Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 65 - March 2024 > Laws, Regulations, and Guidelines (30%) > Flashcards

Laws, Regulations, and Guidelines (30%) Flashcards

1
Q

State Definition

A

50 States + Puerto Rico, American Samoa, Guam, Virgin Islands, DC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Administrator

A

Office or Agency that has complete respect for administering the securities laws of a state. Administrator has jurisdiction over the registration of securities professionals and securities. Power to make rules and issue orders. Can deny, suspend or revoke registration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Security is defined by

A
  • an investment of money
  • in a common enterprise
  • expectations of profits
  • derived by someone other than investor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is not a Security

A
  • Insurance or Endowment Policy or Annuity contract under which a fixed sum of money is promised
  • Interest in a retirement plan
  • Collectibles
  • Commodities such as precious metals and grains and forwards/futures
  • Condos for personal residence
  • Currency
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Non-issuer Transactions (Exempt)

A

Sales do not go directly to issuer. Think secondary trading (Unsolicited)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Exempt Securities (USA 1956)

A
  • US/Canada government and municipal securities
  • Foreign government securities (US maintains diplomatic relations)
  • Depository Institutions (interest in or debt of, or guaranteed by any bank under law of US. or bank, savings institution, or trust company organized under the laws of any state.)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Pre organization certificates (USA)

A
  • before incorporation (promise to send money)
  • maximum of 10 subscribers and no funds paid in
  • no sale just agreement
  • exempt no need to register
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Private Placement (USA)

A
  • restricted to 10 offers (not buyers) in any 12 consecutive months other than to institutional clients.
  • no immediate resale except for institutions
  • no compensation paid on sales to non-institutional buyers
  • no registration needed, it is exempt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

USA Exempt Transactions

A
  • issuer transactions [between issuer and underwriters (going public)]
  • with financial institutions (sophisticated/professional investors): investment companies, insurance companies, banks and trust companies, Employer benefit plan with not less than $1m in assets (pension or profit sharing trusts), Broker dealers, Investment Advisers,
  • SEC definition of accredited investor NOT considered institutional investors for purposes of exemption.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Fiduciary Transactions

A
  • those made by an executor, administrator, trustee, sheriff, and so forth
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Isolated Nonissuer Transactions (Exempt)

A

Transactions that are private between 2 nonissuer parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Coordination (Securities Registration)

A
  • coordination of state and federal regulations
  • accomplished by filing a registration statement with the administrator that includes: 3 copies of latest prospectus filed with SEC, copies of articles of indenture, incorporation, and agreements, and amendments to prospectus filed with SEC
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Individuals meet definition of IAR if:

A
  • make any recommendations or otherwise renders advice regarding securities
  • manages accounts or portfolios of clients
  • determines recommendations and advice to be given
  • solicits, offers, negotiates sale of advisory services
  • supervises employees who do the above
  • can only be an individual
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Impersonal Investment Advice

A
  • investment advisory services provided by means of written material or oral statements that do not purport to meet objective and needed of specific individuals
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Investment Advisers Representative Exemptions

A
  • de minimis exemption - if no place of business for preceding 12 months, no more than 5 retail clients then registration in state in not required.
  • special exemption 203a of 1940 act- required registration in states where there is a place of business.
  • snowbird exemption
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

IAR Termination Processes

A
  • if state = FIRM tells administrator
  • if federal = IAR tells administrator
  • if 2 firms involved (state) each must notify administrator
17
Q

Material changes (ie change of address, disciplinary)

A

Must amend U4 within 30 days

18
Q

What is a Broker Dealer

A
  • defined in Securities Exchange Act of 1934 and USA
  • defined as any person engaged in the business effecting the transactions in securities for the account of others or own account
  • any person in an established place of business in the state of business buying and selling securities for account of others or own account.
  • agents work (only individuals can be agents)
19
Q

Exclusions from Definition of Broker Dealer

A
  • agents
  • issuers
  • banks, savings institutions, trusts
20
Q

States Exclude Definition of Broker Dealer

A
  • have no place of business in state and deal with issuers of securities for institutions
  • no business in state but licensed in state of business and offer to only existing customers
  • snowbird rule
21
Q

Does Broker Dealers get De Minimis exemption?

A

No

22
Q

Under the USA, you are a broker dealer if:

A
  1. You have place if business in state regardless of clients or
  2. You have even one retail client
23
Q

Under the USA, you are not a broker dealer if:

A
  1. You have no place of business in the state AND
  2. Your only clients are other institutions ir issuers or
  3. You are registered in a state and only do business in the state with nonresidents (snowbirds)
24
Q

Exempt Securities USA (BD)

A
  • Securities guaranteed by US or Canadian government or foreign governments the US has diplomatic relations
  • securities backed by banks organized under US laws
  • commercial papers rated with $500k+ with maturities less than 9 months
  • any investment contract issued with employer plans
25
Q

Submitting Application as Broker Dealer

A
  • Form BD includes and must be submitted to state administrator
  • form and place of business
  • method of business
  • all jurisdictions that applicant is registering
  • qualifications and business history
  • court issued injunctions
  • adjudication by the sec or any security SRO within last 10 years.
  • convictions of misdemeanors involving securities
  • felony convictions
  • financial condition and history
  • current unsatisfied liens and judgments
26
Q

Books and Records

A
  • easily accessible for minimum of 3 years from end of fiscal year
  • first 2 years in principal office
  • must file amendments promptly
  • must keep electronic communication, personal nature emails don’t have to be kept.
  • no requirement to keep tax returns
27
Q

Statutory Disqualification

A
  • has been expelled or suspended from membership or association
  • subject to the order of the SEC
  • by conduct while associated with BD.
  • convicted with past 10 years of a security violation or misdemeanor involving finance
  • subject to temporary or permanent judgment from competent court
  • willfully violated federal security laws
  • has made false or misleading statements
28
Q

Registration

A
  • IA’s on federal or state level never both
  • IAR’s only on state level
  • BD’s on federal and state level
  • Agents on federal and state level
29
Q

Renewal for Canadian Broker Dealers

A

Must be filed by December 1

30
Q

Exclusions from the definition of Sale/Sell and Offer to sell

A
  • bona fide pledge or loan (collateral)
  • gift of non-assessable stock
  • stock dividend
  • class vote by stockholders
  • act incident to a judicially approved reorganization which a security is issued in exchange for one or more outstanding securities
31
Q

Administrator Powers to Enforce

A
  • make, amend, or rescind riles and orders and require specific forms
  • conduct investigations and issue subpoenas
  • issue cease and desist orders and seek injunctions
  • deny, suspend and cancel or revoke registrations
32
Q

Rights if Recovery from Improper Sale of Securities

A
  • if purchaser thinks sale violates USA they file complaint with administrator.
    -if proven client can recover: original purchase price, interest at a rate determined by the admin, reasonable attorney fees, any income received while the securities were held
33
Q

SEC Enforcement Powers

A
  • subpoena witness
  • acquire evidence
  • subpoena books and records
  • administer oaths
  • go to a competent court
  • refer to appropriate court
34
Q

Penalties

A
  • Federal = $10k and 5 years
  • State = $5k and 3 years (5-5-3, 5 yr statute)
35
Q

Not included in fee disclosures are:

A
  • commissions
  • markups and markdowns
  • advisory fees
36
Q

Performance Fee Prohibitions Exemptions

A
  • has $1.1m or more immediately under management
  • has net worth of $2.2m or more prior to under management
  • person who is officer or director of investment adviser employed in industry for 12 months
37
Q

Form ADV-E

A

Surprise examination. Required only when investment advisers maintain custody.

Series 65 - March 2024 (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions