Unit 1 Federal And State

Question 1

Registered investment companies are similar to other publicly registered entities in that an _________ audited report must be filed with the SEC.

Answer 1

Annual

An investment company must file reports with the SEC as required by the Investment Company Act of 1940 annually.

Question 2

A ___________ by FINRA would be reason for the Administrator to initiate a review

Answer 2

Suspension

Under the Uniform Securities Act, a FINRA suspension would be cause for disciplinary review action by the state securities Administrator.

Question 3

A federal covered investment adviser refers to a natural person or firm registered under the _____________________ or excluded from the definition of investment adviser under that act. A person registered under the this act is exempt from state registration or licensing requirements of state securities Administrators under the Uniform Securities Act. Federal covered investment advisers are not exempt from the antifraud provisions of the USA. Investment advisers, whether state or federal registered, do not register with NASAA.

Reference: 3.3.2 in the License Exam Manual

Answer 3

Investment Advisers Act of 1940

Question 4

The Administrator of the state where a B-D maintains its principal office (could or couldn’t) investigate the B-D to determine if their recordkeeping requirements were violated

Answer 4

Could

Even though no state can enforce more stringent recordkeeping rules than those of the SEC, a broker-dealer can still be subject to state action if the rules of the state in which the broker-dealer maintains its principal office are broken. It is the usual case that when the SEC suspends or revokes the registration of a BD, the states in which that BD are registered follow suit, but it would be highly unlikely to revoke the registration when the SEC only levied a fine.

Reference: 2.14.4.1 in the License Exam Manual