Notes from USA Quiz Flashcards
The definition of a”person” under the Act includes:
- individuals
- joint stock companies
- unincorporated organizations
- trusts where the interests of the beneficiaries are evidenced by a security
Are IAR’s allowed to do advertising on social media?
Yes, but only if the affiliation of the IA with the IAR is disclosed in the advertisement, along with the IAR’s credentials. Testimonials are prohibited
Any registration statement for a securities offering includes:
- Current balance sheet and income statement;
- Business description;
- Use of proceeds of offering;
- Offering Terms;
- Legal Opinion;
- Accountant’s Opinion
A registration application is considered to be “complete” when the proper documents:
And the filing fee are received by the Administrator
What persons are excluded from the definition of a broker dealer?
- Any person with no place of business in the state who only deals with financial institutions
- Issuers of securities
What is a U-6 report and where are they filed?
The U-6 Form is filed by regulators when they take disciplinary or legal action against a person. This information goes into the CRD or IARD and is available for viewing by the general public on BrokerCheck
Under the provisions of the Uniform Securities Act, the Administrator has the power to do what?
The Administrator has the power to suspend or revoke a registration; and can issue a cease and desist order.
The administrator canNOT impose f fines, issue injunctions, or conduct a judicial review
A “person” under the USA can consist of what?
I. Joint Ventures
II. Individuals
III. Unincorporated businesses
IV. Municipalities
What must an agent be?
An individual person
What can a broker dealer be referenced as?
Incorporated or un-incorporated businesses
What can issuers be referenced as?
- Incorporated or un-incorporated businesses
- Joint ventures
- Municipalities
surety bond coverage is required when:
Investment advisers take custody of funds
What is the minimum net worth or surety bond coverage required for an IA to take custody?
$35,000
The Uniform Securities Act authorizes the Administrator to waive the surety bond requirement for an investment adviser if the firm:
maintains a high enough amount of net capital
What is the FINRA rule for agents of broker dealers borrowing money from immediate family members?
FINRA permits borrowing between a representative and a customer that is an immediate family member, as long as the loan is documented in writing and approved by the firm
What is the NASAA rule for agents of broker dealers borrowing money from immediate family members?
NASAA outright prohibits agents of BD’s borrowing (or lending) from a customer that is an immediate family member
Unsolicited customer security transactions effected through a broker-dealer are exempt from registration under State law. True or false?
True
The State Administrator is supervised by whom?
Secretary of the State
If a representative that transacts business in a State terminates employment with a federal covered adviser, who must notify the administrator and in what amount of time?
If a representative of a federal covered adviser that transacts business in a State terminates employment, it is the responsibility of the representative to notify the State promptly.
Remember, the advisory firm is not registered with the state for federally covered advisors, and someone has to tell the admin!
An Investment Adviser has just submitted a U-4 registration application for a newly hired salesperson to be registered. This individual can start soliciting potential clients at what time?
In 30 days or when the Administrator approves the application, whichever comes first
SEC Rule 17a-3 allows firms to keep complaint records in either of what 2 ways?
- The firm may keep a written record of each customer complaint and its resolution
- Instead of the record, the member may maintain a copy of each original complaint in a separate file of the associated person along with a record of the disposition of the complaint
A firm is in the business of assisting in mergers and acquisitions of companies. The firm does receive monetary compensation in the form of a percentage of the overall deal. Is the firm a Broker dealer?
Yes. A firm that assists in MandA is considered to be effecting a securities transaction. Also, if compensation is received by the the firm, regulators define the firm as a BD
When is it ok for an agent to recommend the purchases of her parent company’s stock to a customer?
- If the agent discloses the existence of the relationship verbally when making the recommendation
- If existence of the relationship is disclosed in writing on the confirmation
The Administrator can require the filing of sales literature, unless the security, or transaction, is what?
Exempt
Who sets net capital requirements for broker dealers?
The SEC.
The NSMIA requires that broker-dealer net capital standards can be set by the State Administrator if:
The administrator sets it at the same level as the federal govt (SEC)
Under Uniform State Law, advisory contracts must be executed:
In writing
Changes to the terms of advisory contracts must be filed with the administrator on ________ within _____ days and approved by the ________
Filed with the administrator on Form ADV within 30 days; approved by the customer
Broker dealers must re-register in the state how often and when?
Annually at calendar year end (12/31)!
What MUST be guaranteed to the customer by an investment adviser?
Custom tailored allocation
What should an investment adviser do if they realized there is a conflict of interest with a customer?
The adviser should notify the customer about the conflict in writing and let the customer decide what action to take, if any
Which of the following can an agent choose in a customer transaction without a written power of attorney?
Price and time
Can the administrator conduct public and private investigations?
Yes
Can the administrator conduct in and out of state investigations?
Yes
Under the Securities Act of 1933, who signs a registration statement for a new issue?
I. CEO of the issuer
II. CFO of the issuer
III. Members of the Board of Directors of the issuer
Investment advisers cannot accept fees based on performance unless the client has at least $__________ of assets under management or a $__________ net worth
$1 million of AUM
$2.1 million in net worth
The Uniform Securities Act requires that an investment adviser notify the Administrator of a representative’s termination in what manner of time?
Promptly
Under the Investment Advisers Act of 1940 to satisfy the requirements of the “Brochure Rule,” customers who wish to buy advisory services must receive a copy of the brochure in what time frame?
At, or prior to, entering into an advisory contract
What is the rule on a State Admin’s ability to set laws establishing record-keeping rules for broker dealers?
The Administrator can only establish recordkeeping rules that are the same as those set by the SEC. Federal law trumps state law
A BD located in State A makes an offer of securities to a customer whose principal residence is in State B. The customer has temporarily moved to State C and has asked the post office in State B to forward the mail to the customer’s address in State C. Which State Administrator(s) has (have) jurisdiction over the offer?
State A only
Because the broker-dealer is located in State A, that State Administrator has jurisdiction. The offer was never received in State B because it was forwarded by the post office on to State C. There is no jurisdiction fro state C either. In this situation, the USA makes an exception. The issue here is that the broker-dealer had no idea that the mail was forwarded to State C and should not be subject to the law of State C on this offer
An agent tells a customer: “Since I am not registered in your State, I cannot contact you and ask you to buy a security. However, you can call me and ask me to sell it to you, since then I am not soliciting you.” Under the Uniform Securities Act, the agent is soliciting:
An offer to BUY from the customer
This action is prohibited
If an investment adviser wishes to effect an “agency cross transaction:”
I. the adviser cannot have recommended the transaction to both the buyer and the seller
II. written consent from the customer is required
III. the total remuneration to be received must be disclosed to the customer
IV. an annual disclosure statement must be sent to customers detailing the number of agency cross transactions effected and the total dollar remuneration received
Under the Investment Advisers Act of 1940, if there are material changes, existing customers of investment advisers MUST be sent a revised “Brochure” at least:
Annually
What is the definition of a security?
An investment in a common enterprise for profit with management provided by another party
