Overview Flashcards
What is the primary purpose of the Securities Act of 1933?
Provide investors with full and fair disclosure regarding new issues (prospectus)
True or False: The SEC judges an offering’s investment merit and provides approval.
False
True or False: The Uniform Securities Act is exactly the same law in every state.
False. The USA is a model law, not the actual law of any state.
According to the USA, who is included under the term “person?” 6
Any legal entity, including
- individuals (clients/agents/IARs),
- BDs,
- IAs,
- issuers,
- corporations, and
- partnerships
True or False: In state law, individuals representing issuers in effecting securities trades are ALWAYS deemed agents.
False. Individuals are not deemed agents if representing issuers of exempt securities or effecting exempt transactions.
As it applies to a BD or IA, what does the term “exclusion” mean in the USA?
Exclusion signifies that a person does not meet the definition of a BD or IA in the state.
A securities firm that executes trades for its own account or the accounts of others is deemed a _______________.
A securities firm that executes trades for its own account or the accounts of others is deemed a broker-dealer (BD).
Who manages accounts, solicits services, or makes recommendations on behalf of a registered investment adviser?
An investment adviser representative (IAR)
An individual who represents an issuer in selling registered, non-exempt securities for compensation is an ________.
An individual who represents an issuer in selling registered, non-exempt securities for compensation is an agent.
An ___________________________________ is to an investment adviser what an ________ is to a BD.
An investment adviser representative (IAR) is to an investment adviser what an agent is to a BD.
Who is the official that monitors and administers a state’s securities laws?
The Administrator or Commissioner
The USA refers to an individual who represents a BD in the sale of securities as an ________.
The USA refers to an individual that represents a BD in the sale of securities as an agent.
Identify who is considered a person under the USA.
Business entities, issuers, estates, governments, individuals (e.g., clients, IARs and agents)
What is the general definition of an investment adviser?
A firm that provides advice/analyses regarding securities, as part of a business, and for compensation
Identify the acronym: USA
Uniform Securities Act
Identify the acronym: IA
Investment Adviser
Identify the acronym: IAR
Investment Adviser Representative
Identify the acronym: NSMIA
National Securities Markets Improvement Act
Identify the acronym: NASAA
North American Securities Administrators Association
What is the ABC Test for investment advisers?
The test that defines an IA as a firm that provides Advice as part of a Business for Compensation
Identify the acronym: RIA
Registered Investment Adviser
Who enforces the Uniform Securities Act?
The Administrator
What is the general definition of an issuer?
Any person who issues or proposes to issue a security, such as government entities and corporations.
An _______of an ________ is an individual who represents an issuer in effecting transactions with the general public.
An agent of an issuer is an individual who represents an issuer in effecting transactions with the general public.
What’s an issuer transaction?
A transaction in which the issuer receives the proceeds.
True or False: The U.S. Virgin Islands are a member of NASAA.
True
True or False: Puerto Rico is a member of NASAA.
True
Is an individual who represents an issuer in the sale of registered stock considered an agent?
Yes. An individual who represents an issuer of securities being offered publicly must register as an agent.
True or False: States may make rules that are more restrictive than SEC (federal) rules.
False. NSMIA prohibits states from making laws that are more restrictive than existing federal requirements.
List the entities that make up NASAA. 6
- All 50 U.S. states,
- the U.S. Virgin Islands,
- Puerto Rico,
- the District of Coloumbia,
- Canada and
- Mexico
What are the three components that must be met for a firm to be defined as an IA?
1) Provide advice regarding securities,
2) Do so as a business
3) Receive specific compensation
(the ABC test)
Identify who IS NOT considered a person under the USA. 4
- Minors,
- incompetents,
- securities, and
- the deceased
are NOT considered persons.
What is the three-pronged test for determining whether a firm meets the IA definition?
A-B-C. A = advice/analyses, B = business, C = compensation
True or False: The District of Columbia is a member of NASAA.
True. Washington D.C. is a member of NASAA.
NSMIA indicates that securities listed on the NYSE, NASDAQ and Toronto Exchange are _______ _______ securities.
NSMIA indicates that securities listed on the NYSE, NASDAQ and Toronto Exchange are federal covered securities.
In state law, individuals who represent BDs in effecting securities transactions are referred to as ______.
In state law, individuals who represent BDs or issuers in effecting securities transactions are referred to as agents.
Identify two significant creations that are credited to the National Securities Markets Improvement Act (NSMIA).
Federal Covered Advisers and Federal Covered Securities
The _____ _________ _________ ______________ __________________ is an organization consisting of state Administrators.
The North American Securities Administrators Association (NASAA) is an organization consisting of state Administrators.
The Securities Act of 1933 regulates ____________.
The Securities Act of 1933 regulates new issues.
