Other Federal and State Regulations

Question 1

What is the Trust indenture Acto 1939?

Answer 1

Created because the 1933 act didnt adequately protect bondholders after and offering was completed

Question 2

What must be made with a Trust Indenture?

Answer 2

All Interstate offerings of non-exempt BONDS of $50MM or more

Question 3

What is exempt from the Trust Indenture act of 1933?

Answer 3

US Govt, Agency, and Municipal debt

Question 4

What else does the 1939 act require?

Answer 4

The appointment of a substantial trustee to protect interest of bondholders and insure. Trustees cannot have conflicts of interest

Question 5

What is the Investment company act of 1940?

Answer 5

Investment companies are required to register with the SEC under this Act. It also defines types of investment organizations that are allowed

Question 6

What is the Investment Advisers Act of 1940?

Answer 6

Investment advisers must register with the SEC if they give advice interstate to 15 or more people.

Question 7

What are specifically not considered to be investment advisers?

Answer 7

Broker Dealers, banks, general circulation newspapers

Question 8

Are market newsletter services considered to be Investment Advisers?

Answer 8

YES

Question 9

Which firms require investment adviser registration?

Answer 9

Firms that offer wrap accounts and non-managed flat fee accounts

Question 10

What are Federal Covered Advisers?

Answer 10

Bigger advisers that have to register with the SEC. Advisers to investment companies and advisers managing over $100MM of assets

Question 11

What are State Registered Advisers?

Answer 11

Smaller advisers that must register with the state. Less than $100MM in assets

Question 12

What is the Securities Investors Protection Act of 1970?

Answer 12

SIPC. This is neither a government nor a regulatory authority. It is a NON-PROFIT member corporation funded by its member securities BD’s

Question 13

What does the SIPC do, and what does it cover?

Answer 13

It protects investors from BD failure. Covers $500,000 in equity per customer, inclusive of $250,000 cash coverage

Question 14

Is SIPC applicable to mutual funds?

Answer 14

NO

Question 15

What are the hours that unsolicited calls and faxes can be made under the Fed. Telephone Consumer Protection Act of 1991?

Answer 15

From 8:00 AM to 9:00 PM, in the recipient’s time zone

Question 16

What must the caller disclose in the phonecall?

Answer 16

• Name
• Firm
• Firm address

Question 17

Who does the Telephone Protection act not apply to?

Answer 17

Non profit org’s

Question 18

What is the National Do Not Call Registry?

Answer 18

This is overseen by the FTC (Federal trade commission), and any person who registers cannot receive unsolicited calls from businesses

Question 19

An exemption applies to the 1991 telephone act if a caller has an established business relationship (EBR) with a customer. What defines an EBR?

Answer 19

• Did business with the firm in the last 18 months

- OR contacted the firm to inquire about products/services in the previous 3 months

Question 20

What rule prevents issuers from extending credit to any officer or director?

Answer 20

SOX

Question 21

What are the different ways in which you can register a security in a State?

Answer 21

• Registration by Coordination: coordinate Fed. reg. with state reg.
• Reg. by Qualification: used by company that has never file in the state before (most expensive/detailed)
• Reg. by Filing: like a renewal app. - used by company that has issued in that state before

Question 22

What securities may be exempt from State registration?

Answer 22

Blue Chip Securities - exempts subsequent issues of listed companies

Manual exemption - exempting debt or other fixed income from reg. if included in Moody’s or SandP manual

Question 23

When must the registered representative be registered in a state?

Answer 23

If they want to accept solicited OR un-solicited orders from that state. The salesman must pass the Series #63 - Uniform State Law Agent’s exam

Question 24

What is an investment Adviser representative?

Answer 24

BD’s that offer wrap accounts and charge a single annual fee. They must have passed the Series #65

Question 25

What is the Series #66 Exam for?

Answer 25

Qualifies a person to register with a state as both a securities salesman and an investment adviser

Question 26

What is allowed on the “Legal List” of safe investments?

Answer 26

Govt and municipal safe securities, and corporate offerings rate BBB or better. Equities and options are NOT legal list investments