Federal Securities Acts

Question 1

If a person accumulates a 5% or greater holding in a publicly held company with the intention of exercising control, they must file

Answer 1

Form 13d within 10 business days

Question 2

What are the 3 main types of compensation paid to investment advisers?

Answer 2

Commissions, sales charges, and wrap fees are all sources of income to investment advisers

Question 3

What are the 3 types of investment companies?

Answer 3

I. Face-Amount Certificate Company
II. Unit Investment Trust
III. Management Company

Question 4

Under the Securities act of 1934, exchanges must:

Answer 4

I. register with the SEC
II. have their rules approved by the SEC
III. enforce their own rules under SEC oversight

Question 5

Prepaid advisory fees requiring payment in excess of $_____ or advisory contracts with anyone other than ____________ , requires the delivery of a brochure

Answer 5

$500, investment companies

Question 6

The Investment Advisers Act of 1940 EXEMPTS advisers who give advice solely to _______ from registration

Answer 6

Insurance companies

Note: State law extends this exemption to most “professional investors” such as investment companies and banks. The Investment Advisers Act of 1940 DOES NOT permit such an exemption for advisers who give advice to investment companies, banks, etc.

Question 7

Advisers that manage $_______ or more of assets; or that render advice ONLY to _______________ must register with the SEC only, not the state

Answer 7

$100 million, investment companies

Question 8

What 3 terms are synonymous?

Answer 8

1. Agent
2. Broker
3. Middleman

An agent is a broker who is middleman in a transaction, earning a commission

Question 9

Under the Securities Act of 1933, during the 20 day cooling off period for a new issue that is in registration what type of advertisement is permissible?

Answer 9

an advertisement that meets the definition of a “tombstone” may be published

Question 10

Under SEC Release IA-1092, which of the following are specifically included under the definition of an “investment adviser”?

Answer 10

I. Pension consultants
II. Advisers to entertainers
III. Advisers to athletes

Question 11

An investment adviser may use a solicitor if what requirements are fulfilled?

Answer 11

• The adviser and solicitor is registered with the SEC or the State
• there is a written agreement between the solicitor and the IA
• solicitor agrees to provide to customers the IA’s “Brochure”
• solicitor agrees to provide its own “Brochure” that describes the nature of the relationship between the solicitor and the adviser
• the fact that this may result in a higher cost to the
• adviser must obtain written acknowledgment from the customer that both brochures were received

Question 12

Soft dollar arrangements can NOT be used for:

Answer 12

Employee salaries, hotel and/or rental car costs, or personal travel or entertainment

Question 13

Under the Securities Act of 1933, signatures will be obtained by which 4 persons involved in an underwriting?

Answer 13

I. CEO
II. CFO
III. Accountants of the issuer
IV. Lawyers of the issuer

Question 14

Where is education and work background of key personnel of an investment adviser disclosed?

Answer 14

Form ADV Part 2B

Question 15

Are solicitors for investment advisers required to be registered?

Answer 15

Yes. Both NASAA and the SEC require that solicitors for Investment Advisers be registered as Investment Adviser Representatives

Question 16

What form is filed to withdraw from registration?

Answer 16

Form ADV-W

Question 17

When are ADV forms part 1 and 2 required to be renewed?

Answer 17

Form ADV Part 1 - annually within 90 days of YE

Form ADV Part 2 - if there are any changes