Definitions Under The USA

Question 1

is a template or guide, not actual legislation, that each state uses in drafting its securities legislation.

• updated to adjust to developments in the securities industry through the passage of Model Rules

Answer 1

Uniform Securities Act (1956)

Question 2

has jurisdiction over virtually all securities activity that emanates from his state, as well as that which is received in his state.

• jurisdiction over the registration of securities professionals and securities
• power to make rules and issue orders
• can deny, suspend, or revoke registrations

Answer 2

Administrator

Question 3

used to deny effectiveness to, or suspend or revoke the effectiveness of, any registration statement.

• this applies to securities only, not professionals such as BDs, agents, IAs, and IARs

Answer 3

Stop order

Question 4

acting without prior notice

Answer 4

Acting Summarily

Question 5

No Final Order may be entered without?

Answer 5

• appropriate prior notice to the interested parties
• the opportunity for a hearing
• written findings of fact and conclusions of law

Question 6

any individual (sometimes known as a natural person), or a legal person.

Answer 6

corporation, partnership, association, trust, an unincorporated organization, a government, or a political subdivision of a government.

Question 7

Test Topic Alert

what are 3 types of nonperson?

Answer 7

• minors (anyone unable to enter into contracts under the laws of their state)
• deceased individuals (but their estate would constitute a person)
• individeals legally declared mentally incompetent

Question 8

True or False

All Broker-Dealers must register with both the states and the SEC

Answer 8

True

Question 9

any individual who represents a BD or issuer in effecting or attempting to effect purchases or sales of securities.

• always individuals (natural persons)
• job is to be involved in securities sales or supervise those who do.
• aka “registered representatives”

Answer 9

Agents

Question 10

Under the NSMIA, are registered with either the SEC or the state, but never both.

Answer 10

Investment Adviser

those registered with the SEC are called federal covered advisers

Question 11

issuers primarily include:

Answer 11

Corporations and Governments

Question 12

is one where the issuer does not receive the money because the seller of the security is someone other than the issuer.

Answer 12

Nonissuer transaction

Question 13

means to be excused from certain requirements

Answer 13

Exempt

Question 14

True or False

when a security is exempt under the USA, it does not have to be registered in order to be sold, and there are no requirements to file advertising about the security with the Admin.

Answer 14

True

Question 15

the term guaranteed security means

Answer 15

guarenteed as to payment of principal, interest, or dividends, but not capital gains.

when used on the exam it means a guarantee from a third party other than the issuer

Question 16

the _ is the attempt; the _ is when its successful.

Answer 16

the offer is the attempt; the sale is when its successful.

Question 17

Define when one has Discretion over a clients account?

Answer 17

the sole or shares authority to determine any one of the following

• Whether to buy or sell (Action)
• the quantity to buy or sell (Amount)
• the specific security to buy or sell (Asset)

Question 18

is a person in whom another has placed trust or confidence to manage and protect property or money

Answer 18

Fiduciary

Examples: Trustees, guardians, and in most cases, investment advisors.

Question 19

denotes that an individual may be subject to disqualification under the USA an/or the Exchange Act of 1934.

Answer 19

Statutory Disqualification

Question 20

All felony convistions, and certain misdemeanor convictions within the last 10 years, certain investment related temporary or permanent injunctions, as well as a variety of other investment-related legal or regulatory actions/sanctions may lead to ?

Answer 20

Statutory Disqualification

Question 21

any individual who, for compensation, acts on behalf of an investment advisor in referring potential clients.

• must be registered as IARs in most cases.

Answer 21

Solicitor

Question 22

the _ exemption generally states that an out-of-state investment adviser does not need to register if:

1. The adviser does not have a place of business in the state, and
2. The adviser only deals with a limited number of clients from that state, usually five or fewer during a 12-month period.

Answer 22

de minimis exemption

Question 23

means an individual or a family business that has over $5 million in investments or an individual/entity that invests over $25 million on their own account or on others’ behalf.

Answer 23

Qualified purchases

Question 24

I.C.P.A.J.T.U.G. is an easy way to remember what constitutes a “person” under the USA but what does it stand for?

Answer 24

Individual
Corporation
Partnership
Association
Joint-stock company
Trust (specifically, where interests are evidenced by a security)
Unincorporated organization
Government (or its political subdivision)

Question 25

B.I.I.P.P.S.S. is an easy way to remember who consitutes an "institution" but what does it mean?

Answer 25

Banks Insurance companies Investment companies Pension trusts Profit-sharing trusts Savings Institutions Savings and loan associations ## Footnote Also included: employee benefit plans with assets of not less than $1 million, Trust companies, and governmental agencies

Question 26

# note A **surety bond** is a contractual agreement where a surety company guarantees that a principal (typically a business or individual) will fulfill specified obligations to a obligee (often a government entity). If the principal fails to meet these obligations, the bond provides financial compensation to the obligee. How it works: 1. The obligee requires the principal to purchase a surety bond as a condition of a license, contract, or other arrangement. 2. If the principal fails to meet their obligations, the obligee can make a claim on the bond. 3. The surety company will pay valid claims. 4. The principal is then responsible for reimbursing the surety company for the claim amount plus any associated costs

Answer 26

In essence, a surety bond protects the obligee from financial loss due to the principal's failure to meet their obligations.

Question 27

# Test topic alert You need to know that individuals who meet the standard of accredited investor are still retail, rather than institutional clients.

Answer 27

remember, retail clients need far more protection than insitutional ones.

Question 28

means excluded from, or not included in, a defintion.

Answer 28

Exclusion

Question 29

# Test topic alert if a person is excluded from the definition of an agent, that person is not subject to provisions of state law that refer to agents.

Question 30

for one fee combine investment advisory services and execution of client transactions

Answer 30

Wrap fee program

Question 31

Define "investment adviser (firm)" under state law and federal law.

Answer 31

Any person a. who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities OR b. Who, for compensation and as a part of a regulation business, issues or promulgates analyses or reports concerning securities."

Question 32

what are the 3 prongs of three-prong test to see if investment adviser (firm)?

Answer 32

1. gives advice to others on securities 2. does so as part of a regular business activity 3. receives compensation for performing this activity

Question 33

Are you an investment adviser if you are giving advice on commodities, collectibles, precious metals, or real estate?

Answer 33

Nope! Only advice on securities (e.g. common stock, bonds)