USA, Broker-Dealers and Agents Flashcards
Who is a “person” under the Uniform Securities Act?
Under the Uniform Securities Act a “Person” means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government. A person is defined very broadly.
Who is a NOT a “person” under the Uniform Securities Act?
The only nonpersons are:
minors (those under 18),
deceased individuals, and
individuals declared legally incompetent.
What is the relationship between a broker dealer and an agent?
Broker dealers (any legal person) employ agents (individuals) to represent them in effecting securities transactions.
When does the registration of broker dealers, agents, investment advisers, and investment adviser representatives expire?
December 31st of each year. All registrations come up for renewal on December 31st. A registration is renewed by paying a fee.
Define broker dealer
Any person engaged in the business of effecting transactions in securities for the account of others or for his own account.
What is an issuer?
An issuer is any person who issues or proposes to issue a security, such as companies or governments.
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.
legal person
Legal person means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government.
natural person
Natural person means an individual. A living human being.
A broker dealer has an office in the state. Does it have to register in the state?
Yes. A broker dealer with a physical office in a state must register in that state. No further analysis is required.
A broker dealer has a single retail client in the state. Does it have to register in the state?
Yes. A broker dealer with a single retail client in a state must register in that state.
Who is an agent of an issuer?
An agent of an issuer is an employee of an issuer who sells the issuers securities in the marketplace.
When is an issuer’s agent exempt from registration?
An issuer’s agent is exempt from registering if the agent:
- sells exempt securities,
- sells securities in an exempt transaction, or
- sells the securities to existing directors, officers, or employees of the issuer and receives no additional compensation for such sales.
Are there financial requirements to register as an agent?
No.
What four characteristics define a security?
- An investment of money;
- in a common enterprise;
- with the expectation of profits;
- to be derived primarily from the efforts of a person other than the investor.
Six categories of items that are not securities under the Uniform Securities Act.
- Insurance, endowments or annuities with fixed payouts;
- Interests in a retirement plan;
- Collectibles;
- Commodities or futures contracts for commodities;
- Condominiums used for personal residences; and
- Currency
What is the difference between an exempt security and an exempt transaction?
An exempt security is exempt from registration based on the nature of the issuer or the type of security. An exempt transaction is exempt from registration based on the manner in which the sale is made or the nature of the purchaser.
What are the two methods for registration of securities in a state?
- Coordination (issuer supplies state securities administrators with the federal registration statement filed under the Securities Act of 1933. This is the most frequently used method of registration); and
- Qualification (issuer supplies all information directly to the state securities administrator).