Unit 11 Flashcards
Registration of Broker-Dealers and Agents
Persons excluded from broker-dealer definition
Agents, issuers, banks, trusts
When one can be exempt from registration for a broker dealer
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
3 criteria that make one not a broker-dealer
- No place of business in a particular state
- Only have clients who are other BDs or issuers in that state
- Only work with snowbirds that travel to a particular state
What IA and IAR’s have that broker-dealers and agents don’t
de minimus exemption
Agent
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
What agents are also referred to as
Registered representatives
What NASAA stands for
North American Securities Administrators Association
Definition of associated person
- Any partner, officer, or director of the broker-dealer
- Any person directly or indirectly controlling or controlled by the broker-dealer (including some employees)
Employees of a broker-dealer not included in definition of an agent
Clerical and administrative employees
If agent give clerical-admin bonuses, are they required to register?
No, this is allowable without registration
When do secretaries/sales agents have to register as agents?
If they accept transactions or take orders over the phone
Can individuals be in sales at a broker-dealer without being an agent?
No
Exempt securities
- 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
Exempt transactions
- Unsolicited brokerage transactions
- Those between issuer and underwriter
- Those with financial institutions
- Private placements
Who broker-dealers have to register with
Both the SEC and state
Who tells employing firm that agents are “good to go” and registered
Administrator
How long records have to be preserved and maintained
At least 3 years, 2 years in principal broker’s office
Do tax returns have to be kept and filed?
No
When brokers dealers must file amendments to documentation
Promptly!
Can administrator establish net capital requirements
Yes
Which administration most control is relinquished to in the case of broker-dealers/agents
SEC
Statutory Disqualification
Status that prevents an individual from registering as a licensed securities professional
What makes someone subject to statutory disqualification
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
Do civil lawsuits subject people to statutory disqualification
No
Know this
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.
How many parties must notify Administrator if agent terminates with one broker and signs with another?
All 3
Do agents need to submit fingerprints for registration?
No
Surety bonds
Promise by one party to assume responsibility for debt obligation of a borrower if that borrower defaults
Can a broker-dealer be an individual?
Yes
What might exempt a firm from posting surety bonds
Maintaining of net capital in excess of minimum requirements
What happens to agents if broker dealer’s registration is revoked by a state
Agent’s licenses are suspended
Who broker-dealers must meet capital requirements of
SEC
When a broker-dealer registers in a state, who all is considered registered
Firm, officers, directors
Who SEC has jurisdiction over under 1934 Securities Act
Exchanges, SROs, broker-dealers, investment advisers, associated persons
When representative registration expires
December 31st of each year
Do applicants have to post that they are applying in a newspaper?
Yes, if administrator requires
What administrator may require broker dealers to keep record of
Account ledgers
Correspondence
Papers and memoranda
Blotters and books
What information is required on an application for registration as an agent?
Any felony convictions, citizenship information
In what states must broker-dealers register?
Those where they serve individual investors
Do Canadian broker-dealers need to register in each state a client travels to?
Yes
The administrator, with proper notice, may examine the financial records of which of the following persons registered in his state?
Broker-dealers and investment advisers
The document that provides the Administrator with limited power of attorney to accept documents issued in investigation of registrant
Consent to service of process
When an agent registered in one state may solicit business in another state
When both the agent and the employing broker-dealer are properly registered in the other state
