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Series 63 Flashcards

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Series 63 flashcards
1
Q

All BDs, exchanges, and agents, and securities must

A

Register with the SEC

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2
Q

Regulates industry professionals who charge a fee for the advice they offer to clients.

A

The Investment Advisers Act of 1940

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3
Q

An insider is defined as any officer, director, 10% stockholder, or anyone who is in possession of

A

Non-public material information

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4
Q

Ensured that no action by any state or political subdivision could impose laws or requirements upon any BD that differed from or are in addition to those of the Securities Exchange Act of 1934

A

The National Securities Market Improvement Act of 1996

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5
Q

Set forth that the states did not have any authority to regulate investment advisory firms that are federally registered. However, the states may require an investment advisory representative or a federally registered investment advisor to register with the State.

A

NSMIA

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6
Q

Sets the basic standards by which all investment professionals acting in a fiduciary capacity must abide.

A

The Uniform Prudent Investors Act of 1994

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7
Q

Require that all firms implement a customer identification program to ensure that the firm knows the true identity of the customers.

A

Anti-money laundering rules

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8
Q

Is a process of multiple deposits in amounts less than 10k. The funds will often be drawn from different financial institutions; this is also known as structuring.

A

Layering

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9
Q

requires that the firm maintain adequate procedures to protect the financial information of its customers. A firm must deliver:
Initial privacy notice to customers when the account is opened.
Annual privacy notice to all customer

A

Regulation S-P

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10
Q

A client of a brokerage firm may not opt-out of the sharing of information with

A

An affiliated company.

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11
Q

Prohibits BD from soliciting business based upon information received from affiliated third parties unless the potential marketing had been clearly disclosed to the potential customer, and the potential customer was provided an opportunity to opt out and did not opt out.

A

Regulation S-AM

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12
Q

Name 5 securities:

A 
Stocks 
Bonds 
Notes 
Debentures 
Warrants
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13
Q

when you see the term “certificate,”

A

you have a security

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14
Q

What term also identifies as security?

A

“Variable”

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15
Q

The phrase “ interest in” also identifying as a what?

A

Security

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16
Q

“Option” is also a good way to identify a security. List Five

A

Stock option
Index option
Futures option
Commodity futures option

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17
Q

The following are not considered what?

  • Real Estate
  • Retirement plans, such as IRAs and 401k
  • Bank Accounts
  • Collectibles
  • Precious metals
  • Fixed annuities/fixed contracts
  • Whole and term life policies
  • Antiques
  • Future contracts (commodities)
  • Trade confirmation
  • Prospectuses
A

Securities

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18
Q

What is not considered securities? (11)

A 
Real Estate 
Retirement plans, such as IRAs and 401k 
Bank Accounts 
Collectibles 
Precious metals 
Fixed annuities/fixed contracts 
Whole and term life policies 
Antiques 
Future contracts (commodities) 
Trade confirmation 
Prospectuses
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19
Q

The term “future” when it appears alone, is an indication that security is

A

Not involved.

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20
Q

The term “fixed” is a good indication that security is

A

Not involved.

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21
Q

A BD must be registered where?

A

In its home state as well as in the states of its “individual” clients

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22
Q

A firm that is in the business of effecting transactions for the accounts of others, is acting as a broker, and charges a commission

A

Agency capacity

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23
Q

A person, or firm, engaged in the business of buying or selling securities for the accounts of others or for its own account

A

Broker-Dealer

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24
Q

A firm that is in the business of effecting transactions for its own account, may be referred to as a market maker, and is acting as a dealer

A

Principal capacity

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25
Q

A BD is not:

A
  • An agent
  • A bank
  • A savings or loan
  • A person with no place of business in the state, who deals exclusively with financial institutions or issuers.
  • A person with no place of business in the state who conducts business with an existing client who does not reside in the state and is in state for less than 30 days
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26
Q

Agents are required to register

A

in their home state, their state of employment, and the state of residence of their customer.

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27
Q

An agent is not required to register if:

A
  • They represent the issuer or a BD in an underwriter transaction.
  • They represent a bank or a savings and loan in the issuance of securities
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28
Q
  • US Gov.
  • State and Municipal Gov.
  • Canadian Federal and Municipal Gov.
  • Commercial paper with maturities of less than 270 days, sold in denomination exceeding 50k
  • Investment contracts associated with employee pension plans, profit sharing, stock purchase, or savings plans
  • Foreign national Gov. recognized by the US
A

Examples of exempt issuers

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29
Q

Agents who represent exempt issuers are not required to register. Examples of exempt issuers are:

A
  • US Gov.
  • State and Municipal Gov.
  • Canadian Federal and Municipal Gov.
  • Commercial paper with maturities of less than 270 days, sold in denomination exceeding 50k
  • Investment contracts associated with employee pension plans, profit sharing, stock purchase, or savings plans
  • Foreign national Gov. recognized by the US
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30
Q

Any person that issues or simply proposes to issue a security.

A

An issuer

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31
Q

any entity that does not issue or propose to issue a security. All secondary market transactions that takes place on an exchange or in the OTC market are nonissuer transactions, and the sellings security holder receives the proceeds from the sale?

A

An nonissuer

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32
Q

any person who is actively involved in and receives a fee for doing such as:
Issuing research reports or analysis
Publishing a market letter based on market events
Advising clients as to the advisability of the purchase or sale of a security
Providing investment advisory services as a complement to their services and claming to provide such service for a fee
Presenting themselves as investment advisers, also known as the shingle rule
Pension consultants

A

An investment adviser

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33
Q

Will file Form ADV and all of the required parts based on their business profile and place of registration through the Investment Adviser Registration Database or IARD. The IARD is used by the SEC and NASAA to review all investment adviser registration data. Advisers must file annual updates to their FOrm ADV within 90 days of the end of the adviser fiscal year.

A

Investment Advisers

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34
Q 
Is a natural person who is under the control of the investment adviser and includes: 
Officers and directors 
Partner 
Solicitors 
Supervisors
A

An investment adviser rep

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35
Q

any person who for compensation actively seeks new business for an investment adviser is called a what? (On the test)

A

A solicitor

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36
Q

Anyone employed by the investment adviser who has access to nonpublic information relating to activity and holding in client accounts or in the investment’s advise portfolio account.

A

An access person

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37
Q

An institutional investor is a person or firm who trades securities for his or her own account or for the account of others. Institutional investors are generally limited to large financial companies. Institutional investors include:

A
  • Insurance Companies
  • BD
  • Banks
  • Trusts
  • Savings and Loans
  • Gov. agencies
  • Investment advisers
  • Employment benefit plans with more than 10m in assets.
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38
Q 
Insurance Companies 
BD
Banks 
Trusts 
Savings and Loans 
Gov. agencies 
Investment advisers 
Employment benefit plans with more than 10m in assets. 
are what?
A

An institutional investor

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39
Q

An individual who has a net worth of 1m, excluding primary residence, or earns 200k per year, a couple earning 300k per year

A

Accredited investor

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40
Q

An individual with at least 5m in investments
A family-owned business with at least 5m in investments
A trust sponsored by a qualified purchaser
is considered a what?

A

A qualified purchase

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41
Q

An unregistered investment company or hedge fund that raises funds through the sale of securities to qualified purchasers for any business purposes

A

A private investment company

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42
Q

Any attempt to solicit the purchase or sale of a security for value.

A

An offer

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43
Q

An offer will not be considered to have been made if it was received through a television or radio broadcast originating where?

A

Outside the state.

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44
Q

An offer will be considered to have been made if received by a newspaper or magazine published out of the state or by a magazine published in state that has what?

A

Two-thirds of its paid circulation outside of the state.

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45
Q

The state securities administrator does not have jurisdiction over offers that are deemed to be made exclusively where?

A

outside of the admin. state.

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46
Q

stock that may require the holder to make additional payments as a term of ownership.

A

Assessable stock

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47
Q

the payment of principal, interest, or dividend

A

“guarantee

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48
Q

Most mutual funds charge an asset-based distribution fee to cover expenses related to the promotion and distribution of the fund’s shares. The amount of the fee will be determined annually as a percentage of the NAV or as a flat fee

A

The 12B-1 fee

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49
Q

To start and continue a 12B-1 fee, three votes must initially approve the fee and annually reapprove it. The three votes that are required are:

A

A majority vote of the board of directors
A majority vote of the noninterest board of directors
A majority vote of the outstanding shares

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50
Q

Most powers of attorney in the investment world are?

A

limited powers of attorney

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51
Q

allow an investment professional to purchase and sell securities without speaking to a client first.

A

limited powers of attorney

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52
Q

A durable power of attorney

A

will remain in full force during the incapacitation of the grantor and will only terminate upon the grantors

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53
Q

The first test when deciding if the BD must register is determining if the first has a what?

A

office in the state.

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54
Q

If the firm maintains an office within the state, then it must register then it must?

A

Register in that state

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55
Q

Agents must register in their state of residence even if their firm is located where?

A

Another State

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56
Q

Agents must also register in the states where they sell securities or offer to sell securities as well as they also do what?

A

advertise

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57
Q

IF the firm does not have an office in the state it may or may not be required to do what?

A

register, depending on whom it does business with

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58
Q

If a broker-dealer does not have an office in the state and engages in securities transactions with the general public, then it must do what?

A

must register

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59
Q

If a BD with no office in the state conducts business exclusively with any of the following then it must not do what?
Other BD
Issuers of Securities
Insurance Companies
Banks
Pension plans with more than 1m in assets
Institutional buyers
Existing customer with less than 30 days temp.

A

not required to register in that state

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60
Q

If the agent works for an exempt issuer, the agent is what?

A

exempt from registration no matter what security is involved

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61
Q 
The following are what? 
US and municipal gov.
Canadian fed and muni gov. 
Foreign fed gov. Recognized by the US 
Banks, savings and loans, and trust companies.
A

Exempt issuers

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62
Q

These are also exempt from registering if they represent an issuer in the sale of exempt security?

A

Agents

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63
Q

must always register with the SEC and with the states where they conduct business.

A

BD

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64
Q

The Securities Exchange Act of 1934 enacted a requirement for registration that requires a BD to meet financial, record keeping, reporting, or custody requirements that doesn’t goes beyond that required to protect against what?

A

No state or political subdivision

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65
Q

must sign an agreement state that FINRA and the SEC are allowed to have access to any location where the member conduct its busines

A

The host financial institution

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66
Q

Is used to collect the applicants personal and professional history, including
10-year employment history
5-year resident history
Any legal or regulatory actions

A

Form U4

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67
Q

If a registered rep voluntarily resigns or has his or her association with a member firm terminated for any reasons, the member must fill out and submit a Uniform Termination Notic of Securites Industry Registration, which is known as

A

Form U5

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68
Q

registration is nontransferable to whom?

A

Associated person’s

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69
Q

The employing firm that the representative is leaving must fill out and submit a

A

From U5

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70
Q

While an agents registration is pending the agent may act in

A

Administrative or support capacity only.

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71
Q

An agent does not become registered in a state simply by passing the Series 63 exam. An agent becomes registered only when?

A

the state securities admin. Notifies the agent that he or she has become registered.

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72
Q

An agent may not be registered in any state without being what?

A

employed by a BD or issuer

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73
Q

If a BD is acquiring another BD, the successor firm must file an application for registration within the state. The successor firm registration will become effective upon completion of the transaction. The registration fees for the successor firm will be what? (asked on test)

A

Waived

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74
Q

All state registration expires on Dec. 31st, and all BD, investment advisers, and agents are required to file a?

A

the renewal application and pay a renewal fee.

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75
Q

remains in effect as long as the registration of the agent or firm is in effect with the state.

A

The consent to service of process

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76
Q

A Canadian firm or agent may engage in securities transactions with financial institutions and existing customers without registering under the USA as long as they do not what?

A

maintain an office within the state.

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77
Q

A Canadian BD or agent who is a member in good standing with a Canadian securities regulator is allowed to register through a simplified registration process. The state registration will become effective

A

30 days after the application has been received with the consent to the service process.

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78
Q

State registration exemptions are provided for investment advisers who:

A
  • Are federally registered
  • Manage portfolios for investment companies
  • Manager portfolios in excess of 110m
  • Have no office in the state and conduct business exclusively with financial institutions.
  • Have no office in the state and offer advice to five clients or fewer in any 12 month period. - This is known as the de minimis exemption
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79
Q

If a state registered investment adviser with no office in the state adversities to the public the ability to meet and offer investment advisory services with clients in a hotel or other temporary location, the investment adviser is required to do what?

A

register with the state.

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80
Q

A federally covered investment adviser must register with the SEC and is any investment adviser who:

A
  • Manages at least 110m
  • Manages investment company portfolios
  • Is not registered under state laws
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81
Q

All federally registered investment advisers must pay what and do what?

A

state filing fees and notify the administrator in the state in which they conduct business.

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82
Q

The state securities admin. may not audit a federally covered investment adviser unless? Investment advisers are required to register with the state if they manage less than what?

A

that adviser’s principal office is located in that administrator’s state. Investment advisers are required to register with the state if they manage less than 100m

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83
Q

Pension consultants must have at least then what?

A

200m AUM to be eligible to become federally registered

84
Q

All Investment adviser representatives who maintain an office within the state must register within the state. An investment adviser representative is an individual who:

A

Is an officer, director, or partner of the investment adviser.

85
Q

An investment adviser representative who has no place of business in the state and who offers to meet a client in a hotel or other place of convenience is not considered to have an office in the state so long as the representative does not do what?

A

advertise the office and offer the ability to meet directly to clients.

86
Q

Investment adviser representatives who represent federally covered investment advisers are only required to register in the state where they work even though they may have clients where?

A

In other states.

87
Q

Advisers, that have custody of customers’ cash and securities must maintain net capital of what?

A

35K

88
Q

An adviser who has only limited discretionary authority over customer’s accounts needs to maintain a min.

A

10k

89
Q

Investment adviser representatives are not required to maintain a level of what?

A

Liquidity

90
Q

Federally registered investment advisers are not required to meet what?

A

any capital or net worth requirements

91
Q

In practice, the administrator may allow registrations of any applicant to become effective in a period of less than

A

30 days. This would be classified by definition as a “rush order”

92
Q

During the period when an agent’s registration is pending the person may not undertake any activities that would require the person to be registered. The person may only act in a what?

A

clerical capacity such as posting trades to client accounts and participating in the creation of research.

93
Q

All advertising and sales literature for an investment adviser must be filed with who?

A

the state securities administrator.

94
Q

The following records must be kept by investment advisers for a min. of five years/ (3)

A

Advertising and sales literature
Account Statements
Order tickets/order memorandum

95
Q

All investment advisers must keep accurate records relating to the following:

A

Cash receipts and disbursements

Copies of calculations sent to more than 10 ppl.

96
Q

All books and records must be kept for how long?

A

five years readily accessible and for two years at the adviser’s office

97
Q

An investment adviser is required to provide all prospective clients with a brochure or with Form ADV Part 2A and 2B at least how long?

A

48 hours prior to the signing of the contract or at least at the time of the signing of the contract, if the client is given a five day grace period to withdraw without penalty

98
Q

A wrap account is an account that charges one fee for both?

A

the advice received as well as the cost of the transaction.

99
Q

All clients who open wrap accounts must be given the wrap account brochure knows as what

A

Schedule H; will provide all of the information that is found on Form ADV Part 2. BD who offer WRAP accounts must be registered as investment advisers.

100
Q

All Securities that are sold to state residents must either be: (3)

A

Properly registered
Exempt from registration
Sold through an exempt transaction

101
Q

Exempt securities are exempt from the registration requirements of the Securities Act of 1933. Exempt securities are not exempt from the antifraud provision of the USA. Exempt securities are: (2)

A
  • Issued by exempt issuers, such as governments

- Short term debt instruments with less than 270 days to maturity

102
Q

Nonexempt securities become federally registered by submitting a registration statement to who?

A

The SEC

103
Q

Nonexempt securities must also register in the states in which the securities will be?

A

Sold

104
Q

IPOs that register with the state securities administrator at the same time that they register with the SEC. The process of simultaneous registration is known as what?

A

Coordination. State Registration may not become effective prior to the security’s federal registration become effective.

105
Q

NSMIA withdrew the states authority to require the registration of investment companies registered under the Investment Company Act of 1940. The states preserved the right to require investment companies to file a notice and pay a fee. this is called?

A

Notice Filing

106
Q

When the issuer of a security notice files with the state securities administrator, the following must be submitted: (7)

A
  • Issuer’s name and address
    - Type of organization
    - Description of the securities to be offered
    - Copy of the prospectus
    - Copy of documents filed with the SEC
    - Consent to service of process
    - State fee
107
Q

The administrator may investigate the firms and agents that offer the securities for sale to investors within their state. Notice filing may also be used by other federally covered and federally registered securities that meet the minimum requirements. The administrator may require that an issuer of a federally covered security trading on an exchange file all information with the SEC and submit a consent to service of the process prior to offering any securities to who

A

State Residents

108
Q

Securities of issuers that will be sold only in one state through an intrastate offering will also be registered through

A

Qualification

109
Q

Registration is effective for up to?

A

one year from the effective date or until all securities have been sold, whichever is longer.

110
Q

The person who files the registration statement with the state maybe?

A

the issuer, a broker-dealer, or a large stockholder selling shares as part of the offering.

111
Q

An exemption from state registration is also provided to two types of securities?

A
  • Securities that sold exclusively to qualified purchasers

- Securities and transactions exempt from federal registration.

112
Q

Certain securities are exempt from state registration and sales literature requirements because the issuer is exempt. Examples of exempt issuers are: (4)

A

U.S. government
State and Municipal governments
Insurance Companies
Banks and Trusts

113
Q

Sales to nonaccredited investors are limited to:

A

10 in any 12 month period at the state level, and 35 nonaccredited investors at the federal level.

114
Q

No commission may be paid to representatives who sell a private placement to?

A

nonaccredited investors (and higher net worth individuals and institutions). All investors in private placements must hold the securities fully paid for at least six months.

115
Q

All transactions with financial institutions are exempt. The USA was designed to protect individual investors. Financial institutions include: (5)

A
  • Banks
  • Insurance companies
  • Investment companies
  • Broker Dealers
  • Pension plans with at least 1m in assets
116
Q

All transactions with fiduciaries are exempt from registration with the administrator. The transaction with any of the following are considered transactions with fiduciaries and are exempt: (6)

A 
Trustees
Executors 
Guardians 
Sheriffs/marshals 
Administrators 
Receivers
117
Q

All orders that is executed through a broker-dealer at the sole request of the customer are considered?

A

unsolicited orders, and the securities if not registered within the state are exempt from registration.

118
Q

The administrator may require proof that the order was unsolicited and may require that the customer sign an acknowledgment due to the fact the unsolicited order is an

A

exempt transactions.

119
Q

an agreement to purchase securities to the formation of a corporation.

A

A preorganization certificate

120
Q

The offer or sale of the certificate is exempt if no commission was received for

A

soliciting the sale

121
Q

An agent or a broker-dealer may occasionally recommend a security to a client this is not registered in the clients state of residence as long as it is an

A

isolated event

122
Q

In order to qualify for an exemption from SEC registration, the issue must be organized and have its principal place of business in the state and meet at least one the following business criteria:

A

80% issuer income in that state
80% of the offering proceeds must be used in that state
80% of the issuer assets in that state
A majority of employees in that state.

123
Q

All purchasers must be located within the state and must agree not to resell the securities to an out of state resident for

A

6 months

124
Q

If the issuer is using an underwriter, the BD

A

must have an office in that state.

125
Q

Fraud is defined as any act that is employed to obtain an unfair advantage over another party. Fraud includes

A
  • False statements
  • Deliberate omissions of material facts
  • Concealment of material facts
  • Manipulative and deceptive practices
126
Q

A recommendation to a customer could be profitable yet still be unsuitable if the customer’s profile is considered. Firms and agents are prohibited from: (6)

A
  • Making blanket recommendations
  • Churning customer’s accounts
  • Making unfair comparisons
  • Making recommendations that do not meet clients investment objective or investment profile
  • Selling away
  • Making recommendations that are excessive in size based on the customer’s ability to pay
127
Q

The adviser must send notice to its clients annually detailing the number of all agency type of transactions

A

agency cross transaction

128
Q

An investment adviser must update its form ADV?

A

annually within 90 days of its fiscal year end.

129
Q

the investment adviser must provide each client with an updated brochure annually within

A

120 days of the advisers fiscal year end.

130
Q

An investment adviser must disclose all of the following:

A
  • Conflict of Interest
  • Sources of recommendations
  • Location of customers funds for advisers with custody
  • Soft Dollar arrangement
131
Q

If the change to the investment adviser’s business is material, it must be disclosed when?

A

promptly

132
Q

An investment adviser may no do the following activities: List 6

A
  • Borrow from a customer
  • Commingle customers funds with the adviser funds
  • Accept an order from a party not named on the account of the customer.
  • Churn customer accounts.
  • Make unsuitable recommendations
  • Charge unreasonable fees
133
Q

An investment adviser with custody of customers’ funds must do what? (5)

A
  • Segregate all customer funds and securities
  • Give the customer a written notice of the location of the funds
  • Establish a separate bank account for the customers funds.
  • Provide quarterly statements showing all transactions and account status
  • Go through an annual surprise audit
134
Q

Only the items that can truly be deemed to be for the benefit of the client are within the safe harbor. Valuation software and other research-related items are within the safe harbor while paying for a laptop or rent for the adviser would not be within the safe harbor.

A

Soft Dollar Considerations:

135
Q

An individual’s registration may be canceled if the person has been deemed mentally incompetent by a court of law. The cancellation of registration by the administrator is not disciplinary or punitive action but is more?

A

it is more clerical in nature.

136
Q

The parties must also be notified that a hearing will be granted within how many days and by?

A

15 days of receipt of a written request.

137
Q

A state securities administrator may investigate who and why?

A

a broker-dealer, a state investment adviser, or an agent in any state if the administrator believes that a violation has taken or may take place.

138
Q

While the administrator may investigate and take action in all of the above situations, the administrator does not have jurisdiction over activities that take place where?

A

exclusively outside of the administrative state.

139
Q

may issue a cease and desist order without a prior hearing or notice.

A

A state securities administrator

140
Q

The powers granted to the administrator under Uniform Securities Act include the ability to: (3)

A
  • Cancel, deny, suspend, or revoke a registration of an agent, firm, or security.
  • Seek injunctions
  • Amend, make and rescind rules and orders.
141
Q

The only time that a state securities administrator has any authority to investigate a federally registered investment adviser is if?

A

the adviser principal office is located within the administrator state

142
Q

xThe state securities administrator has jurisdiction over securities transaction that: (4)

A
  • Originated within the state
  • Are directed into the state
  • Are accepted in the state.
  • The offer and acceptance of a security constitute a transaction or the sale of a security. It is the actual conference
143
Q

may be issued without a hearing

A

A cease and desist order

144
Q

has the authority to force compliance with the order and to prescribe penalties for violating the order.

A

a court of law

145
Q

An advertisement, offer, or solicitation will not have been made and will be outside the jurisdiction of a state securities administrator if the following conditions are met: (5)

A
  • The television broadcast is originated outside the administrators state
  • The radio broadcast originated outside the admin. State
  • The newspaper or periodical was published outside the admin. State.
  • The newspaper or periodical was published inside the state but two thirds of its circulation is outside of the state of publication
  • In the last case the circulation numbers are based on the preceding year.
146
Q

All offers of rescission must be in writing and include an agreement to repurchase the securities at the original purchase price and must include interest for the time period that money was invested. If the buyer does not accept the offer of rescission within

A

30 Days

147
Q

If a buyer of a security finds that the sale of the security violates any of the provisions of the USA, the purchaser has

A

two years from the discovery of the violation or three years from the purchase date, whichever comes first, to take action.

148
Q

Securities sold by the U.S. Government, municipal issues sold by cities or states, and securities issued by non-profit organization

A

are exempt from the registration requirements of the USA

149
Q

An investment adviser must furnish each advisory client with a written disclosure statement not less than

A

48 hours or at the time of entering into any such contract if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

150
Q

Any brokerage firm employee who effects transactions is considered a what regardless of job title.

A

An agent

151
Q

An employee of an issuer selling stock to a non-institutional customer is typically considered

A

An Agent

152
Q

The definition of security does not include a

A

Fixed annuity

153
Q

are those with assets of $150 million or more and are required to register with the SEC?

A

Qualifying Private Funds

154
Q

If a Canadian broker-dealer has even one non-institutional investor who is a resident of a state, then?

A

the firm must register as a broker-dealer in that state.

155
Q

All firms are exempt from registration if they have no place of business in a state and their only clients

A

Are institutional institution

156
Q

Canadian broker-dealers are exempt when dealing with existing Canadian clients who are

A

Temporarily in that state.

157
Q

A firm that provides investment management services will register as an investment adviser, not as

A

a broker-dealer

158
Q

Advisers may receive compensation both for providing investment advice and for facilitating transactions pursuant to the advice, as long as the nature and sources of the compensation are fully disclosed to the client in writing before when?

A

rendering of the advice.

159
Q

A person who represents an issuer is sometimes considered

A

an agent and must register with the state.

160
Q

a person who represents an issuer in transactions with employees of that issuer involving that issuer’s securities is not

A

An agent

161
Q

securities issued by banks, savings institutions, savings & loans, or trust companies are?

A

exempt securities

162
Q

. Securities issued by bank holding companies are

A

not exempt.

163
Q

An investment adviser and an investment adviser representative must always be registered in a state in which they

A

transact securities business, unless exempted from registration

164
Q

excluded from the definition under state law and is exempt from registration requirements under federal law and therefore, not required to be registered in the state, but may be required to notify the administrator in that state.

A

federally covered adviser

165
Q

must be registered in the state, even if working for a federally covered adviser

A

the investment adviser representative

166
Q

All securities sold by an agent must be authorized or approved

A

by the employing broker-dealer.

167
Q

Customers must be provided with a copy of the adviser’s IA brochure (or ADV Part 2) either

A

48 hours prior to entering into the advisory contract or at the time the contract is executed. If the IA waits until the time of contract to deliver the brochure, the customer can terminate the contract without penalty within five business days.

168
Q

An agent who provides advice on securities, receiving compensation for the transaction is NOT required to be registered

A

as an investment adviser representative.

169
Q

A broker-dealer agent must try to obtain enough information from the customer in order to make a what?

A

suitable recommendation as well as disclose the risks involved.

170
Q

Banks and publishers of financial columns that do not tailor their advice to specific investors are what?

A

excluded from the definition of investment advisers

171
Q

financial planners may be investment advisers and those who advise on exempt securities for a fee are always

A

investments advisers

172
Q

A pooled investment that is not an investment company is often referred to as a

A

private fund, or a hedge fund

173
Q

The adviser to a private fund with less than $150 million in assets under management is exempt from registration with the

A

SEC

174
Q

private fund advisers with more than $150 million under management will register with the SEC using what form?

A

FORM PF

175
Q

Advisers to individuals that have more than $110 million under management will register with the

A

SEC

176
Q

offered to more than 10 retail investors in a 12-month period will lose their exemption from registration.

A

Private placements

177
Q

The USA and related NASAA Statements of Policy and Model Rules classify many types of investments, aside from traditional stocks and bonds as

A

Securities

178
Q

Futures and commodities are not considered what?

A

securities under the USA, but options on these instruments (or anything else) are considered to meet the definition.

179
Q

t in some cases, such as the “giving away” of a warrant with a stock purchase, the transaction may be considered both an?

A

offer and sale, since the stock was purchased and the warrant may entail a future cash outlay upon exercise.

180
Q

Securities sold by the U.S. Government, municipal issues sold by cities or states, and securities issued by non-profit organizations are what?

A

exempt from the registration requirements of the USA

181
Q

Junk rated commercial paper is (fill in the blank) from registration in a state under the USA and is subject to registration.

A

Exempt

182
Q

it is unlawful for any person to offer or sell any security unless

A

1) it is registered under the USA, 2) the security or transaction is exempted under the USA, or 3) it is a federal covered security.

183
Q

An offer of an unregistered, non-exempt security by an agent of a broker-dealer is what?

A

not an exempt transaction nor is it permitted under the Act.

184
Q

The only time it is acceptable to trade an unregistered, non-exempt security is if the trade was what?

A

directed by the customer on an unsolicited basis (with proper documentation to support it).

185
Q

offered to 10 or fewer retail customers within 12 months and no commission paid

A

Private placements

186
Q

Securities issued by a non-profit or religious organization, securities guaranteed by a banking institution organized under the laws of the United States, and securities issued by the federal government of Canada, a recognized foreign government, are considered by the USA

A

to be exempt securities.

187
Q

The Uniform Securities Act considers condominium leasing pools (such as timeshares), merchandise marketing programs, and REITs to be investment contracts…these are considered?

A

(securities).

188
Q

Commodity futures contracts are

A

not securities

189
Q

Bonds issued by foreign municipalities must also be registered

A

in a state, unless it is a Canadian municipal bond.

190
Q

stock issued by a bank holding company requires

A

state registration under the USA.

191
Q

. A customer must be sent an annual summary of what?

A

agency cross transactions on the account

192
Q

A customer may give blanket authorization to the investment adviser that may be revoked by the customer when?

A

at any time

193
Q

the investment adviser can only recommend the transaction to the buyer or seller. The investment adviser cannot recommend to who?

A

both sides of the trade

194
Q

Every registered investment adviser who takes custody of client funds or securities, or requires payment of advisory fees six months or more in advance and in excess of $500 per client, must file a what?

A

audited balance sheet with the Administrator

195
Q

The adviser must also promptly notify the administrator that it has taken custody of customer funds. An adviser that takes custody of client funds may also be a broker-dealer. This practice is not considered what?

A

Fraudulent

196
Q

allows firms with no office in a state to provide investment advisory services to five or fewer non-institutional customers in a 12-month period

A

The de minimus exemption

197
Q

any firm that executes trades is not an investment adviser, the firm is a what?

A

Broker Dealer

198
Q

The adviser must obtain written customer permission no later than what?

A

10 days after the first trade in a discretionary account that was effected based on verbal authorization.

199
Q

A person that require discretionary authority granted in writing by the customer before discretion can be used.

A

Broker Dealer

200
Q

REITs, fractional undivided interest in oil, gas, or other mineral rights, and VULs are included in the USA definition of a what?

A

Security

201
Q

Both solicited and unsolicited orders are instructions to what?

A

trade securities.

202
Q

An individual who represents a broker-dealer in the sale of nonexempt securities is required to register?

A

in a state

203
Q

Individuals who directly represent issuers in selling exempt securities or engaging in exempt transactions

A

are excluded from the Uniform Securities Act’s definition of an agent.

204
Q

. The Administrator has the power to review advertising and sales literature for non-exempt securities and may examine records

A

both in and out of their home state.

205
Q

Agents may not share directly or indirectly in profits and losses in client accounts without the prior written agreement between

A

the client and the agent, and approved by the employing broker-dealer.

Series 63 (2 decks)

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