Random #11 Flashcards
Who is not considered a person?
minority, mentally handicapped, dead person.
Broker dealer net worth requirement with respect to state
Not subject to state
All registrations of persons and companies expire on what date
Dec 31st (for securities is 12 months)
Consent to service
allows state administrator to receive legal documents on our behalf
Broker dealer with office in a state will have to
Register in that state
Investment advisor- with and without custody
Net worth of 10k without custody and with custody 35k and IA firm can post a surety bond in lieu
Don’t use guarantee as it relates to securities unless
Treasury bond for instance, insurance product,
Exempt transactions
Isolated non issurer transactions, institutions, unsoliceted orders, trustee in a bankruptcy, private placement,
Agent terminates relationship with BD
State register- IA notifies
Federal covered= IAR notifies
Can you split commissions with another agent
Yes- does not have to be discussed
Snowbirds move
30 days to get registered
Customer asks to buy or sell a penny stock not a problem
BD records are kept
Mostly 3 years
Correspondence and Social Media
Every firm has have written supervisory procedures surrounding use of SM (acceptable and not)
IA opens a Margin account for their customer
Credit agreement, hypothecation agreement (Pledging securities as collateral for a loan), Risk disclosure document,
Right of recision
If we didn’t properly Blue Sky the security -Tell investor they the right to 30 days to rescind the sale
Consideration - Stock split or dividend with no payment is
not an offer of sale
Types of orders- vast majority are
Market orders (limit orders)
Stop orders on a stock
Used to stop losses
MAx criminal penalty
5k and 3 years of prison
Federally covered IA
100M to 110M can choose Fed or State. Floor of 90M- 110M is Fed
Incidental advisors
Don’t have to be registered (teacher, accountant, etc.)
ABC of definition of IA
Advice, Business of giving advice, compensation
IA offering free advice- if referring to past performance
12 months of performance
3rd party research
Have to disclose to customer
Agency cross transactions
Represents buy and sell side. when a broker or portfolio manager successfully transfers an asset from one client to another and eliminates the deal’s spread. Eliminates public market
3rd party solicitors to find customers
Has to give a brochure who explains who the solicitor is and for the investment advisory firm. Customer has to know how payment is structured.
