Unit 12

Question 1

Sale

Answer 1

An actual transaction involving money or another form of consideration for value (Contract)

Question 2

Offer to sell

Answer 2

Attempt to sell (Solicitation)

Question 3

Assessable stock

Answer 3

A type of stock issue sold to investors at a discount in exchange for the right to come back for more money at a later date

Question 4

Exclusions from sale

Answer 4

1. Bona fide pledge/loan
2. Gift of nonassessable stock
3. Stock dividend
4. Class vote by stockholders, act incident to a judicially approved reorganization with which a security is issued in exchange for one or more outstanding securities, claims, or property interest, or partly in such exchange and partly for cash

Question 5

Jurisdiction

Answer 5

The legal authority to regulate securities activities that take place in the state

Question 6

3 circumstances where Administrator doesn’t have jursidiction

Answer 6

1. Television or radio broadcast that originated outside of the state
2. Bona fide newspaper or periodical published outside of the state
3. Newspaper or periodical published inside the state but with more than two-thirds (66%) of its circulation outside the state in the last year

Question 7

What is a bona fide newspaper?

Answer 7

Example: New York Times

Question 8

4 broad powers of Administrator

Answer 8

1. make, amend, or rescind rules and orders 2. conduct investigations/issue subpoenas
2. Issue cease and desist orders
3. Deny, suspend, cancel, revoke registrations/ licenses.

Question 9

What rule applies to

Answer 9

Everyone

Question 10

What order applies to

Answer 10

Specific instances

Question 11

Contumacy

Answer 11

Stubborn refusal to obey or comply with authority, especially a court order or summons

Question 12

Who cease and desist orders are directed to

Answer 12

Individuals

Question 13

Definition of enjoined

Answer 13

Legal term that is used to refer to a person who is the subject of an injunction.

Question 14

Two actions Administrator can take if a person is violating acts or rules

Answer 14

1. Issue cease and desist
2. Issue injunction to enforce order being violated

Question 15

Definition of acting summarily

Answer 15

Order, without having to go through the hearing process, a postponement or suspension of a registration

Question 16

When must an applicant submit a written request for a hearing after being ordered

Answer 16

Within 15 days

Question 17

Definition of final order

Answer 17

When the Administrator (or a court) renders a judgment in an action

Question 18

If a person commits a misdemeanor, then moves to a state where that act is a felony, and applies to be a representative, what record does the Administrator look at?

Answer 18

The originally recorded misdemeanor

Question 19

3 things that must happen before registration is denied, suspended, or revoked

Answer 19

1. Appropriate prior notice to the applicant or registrant and their employer
2. Opportunity for hearing
3. Written findings of fact and conclusions of law

Question 20

When an Administrator may deny, revoke, suspend a security registrant

Answer 20

1. Files a misleading or incomplete registration statement;
2. Is engaged in an offering that is fraudulent or made on unfair, unjust, or inequitable terms
3. Charges offering fees that are excessive or unreasonable
4. Has a control person convicted of a securities-related crime
5. Is subject to a court injunction;
6. Is engaged in a method of business that is illegal
7. Is subject to an administrative stop order of any other state

Question 21

Vacated

Answer 21

Term used to describe lifting of stop order

Question 22

Who stop orders are directed to

Answer 22

Issuers

Question 23

When withdrawal is effective after person requests on their own initiative

Answer 23

30 days after Administrator receives it

Question 24

How long administrator retains jurisdiction after effective date of withdrawal takes place

Answer 24

One year

Question 25

What would the Administrator do if mailings to a registrant were returned with no forwarding address

Answer 25

Cancel the registration

Question 26

Why cancellation occurs

Answer 26

The result of death, dissolution, or mental incompetency

Question 27

When suspension of broker-dealer is over what happens to agent’s licenses?

Answer 27

They are reactivated

Question 28

If client’s case against broker-dealer is proven, what do they recover? (3)

Answer 28

1. The original purchase price of the securities
2. Interest at a rate determined by the Administrator
3. All reasonable attorney’s fees and court costs

Question 29

Right of rescission

Answer 29

When broker-dealer buys back securities from a purchaser because they realize they were sold in violation of USA

Question 30

Letter of rescission

Answer 30

Issued by seller to buyer, buyer has 30 days to respond

Question 31

In order for a surety bond to meet the requirements of the USA, what must it provide?

Answer 31

Proof that they are entitled to collect against the bond

Question 32

When a client must commence a lawsuit to be eligible for recovery from damages

Answer 32

Three years of occurrence or two years of discovery, whichever occurs first

Question 33

If an agent chooses to appeal an Administrator’s order, when must the agent file for review of the order with the appropriate court?

Answer 33

Within 60 days after entry of order

Question 34

As a result of a hearing held by the Administrator, the registration of a broker-dealer is revoked. Waht happens to agent’s licenses?

Answer 34

They are revoked

Question 35

What administrator issues final order, what can agents do? (2)

Answer 35

1. Obtain a review of the order in an appropriate court of law
2. Request that additional evidence be presented to the court

Question 36

When administrator can revoke a firm’s registration (2)

Answer 36

1. Firm is insolvent
2. Agent within has been convicted of a felony

Question 37

Violation of the Uniform Securities Act may result in criminal penalties of up to

Answer 37

$5,000 and/or three years in prison

Question 38

Does the court or Administrator issue injunctions?

Answer 38

Court