IAs, IARs, Broker Dealers, & Agents Flashcards
What is the definition of a broker-dealer?
Person engaged in business of effecting transactions in securities for the account of others or for his own account
For broker-dealers, who specifically is excluded from registration?
Agents, Issuers, banks,
Canadian (limited registration)
Institution rule (doesn’t need to register if only engaging institutions)
Vocation Rule (No registration if engaging current clients visiting a state)
“V-I” not “V-I-D”
What is the institution rule?
A person is exempt from registration if they are only engaging institutions (and no office in state)
What is the vocation rule?
A person is exempt from registration if engaging current clients visiting a different state (and no office in state)
What is an Investment Adviser? (Hint: ABC)
It is a person offering securities Advice as a regular Business for Compensation
Who is excluded from having to register at the state level as an Investment Adviser?
Banks, Savinfs and Loans, LATE (lawyers, accountants, teachers, engineers),
BDs and agents if they do not charge advisory fees, Media programs if just general advice, Federally-covered advisers
In what situations is a person exempt from registering? (Think rules)
Vocation rule (no registration if engaging CURRENT clients visiting a different state)
Institution Rule (no registration if only engaging institutions
De Minimis Rule (no registration if 5 or feeeer retail clients in a state within a 12 month period
(V-I-D)
Think EXEMplary, like our VIDeo from senior year
For how long must IAs retain records?
How about broker dealers? And how long must those records be readily available (for both of them)?
5 years for IAs
3 years for BDs
2 years readily accessible
What is the definition of an Agent?
An individual representing a broker-dealer or issuer in effecting securities transactions
VID applies to _____ and _____
But VI applies to ____ and ______
vocation rule, institutions rule, and de Minimis exemption apply to IAs and IARs
The de Minimis exemption does not apply to broker-dealers or agents
What form do IARs and agents have to fill out in order to register at the state level ? Who files it for IARs and who files it for Agents?
U4
For IARs, at the state level, the IA files it
For AGENTS, both the agent and BD file it
Who files form U4 for IARs if the IA they work for is federally covered?
The IAR does it themselves
For civil liabilities under the USA, what is the statute of limitations ?
3 years from occurrence, 2 years from discovery
What is the maximum penalty for willfully violating the law under USA?
3 years in jail, 5k fine
What is the right of rescission? How long does the client have to accept?
an IA/IAR that unknowingly broke the law when effecting a transaction can offer to repurchase the security at original cost + interest and legal fees, minus income.
30 days
