Unit 11

Question 1

Persons excluded from broker-dealer definition

Answer 1

Agents, issuers, banks, trusts

Question 2

Exemptions from registration for a broker dealer

Answer 2

If you only generally advertise on the internet without giving recommendations, and don’t follow up with advice or offer securities to those in states you are not registered in

Question 3

3 criteria that make one not a broker-dealer

Answer 3

1. No place of business in a particular state 2. Only have clients who are other BDs or issuers in that state
2. Only work with snowbirds that travel to a particular state

Question 4

What IA and IAR’s have that broker-dealers and agents don’t

Answer 4

de minimus exemption

Question 5

Agent

Answer 5

Any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities

Question 6

What agents are also referred to as

Answer 6

Registered representatives

Question 7

What NASAA stands for

Answer 7

North American Securities Administrators Association

Question 8

Definition of associated person

Answer 8

1. Any partner, officer, or director of the broker-dealer
2. Any person directly or indirectly controlling or controlled by the broker-dealer (including some employees)

Question 9

Employees of a broker-dealer not included in definition of an agent

Answer 9

Clerical and administrative employees

Question 10

If agent give clerical-admin bonuses, are they required to register?

Answer 10

No, this is allowable without registration

Question 11

When do secretaries/sales agents have to register as agents?

Answer 11

If they accept transactions or take orders over the phone

Question 12

Can individuals be in sales at a broker-dealer without being an agent?

Answer 12

No

Question 13

Exempt securities

Answer 13

Any security issued/guaranteed by a government, securities of foreign governments that the US has diplomatic relationships with, any security guaranteed by banks, commercial paper rated in top three categories of $50,000 or more for under 9 months, investment contract associated with employee’s benefit plan

Question 14

Exempt transactions

Answer 14

Unsolicited brokerage transactions, those between issuer and underwriter, those with financial institutions, private placements

Question 15

Who broker-dealers have to register with

Answer 15

Both the SEC and state

Question 16

Who tells employing firm that agents are “good to go” and registered

Answer 16

Administrator

Question 17

How long records have to be preserved and maintained

Answer 17

At least 3 years, 2 years in principal broker’s office

Question 18

Do tax returns have to be kept and filed?

Answer 18

No

Question 19

When brokers dealers must file amendments to documentation

Answer 19

Promptly!

Question 20

Can administrator establish net capital requirements

Answer 20

Yes

Question 21

Who most control is relinquished to in the case of broker-dealers/agents

Answer 21

SEC

Question 22

Statutory Disqualification

Answer 22

Status that prevents an individual from registering as a licensed securities professional

Question 23

What makes someone subject to statutory disqualification

Answer 23

Expulsion/suspension from membership of an SRO, Subjection to regulatory agency denying registration as a broker dealer, conviction of financial dishonesty misdemeanor in the past 10 years, subjection to injunction from a court, violation of federal securities law, Making false/misleading statements in any filing

Question 24

Do civil lawsuits subject people to statutory disqualification

Answer 24

No

Question 25

Know this

Answer 25

IAs register on the federal level (SEC) or state level, never both.
IARs only register on the state level.
BDs register on the federal level (through FINRA) and the state level.
Agents register on the federal level (through FINRA) and the state level.

Question 26

How many parties must notify Administrator if agent terminates with one broker and signs with another?

Answer 26

All 3

Question 27

Do agents need to submit fingerprints for registration?

Answer 27

No

Question 28

Surety bonds

Answer 28

Promise by one party to assume responsibility for debt obligation of a borrower if that borrower defaults

Question 29

Can a broker-dealer be an individual?

Answer 29

Yes

Question 30

What might exempt a firm from posting surety bonds

Answer 30

Maintaining of net capital in excess of minimum requirements

Question 31

What happens to agents if broker dealer’s registration is revoked by a state

Answer 31

Agent’s licenses are suspended

Question 32

Who broker-dealers must meet capital requirements of

Answer 32

SEC

Question 33

When a broker-dealer registers in a state, who all is considered registered

Answer 33

Firm, officers, directors

Question 34

Who SEC has jurisdiction over under 1934 Securities Act

Answer 34

Exchanges, SROs, broker-dealers, investment advisers, associated persons

Question 35

When representative registration expires

Answer 35

December 31st of each year

Question 36

Do applicants have to post that they are applying in a newspaper?

Answer 36

Yes, if administrator requires

Question 37

What administrator may require broker dealers to keep record of

Answer 37

Account ledgers
Correspondence
Papers and memoranda
Blotters and books

Question 38

What information is required on an application for registration as an agent?

Answer 38

Any felony convictions, citizenship information

Question 39

In what states must broker-dealers register?

Answer 39

Those where they serve individual investors

Question 40

Do Canadian broker-dealers need to register in each state a client travels to?

Answer 40

Yes

Question 41

The administrator, with proper notice, may examine the financial records of which of the following persons registered in his state?

Answer 41

Broker-dealers and investment advisers