint stock company, a trust, unincorporated organization, a government, political subdivision (sometimes known as a legal person)

Very broad

Question 5

Investment advisor

Answer 5

Any person who, for compensation, engages in the business or advising others, either directly or through publications or writings, as to the advisability of investing in, purchasing or selling securities

Who, for compensation and as a part of regular business, issues or promulgates analyses or reports concerning securities

Under the NAMIA of 1996, IAs are either required to register with the SEC or the state, but never both

Question 6

Issuer

Answer 6

Any person who issues or proposes to issue any security.

Primarily gov and corporations

Under the USA there is not considered to be any issuer with respect to certificates of trust or participation in oil, gas, mining titles or leases

Question 7

Non issuer

Answer 7

Not directly or indirectly for the benefit of the issuer

The seller of the security is someone other than the issuer

Basic everyday trading on the stock markets

Question 8

Accredited investor

Answer 8

Found in rule 501 of the federal securities act of 1933

Refers to person not counted when computing the number of investors purchasing a private placement under regulation D of that act

Not found in the USA act basically will be used to confuse you

Question 9

Institution

Answer 9

Banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets not less then $1M, and gov agencies and instrumentalities

USA generally affords less protection to these investors, owing to their greater investment sophistication

Question 10

State

Answer 10

50 states, any territory or possession of the US, DC, and Puerto Rico

Question 11

Retail client

Answer 11

Retail and non institutional are the same.

Clients need more protection

Individuals that meet the standard of accredited investor ARE STILL RETAIL

Question 12

Holding company

Answer 12

Primary business is holding a controlling interest in the securities of other companies

Most common is bank holding company

Question 13

Wrap fee program

Answer 13

Client is charged a specified fee not related to transactions on the account

Typically a percentage of total assets