Unit 1 Vocabulary Flashcards
1956 National Conference of Commissions on Uniform State Law (NCCUSL)
Drafted the Uniform Securities Act (USA) which is a template/guide for states to follow to draft state securities legislation
Model Rules
Updates to the Uniform Securities Act (USA)
North American Securities Administration Association (NASAA)
Advisory body of state securities regulators responsible for the exam content
Administrator
Office or agency responsible for administering the security laws of a state
Stop Order
An order from the Administrator to deny, suspend, or revoke the effectiveness of any registration statement (applies to actual securities only)
Cease and Desist Order
An order from the Administrator to stop an activity (applies to securities personnel only)
Summary Order
A power of the Administrator for registration of persons and securities and applies to:
1. Postponing/suspending registration of a security professional
2. Postponing/suspending registration of a security
3. Denying/revoking a specific security on transaction exemption
Final Order
An order from the Administrator determining final action on a person, exemption, or registration
Person
Any individual (natural person) or legal person
Non-Person
- Minors (anyone unable to enter into contracts under laws of the state)
- Deceased individuals (but their estate is a person)
- Individuals legally declared mentally incompetent
Natural person
An individual
Legal Person
Any entity that is not an individual or a non-person; examples include corporations, partnerships, associations, trusts, unincorporated organizations, governments, and political subdivisions of governments
Broker-Dealer (BD)
Any person engaged in the business of effecting transactions in securities for the account of others or its own account
Broker
Acting on behalf of another
Dealer
Acting on behalf of themselves
Agent
A registered representative that is always an individual (natural person) who represents the broker-dealer (BD) or issuer in effecting/attempting to effect purchases or sales of securities
Investment Advisor (IA)
Any person who for compensation advises others (direct or indirect) to the value of securities or to advise in buying/selling securities OR for compensation issues or promulgate analyzes or reports concerning securities
Investment Advisor Representative (IAR)
Any individual who represents an IA in performing duties related to advisory services
Associated Person
Any partner, officer, or director of a broker-dealer (BD) or investment advisor (IA) including employees (excludes clerical and ministerial personnel)
Issuer
Any person who issues or proposes to issue a security
Non-issuer
Any person not directly or indirectly issuing a security (basic everyday trading on the stock market)
Security
A financial instrument (typically any financial asset that can be traded); examples include stocks, bonds, promissory notes, debentures, mutual funds, and variable insurance products (annuities or life insurance)
Exempt Security
A security that does not have to be registered in order to be sold and has no requirements to file advertising
Exempt Transaction
The nature of the security sale is such that registration with the Administrator and filing of advertising material is not required in order to make the transaction
Form ADV
Investment advisor (IA) registration form
Form BD
Broker-dealer (BD) registration form
Form U4
Agent and Investment Advisor Representative (IAR) registration form
Guaranteed Security
A security with a guaranteed payment of principal, interest, or dividends (but not capital gains)
Offer/Offer to Sell
Every attempt or offer to dispose of or solicitation of an offer to buy a security or interest in a security for value
Offerer
Person trying to sell a security or interest in a security for value
Offeree
Person being sold a security or interest in a security for value
Sale/Sell
Every contract of sale, contract to sell, or disposition of security or interest in a security for value
Discretion
When a professional has sole or shared authority to determine:
1. Whether to buy/sell (action)
2. Quantity to buy/sell (amount)
3. Specific security to buy/sell (asset)
Fiduciary
A person who has an obligation to act for another’s benefit
Fraud
Intentional effort to deceive someone for profit
Statutory Disqualification
A status meaning an individual may be subject to disqualification under the Uniform Securities Act (USA) or a parallel provision in the Securities Exchange Act of 1934
Stock Exchange
Membership or organization regulated by the Securities and Exchange Commission (SEC) where members use facilities to buy and sell stocks and bonds listed for trading or exchange
Over the Counter (OTC) Market/Unlisted Securities
Market for securities traded other than on the national securities exchange under a system of dealers that offer and sell securities where prices are negotiated
Self-Regulatory Organization (SRO)
An agency that is able to create and enforce industry regulations by itself; most prominent is Financial Industry Regulatory Authority (FINRA)
Solicitor
Any individual who for compensation acts on behalf of an investment advisor (IA) in referring potential clients
de minimis
means “about minimal things”; an exemption available to investment advisors (IA) and their representatives that applies where there is no place of business in a state and the number of retail investors is small (5 or fewer)
Accredited Investor
A person who isn’t counted when computing the number of investors purchasing a private placement under Regulation D of Rule 501 of the Federal Securities Ace of 1933
Qualified Client
An individual or company with the minimum financial requirements to enter into a performance based compensation contract with an investment advisor (IA)
Qualified Purchase
An individual or family business that has over $5M in investments or an individual/entity that invests over $25M on their own account or on another’s behalf
Registrant
Security professionals (BDs, DAs, agents, and IARs) or security issuers who are in the process of registering or who have registered with the Administrator
Institution
Examples include banks, trust companies, savings and loan associations, insurance companies, investment companies, employee benefit plans with assets of not less than $1M, and government agents or instrumentalities
National Securities Markets Improvements Act of 1996 (NSMIA)
Promotes efficiency in capital formation in financial markets and generally preempts state blue-sky laws which eliminates the dual system of state and federal registration of certain securities and investment advisors (IAs)
Blue-Sky Law
State law
State
Any of the 50 states and territories or possessions of the United States, DC, and Puerto Rico
Surety Bond
Guarantees that securities professionals will adhere to the law and covers losses if a security professional acts criminally
Retail Client
Individuals who meet the standard of accredited investor
Holding Company
A company whose primary business is holding and controlling interest in securities or other companies
Exclusion from a Definition
A person is not subject to the provisions of state law that refer to agents
Exemption of Registration Under the Uniform Securities Act (USA)
A common example is when a security is exempt form the registration requirements of the Uniform Securities Act (USA)
Wrap Fee Program
A program in which any client is charged a specified fee or fees not based directly not transactions in the client’s account for investment advisory purposes and execution of client transactions
