Series 66 Chapter 2

Question 1

What is the most difficult type of state registration? Why?

Answer 1

Qualification. The SEC will not be examining it.

Question 2

What is 80% rule?

Answer 2

Applies to Intrastate offerings. 80% of assets must be located in the state, and at least 80% revenues generated must come from in state business

Question 3

Which state registration requires a balance sheet to be filed?

Answer 3

Qualification

Question 4

Subject to Post Registration Requirements

Answer 4

Broker-Dealers Investment Advisers Issuers

Question 5

Not subject to Post Registration Requirement

Answer 5

Agents IARS

Question 6

Federally Covered Securities

Answer 6

Deemed to have nation interest. Include All US exchange listed securities and Investment Companies

Question 7

Federally Covered Exemptions

Answer 7

Securities that are exempt from Federal and State registration according to NSMIA US Gov Securitites (T-bonds, T-Bills, ect) Municipal Securities (GO, Revenue, etc) Securities issued by financial institutions (Banks, credit unions, trusts, etc)

Question 8

State registration securities exempt through NSMIA

Answer 8

Federally Covered Securities, Federally covered exemptions

Question 9

State registration exempt securities through USA

Answer 9

-Securities issued by governments maintaining diplomatic relations with US -Debt securities maturing in 9 months or less -Railroad and trucking securities -Public Utility Securities -Insurance Company Securities -Securities issued by Non-profits -Pre-organization certificates -Securities sold to qualified purchasers -Investment contracts associated with corporate retirement plans

Question 10

Exempt Transactions

Answer 10

Trades that allow a security to be exempt from state registration requirements -Non-Issuer Transactions -Unsolicited Orders -Trades with Investment Companies -Trades between and issuer and an underwriter -Fiduciary transactions -Trades with institutions -Transactions between issuers and existing stockholders or bondholders of the issuer as long as no commissions are paid -Private Placements

Question 11

Non-Issuer Transaction Exemption

Answer 11

security must be outstanding for at least 3 months and disclosing financial updates to the SEC for at least 6 months to qualify

Question 12

Unsolicted Orders Exemption

Answer 12

customer instructs agent to execute trade that was not recommended by rep

Question 13

Easiest form of registration for established companies -not available in all states

Answer 13

Notification (Registration by “filing”)

Question 14

federal and state registration become valid at same time. Most common type of registration for IPO’s.

Answer 14

Coordination

Question 15

registration method for securities that are exempt from registration with the SEC, but require state registration.

Answer 15

Qualification

Question 16

Issuer may be required to provide periodic reports to Administrator. If so, must be filed quarterly.

Answer 16

Post Registration Requirements

Question 17

Deemed to have nation interest. Include All US exchange listed securities and Investment Companies

Answer 17

Federally Covered Securities

Question 18

Securities that are exempt from Federal and State registration according to NSMIA US Gov Securitites (T-bonds, T-Bills, ect) Municipal Securities (GO, Revenue, etc) Securities issued by financial institutions (Banks, credit unions, trusts, etc)

Answer 18

Federally Covered Exemptions

Question 19

Accredited Investors - unlimited Unaccredited Investors - SEC 35 or less STATE 10 or less securities may not be traded publicly by investors for at least 6 months except for institutional clients.

Answer 19

Private Placements