Series 63 Flashcards
Under the USA, what entities are included in the definition of institutional client of an investment advisor?
- Other IAs / federal covered advisers
- BDs
- Banks
- Trust companies
- Savings and loans associations
- Insurance companies
- Employee benefit plans w/assets of NOT LESS than $1mm
- Governmental agencies or instrumentalities
INDIVIDUALS ARE NEVER DEFINED AS INSTITUTIONS, REGARDLESS OF WEALTH OR SOPHISTICATION
What is the statute of limitations for civil liability?
The statute of limitations for civil liability is the earlier of three years after the date of the sale or two years after discovery of the violation.
The suspension of a BD’s registration causes the registration of all agents ….
The suspension of a broker-dealer’s registration causes the registration of all agents to be placed into suspense
In general, a broker-dealer will disclose its fee schedule
Typically, a broker-dealer’s fee schedule is disclosed at the time an account is opened.
In conducting investigations, the Administrator may not
make investigations outside the state to determine whether violations of the Uniform Securities Act have occurred in that other state.
The state Administrator may, by rule or order, require issuers of federal covered securities to file records with the state that are part of a registration statement filed with the SEC. This procedure is called
Notice filing
Items that are NOT securities
- Fixed Annuities
- Ordinary Insurance Policies
- Endowments
- Keogh Plans
- IRAs
- Commodity Contracts
- Precious Metals
There are 3 primary expenses involved with brokerage accounts that are NOT included in the fee disclosure template
- commissions
- markups and markdowns;
- advisory fees for those firms that are also registered as investment advisers.
The statute of limitations for CIVIL VIOLATIONS of the Uniform Securities Act is…
Is the earlier of 3 yrs after the date of sale OR 2 yrs after discovery of the violation
What is the SEC’s Customer Protection Rule?
The SEC’s Customer Protection Rule is designed to help safeguard customer securities and funds held by a broker-dealer, prevent investor loss or harm in the wake of a broker-dealer’s failure, and improve the SEC’s ability to monitor broker-dealer business practices
Form ADV is used to register investment advisors:
o Part 1 includes information for the regulators in a fill-in-the-blank/check-the-box format.
o Part 2A is the basis for the customer brochure and includes disclosure information in a narrative, plain language format.
o Part 2B is the brochure supplement containing information on the IAR(s) providing advice to the client.
o Part 3 is the customer relationship summary (Form CRS) required by Regulation BI (Best Interest)
The statute of limitations for CRIMINAL VIOLATIONS of the Uniform Securities Act is..
5 years from the date of violation
All emails are to be retained for…
3 years
Among the exceptions from the definition of an agent is when …
representing issuers in an exempt transaction (in this case, transactions with trust companies and savings institutions)
In order for an agent to share in the profits or losses in an account with a client, prior written authorization of the client and the employer broker-dealer (BD) must be obtained. Unlike FINRA rules, there is NO requirement that gains or losses be shared on a proportionate basis
Under the broadcast and publishing exceptions, the Administrator does not have jurisdiction if the offer is made in a TV or radio broadcast originating outside the state or in a newspaper published outside the state. Furthermore, if a newspaper is published inside a state but more than two-thirds of its circulation is outside the state, the Administrator does not have jurisdiction.
A person is excluded from the definition of an agent when….
When representing an issuer in exempt transactions, transactions between issuers and underwriters, and transactions w/existing employees in which no commissions are paid
Minimum capital may be required of BDs and IAs but not…
Agents
The offer of recission is based on…
The price originally paid for the security + interest at a rate determined by the state Administrator
All IARs register with…
States (not the SEC)
The consent to service of process is a PERMANENT document submitted with the initial application
Per the Uniform Securities Act, guaranteed means…
Guaranteed as to payments of principal, interest, or dividends only (not capital gains/losses)
Trade confirmations must ALWAYS include the capacity in which…
The BD acted in the transaction
A prospectus is the document that…
Offers a security for sale
Stock dividends are specifically excluded from the definition of an offer or sale
An offer refers to…
Making a security available to investors
BDs, IAs, or agents (but not IARs) who have discretion over custody of funds/securities may be required to…
Post a bond
The Uniform Securities Act EXCLUDES from the definition of an agent an individual who…
Represents the issuer in an exempt transaction
Common examples include unsolicited transactions
Even though federal advisers are IAs, they are excluded from the definition of investment advisers under state law
The Uniform Securities Act states that registration of a BD automatically constitutes registration any agent who is…
A partner, officer, or director or a person occupying a similar status or performing similar functions
The Administrator may deny a license to individuals who have been…
Convicted of any felony or a security/money-related misdemeanor within the last 10 years
The Uniform Securities act defines sale as…
Including every contract of sale, contract to sell, or disposition of security or interest in a security for value
When opening an account to trade options, the account owner must be told about…
The risks involved with trading options -> this entails providing Options Disclosure Document to the account owner before he places the 1st order
Agents, issuers, commercial banks (which include credit unions, S&L, and thrifts) are specifically excluded from the definition of a BD
