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Series 63 > Series63Notes > Flashcards

Series63Notes Flashcards

1
Q

1 - 1 Overview

A

Universal life is not defined as a security.

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2
Q

1 - 2 Overview

A

When a term life policy is extended beyond the term period, the premium will increase.

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3
Q

1 - 3 Overview

A

Fixed annuities are not subject to the USA since they are not securities.

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4
Q

1 - 4 Overview

A

An agent of an issuer is exempt from registration if selling exempt securities or involved in an exempt transaction.

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5
Q

1 - 5 Overview

A

NASAA members include all states, District of Columbia (D.C), U.S. territories, Canada, and Mexico.

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6
Q

1 - 6 Overview

A

The definition of a state includes the 50 states, D.C., U.S. territories, but DOES NOT include the British V.I., Mexico, or any province of Canada.

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7
Q

1 - 7 Overview

A

Viatical investments are securities.

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8
Q

1 - 8 Overview

A

A certificate of interest in a mining lease is a security.

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9
Q

1 - 9 Overview

A

Federal covered securities are exempt from state registration.

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10
Q

1 - 10 Overview

A

Futures and commodities are not defined as securities. An option on them would be.

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11
Q

1 - 11 Overview

A

An individual who represents the issuer of exempt securities is not subject to registration as an agent.

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12
Q

1 - 12 Overview

A

An individual who represents the issuer in an exempt transaction is not subject to registration as an agent.

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13
Q

1 - 13 Overview

A

Lawyers, accountants, teachers, and engineers are excluded from the definition of an investment adviser.

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14
Q

1 - 14 Overview

A

An unpaid intern at a B/D who is involved in sales or solicitations is considered an agent and must register.

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15
Q

1 - 15 Overview

A

A solicitor for an IA may be required to register with the Administrator.

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16
Q

1 - 16 Overview

A

An endowment policy is not a security.

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17
Q

1 - 17 Overview

A

Notice filing is required for issuers of investment company shares and private placements under Rule 506 of Reg. D.

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18
Q

1 - 18 Overview

A

Limited registration is granted to Canadian B/D’s and their agents. Not Mexican B/D’s or agents.

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19
Q

1 - 19 Overview

A

The Administrator is permitted to issue a cease and desist order, but not an injunction.

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20
Q

1 - 20 Overview

A

The definition of a person does not include minors.

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21
Q

2 - 1 Administration of the Uniform Securities Act

A

State Administrators in one state are permitted to share information with other state administrators. .

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22
Q

2 - 2 Administration of the Uniform Securities Act

A

An offer or sale includes rights offerings and exercising an option.

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23
Q

2 - 3 Administration of the Uniform Securities Act

A

The Administrator may not deny registration for a misdemeanor DUI.

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24
Q

2 - 4 Administration of the Uniform Securities Act

A

Registration can be denied if convicted of a securities violation in a foreign country within the past 5 years.

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25
Q

2 - 5 Administration of the Uniform Securities Act

A

A gift of assessable stock is considered both an offer and sale.

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26
Q

2 - 6 Administration of the Uniform Securities Act

A

The Administrator may issue subpoenas both inside and outside the state.

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27
Q

2 - 7 Administration of the Uniform Securities Act

A

Registrations may be cancelled by the Administrator without a hearing if the registrant is deceased, missing, mentally incompetent, or out of business.

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28
Q

3 - 1 Registration of Securities Professionals

A

3 Rebates received by an IA from an agent must be disclosed on the IA’s ADV.

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29
Q

3 - 2 Registration of Securities Professionals

A

State registered advisers do not file documents with the SEC.

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30
Q

3 - 3 Registration of Securities Professionals

A

Form U-4 is used by agents and IAR’s to register.

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31
Q

3 - 4 Registration of Securities Professionals

A

Form U-5 is used to report termination of employment filed by the B/D.

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32
Q

3 - 5 Registration of Securities Professionals

A

Form U-6 is filed with regulators to report civil, criminal or regulatory actions.

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33
Q

3 - 6 Registration of Securities Professionals

A

Foreclosures are not reported on the U-4, however tax liens are.

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34
Q

3 - 7 Registration of Securities Professionals

A

Order tickets do not require pre-approval, but must be reviewed by a supervisor at the end of the day.

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35
Q

3 - 8 Registration of Securities Professionals

A

Items older than 10 years need not be disclosed on the U-4.

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36
Q

3 - 9 Registration of Securities Professionals

A

IA’s who manage more than $110 million in assets are federal covered advisers and must register with the SEC.

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37
Q

3 - 10 Registration of Securities Professionals

A

IA’s who manage less than $100 million in assets must register with the state.

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38
Q

3 - 11 Registration of Securities Professionals

A

IA’s who manage between $100 million and $110 million may register with the state or the SEC.

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39
Q

3 - 12 Registration of Securities Professionals

A

If a B/D has an office in a state, it must register in that state.

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40
Q

3 - 13 Registration of Securities Professionals

A

B/D records are kept for 3 years.

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41
Q

3 - 14 Registration of Securities Professionals

A

IA records are kept for 5 years.

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42
Q

3 - 15 Registration of Securities Professionals

A

If an agent’s employment is terminated, the agent, the old B/D and any new B/D must notify the Administrator.

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43
Q

3 - 16 Registration of Securities Professionals

A

IA’s register using Form ADV.

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44
Q

3 - 17 Registration of Securities Professionals

A

IA’s are not required to give a brochure to clients that are registered investment companies.

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45
Q

3 - 18 Registration of Securities Professionals

A

The anti-fraud rules would not apply to fixed annuities since they are not defined as a security.

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46
Q

3 - 19 Registration of Securities Professionals

A

In lieu of a surety bond, the Administrator may accept cash or securities.

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47
Q

3 - 20 Registration of Securities Professionals

A

A consent to service of process is only filed once.

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48
Q

3 - 21 Registration of Securities Professionals

A

An adviser’s net worth would not include home furnishings or automobiles.

49
Q

3 - 22 Registration of Securities Professionals

A

Account numbers, terms of the order, execution price, time that the order was received, and the person who accepted the order are all required on an order ticket.

50
Q

3 - 23 Registration of Securities Professionals

A

Principal approval is NOT required when a trade is executed.

51
Q

3 - 24 Registration of Securities Professionals

A

Form ADV-E is filed by the auditor of an IA who has custody of client funds or securities.

52
Q

3 - 25 Registration of Securities Professionals

A

Lack of experience may not be the sole grounds for denial of a registration.

53
Q

3 - 26 Registration of Securities Professionals

A

Registration of an agent is effective on the 30th day from filing.

54
Q

3 - 27 Registration of Securities Professionals

A

Withdrawals from registration are effective 30 days after filing.

55
Q

3 - 28 Registration of Securities Professionals

A

Agents may split commissions with other agents of the same B/D if the agents and B/D are registered in the same state.

56
Q

3 - 29 Registration of Securities Professionals

A

A Transfer on Death(TOD) account designation is used to avoid probate, not estate taxes.

57
Q

3 - 30 Registration of Securities Professionals

A

An IA has custody if securities received inadvertently are not returned within 3 business days.

58
Q

3 - 31 Registration of Securities Professionals

A

IA clients must receive a brochure at least 48 hours before signing a contract, or at the time of signing if it can be cancelled without a penalty within 5 days.

59
Q

3 - 32 Registration of Securities Professionals

A

An Investment Adviser Representative must register in any state in which they have a place of business.

60
Q

3 - 33 Registration of Securities Professionals

A

When registering securities, disclose the amount to be offered in the state, not the total amount being offered.

61
Q

3 - 34 Registration of Securities Professionals

A

Advisers to investment companies must register with the SEC regardless of the amount of assets under management.

62
Q

4 - 1 Registration of Securities

A

Under Reg. D, accredited investors include individuals with net worth over $1 million, or $200,000 of annual income ( $300,000 with spouse ).

63
Q

4 - 2 Registration of Securities

A

According to the USA, private placements are exempt from registration in a state, if offered to no more than 10 non-institutional investors within a 12 month period.

64
Q

4 - 3 Registration of Securities

A

When created, an order ticket does not disclose the capacity the B/D acted in or the execution price.

65
Q

4 - 4 Registration of Securities

A

A bond rating is not included on a confirmation.

66
Q

4 - 5 Registration of Securities

A

Registration by Filing is not used for an IPO, and is not used by all states.

67
Q

4 - 6 Registration of Securities

A

Registration by Coordination is used for inter-state offerings.

68
Q

4 - 7 Registration of Securities

A

Registration by Qualification is used for intra-state offerings and requires the most documentation.

69
Q

4 - 8 Registration of Securities

A

A bond rating is not included on a confirmation

70
Q

4 - 9 Registration of Securities

A

If registration is denied, revoked or suspended, registrants may request a hearing to be held within 15 days.

71
Q

4 - 10 Registration of Securities

A

Securities issued by an insurance company are exempt, not variable annuities.

72
Q

4 - 11 Registration of Securities

A

Church bonds are exempt from registration.

73
Q

4 - 12 Registration of Securities

A

The sale of exempt securities in a state does not exempt an agent from registration.

74
Q

4 - 13 Registration of Securities

A

Selling units in a Canadian limited partnership is not an exempt transaction.

75
Q

4 - 14 Registration of Securities

A

Secondary market transactions are exempt transactions.

76
Q

4 - 15 Registration of Securities

A

A correcting amendment is filed with the Administrator if information in a registration statement becomes inaccurate.

77
Q

4 - 16 Registration of Securities

A

Under Rule 147, securities sold only in one state are exempt from federal registration.

78
Q

4 - 17 Registration of Securities

A

Securities issued by a Canadian municipality are exempt from registration , not those issued by a Canadian corp.

79
Q

4 - 18 Registration of Securities

A

Transactions between a B/D and issuer are exempt.

80
Q

4 - 19 Registration of Securities

A

A non-issuer transaction in a security listed on the Toronto Stock Exchange is exempt.

81
Q

4 - 20 Registration of Securities

A

Transactions between an underwriter and issuer are exempt transactions.

82
Q

4 - 21 Registration of Securities

A

Do not confuse Notice Filing with registration by filing.

83
Q

5 - 1 USA - Fraudulent and Unethical Practices

A

IA’s may have discretion with a client’s verbal approval for 10 days, after which it must be in writing.

84
Q

5 - 2 USA - Fraudulent and Unethical Practices

A

A B/D may commingle customer cash, not securities.

85
Q

5 - 3 USA - Fraudulent and Unethical Practices

A

An agent cannot liquidate a client’s position based solely on a research report recommendation to sell.

86
Q

5 - 4 USA - Fraudulent and Unethical Practices

A

Agents cannot underline or summarize a prospectus.

87
Q

5 - 5 USA - Fraudulent and Unethical Practices

A

A summary prospectus may be used when selling mutual funds.

88
Q

5 - 6 USA - Fraudulent and Unethical Practices

A

Written complaints must be responded to, but it is not a requirement to notify the administrator.

89
Q

5 - 7 USA - Fraudulent and Unethical Practices

A

For securities sold in a bank environment, disclose they are not FDIC insured, not guaranteed by the bank and are subject to loss of value.

90
Q

5 - 8 USA - Fraudulent and Unethical Practices

A

Front running is entering a trade based on advance knowledge of a large order prior to the order being reported, and insider trading is trading in advance of material non-public information about an issuer of securities.

91
Q

5 - 9 USA - Fraudulent and Unethical Practices

A

IA’s may not disclose client information without written consent.

92
Q

5 - 10 USA - Fraudulent and Unethical Practices

A

IA’s may charge a performance fee to qualified clients. (those with at least $1 million under management or net worth of more than $2 million)

93
Q

5 - 11 USA - Fraudulent and Unethical Practices

A

Possessing material non-public information (inside information) is not a violation, only if it is acted on.

94
Q

5 - 12 USA - Fraudulent and Unethical Practices

A

Agents may not solicit orders for unregistered, non-exempt securities. However, they may accept unsolicited orders.

95
Q

5 - 13 USA - Fraudulent and Unethical Practices

A

A sign of churning is frequency of trades.

96
Q

5 - 14 USA - Fraudulent and Unethical Practices

A

Trading ahead of a research report is prohibited.

97
Q

5 - 15 USA - Fraudulent and Unethical Practices

A

Civil suits succeed the life of the plaintiff or defendant .

98
Q

5 - 16 USA - Fraudulent and Unethical Practices

A

The Administrator may not levy fines, change the law or issue an injunction. However the administrator may change rules and interpret the law.

99
Q

5 - 17 USA - Fraudulent and Unethical Practices

A

IA’s are required to keep a copy of all advertising sent to 2 or more persons.

100
Q

5 - 18 USA - Fraudulent and Unethical Practices

A

Agents may call a prospective client only between 8 am and 9 pm, local time of the party called.

101
Q

5 - 19 USA - Fraudulent and Unethical Practices

A

A B/D may use testimonials , an IA may not.

102
Q

5 - 20 USA - Fraudulent and Unethical Practices

A

A no load mutual fund may have a 12b-1 fee that does not exceed .25%.

103
Q

5 - 21 USA - Fraudulent and Unethical Practices

A

A Not Held order does not require written authorization.

104
Q

5 - 22 USA - Fraudulent and Unethical Practices

A

Any purchaser of an IPO within the first 25 days of the effective date which will be listed on the NYSE or Nasdaq must receive a prospectus. For non-listed securities the requirement is 90 days from the effective date for an IPO and 40 days from the effective date for a non-IPO.

105
Q

5 - 23 USA - Fraudulent and Unethical Practices

A

An agent is selling away when executing transactions that are not recorded on the books of the B/D.

106
Q

5 - 24 USA - Fraudulent and Unethical Practices

A

Names placed on the Do Not Call List are maintained indefinitely.

107
Q

5 - 25 USA - Fraudulent and Unethical Practices

A

IA contracts may not contain an exculpatory clause.

108
Q

5 - 26 USA - Fraudulent and Unethical Practices

A

Soft dollars can only be used to acquire services that benefit clients.

109
Q

5 - 27 USA - Fraudulent and Unethical Practices

A

Soft dollar arrangements must be disclosed in the IA’s ADV.

110
Q

5 - 28 USA - Fraudulent and Unethical Practices

A

When executing an agency cross transaction , one side of the trade must be unsolicited.

111
Q

5 - 29 USA - Fraudulent and Unethical Practices

A

A cease and desist order may be appealed to a state court within 60 days.

112
Q

5 - 30 USA - Fraudulent and Unethical Practices

A

The statute of limitations for civil liabilities is 2 years from discovery of a violation , or 3 years from the violation, whichever is first.

113
Q

5 - 31 USA - Fraudulent and Unethical Practices

A

The statute of limitations for criminal violations is 5 years.

114
Q

5 - 32 USA - Fraudulent and Unethical Practices

A

Maximum criminal penalties are a $5,000 fine and/or 3 years in prison.

115
Q

5 - 33 USA - Fraudulent and Unethical Practices

A

The Administrator may not impose civil or criminal penalties.

116
Q

5 - 34 USA - Fraudulent and Unethical Practices

A

An agent instructing a client to open an account in the state in which her parents reside (and the B/D is registered), instead of where she resides (where the B/D is not registered), is prohibited.

117
Q

5 - 35 USA - Fraudulent and Unethical Practices

A

For a 529 plan, equities are suitable is the child will not be attending college for a number of years. When the child is a year away from attending college, short term bonds would be suitable.

118
Q

5 - 36 USA - Fraudulent and Unethical Practices

A

A variable annuity is NOT suitable if the client wants liquidity.

119
Q

5 - 37 USA - Fraudulent and Unethical Practices

A

The maximum civil penalty for insider trading is three times the profit made or the loss avoided.

Series 63 (1 decks)

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