Questions To Study Flashcards

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1
Q

What federal law was created to prevent fraud in the sale of new issues?

A

The Securities Act of 1933 is to prevent fraud in the sale of new issues of securities (primary distributions) by requiring that investors be provided with enough relevant information about the offering to make an informed decision

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2
Q

What federal law requires broker-dealers to register with the SEC

A

The Securities Exchange Act of 1934 established the SEC which requires the registration of broker-dealers, and governs the secondary market for securities in the US>

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3
Q

What type of securities are NOT required to be registered with the state Administrator?

A

Exempt securities

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4
Q

What does NASAA do?

A

1) Writing and updating the USA
*SEC enforces federal securities law
**FINRA is a self-regulatory org (SRO) that regulates broekr-dealers.

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5
Q

What is the purpose of the Securities Exchange Act of 1934?

A

This act established the SEC and requires the registration of certain financial professionals and governs the secondary market

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6
Q

What does the Investment Adviser’s Act do?

A

Requires investment advisers to register with the SEC

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7
Q

What does the Securities Act of 1933 do?

A

Governs the sales of new securities (IPOS)

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8
Q

What does the USA do?

A

It is a model law that’s used to create state securities legislation

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9
Q

What does the NSMIA do?

A

The National Securities Markets Improvement Act of 1996 was created to eliminate the duplication of state and federal regs.

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10
Q

Which exemption from the registration requirements of the Securities Act of 1933 permits the sale of up to $20 million of securities in a 12-month period without registration with the SEC?

A

Regulation A Tier 1- an issuer is permitted to sell up to $20 millions of any securities in a 12-month period without registering securities with the SEC.

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11
Q

What is Reg D?

A

An exemption from the securities Act of 1933 for private placements

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12
Q

What is Rule 147?

A

The intrastate exemption; if the security is only offered in the state. Must register with the state using qualification.
Notice filings are given to the state Administrator(s) by issuers of federal covered securities

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13
Q

When does a security registered with the state Administrator under USA expire?

A

One year from the effective date of the security’s registration

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14
Q

USA Exempt Securities include:

A
  1. Canada securities
  2. Savings and loans associations
  3. Railroad company certs
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15
Q

What is registration by qualification?

A

When an issuer must satisfy requirements that are set by the Administrator. Qualification doesn’t require registration with the SEC.

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16
Q

What are federal covered securities?

A
17
Q

What are federal covered securities exemptions?

A
18
Q

Viatical investor suitability

A
  1. Minimum net worth of at least $150K (not including their primary residence) and an annual income of $100K
  2. Minimum net worth of at least $250K (not including their primary residence)
19
Q

What is an accredited investor ?

A
  1. Net worth of at least 1 million or annual income of $200K.
  2. Married couple with an income of $300K.
  3. Financial institutions
  4. Executives of the issuer
20
Q

Who created the definition of a security?

A

The Supreme Court

21
Q

What is a non-issuer transaction?

A

A transaction between two investors where the sale proceeds are not directed to the issuer.

22
Q

What are investment company securities registered under?

A

Must be registered with the SEC but are exempt from registration with the state Administrators.

23
Q

When can an administrator deny registration of securities?

A
  1. If the issuer fails to pay the filing fee
  2. If the issuer’s business is illegal
  3. If the seller’s fees are unreasonably large
24
Q

All of the following persons are defined in the USA except:
1) Issuer
2) Broker-dealer
3) Registered Rep
4) IAR

A
  1. Registered Rep
25
Q

Custodians may delegate discretion to whom?

A

Any competent person

26
Q

Who does not meet the definition of an agent, even if they sell to both institutional and retail investors?

A

Anyone selling securities from a municipal issuer or a muni bond

27
Q

When can broker-dealers and their agents exercise discretionary authority?

A

When the customer gives written consent or provides verbal discretion to select the price and/or time of the transaction

28
Q

How long must broker-dealers and IA’s maintain their books and records according to USA?

A

BDs: 3 years
IAs: 5 years

29
Q

How does sharing in a customer’s account work?

A

The client and broker-dealer must approve.
The sharing must be proportionate to the capital at risk.

30
Q

Under the USA Act, when is an offer made in a state?

A

1) When it originates from that state or
2) is directed by the person making the offer (the agent) to a state, and is received in that state in which it is directed.

31
Q

Any person who willfully violate SEC rules an regulations is subject to (Fine and Imprisonment)?

A

1) Fine 10K
2) Imprisonment 5 years

32
Q
A