Wrong Answers

Question 1

Under the USA, which of the following statements regarding registration of a successor firm is true?

Answer 1

The registration of the successor firm will be effective until the December 31 renewal date

Question 2

Which of the following would be an agent under the terms of the USA?2

Answer 2

A sales representative of a licensed broker dealer who sells securities in the secondary markets to the general public

An assistant to the president of a broker dealer who, for administrative purposes accepts orders on behalf of senior partners

Question 3

Under the Uniform Securities Act, any partner, officer or director of a registered investment adviser is an investment adviser representative if he 4

Answer 3

Offers advice concerning securities
Manages client accounts or portfolios
Determines securities recommendations for representatives to disseminate

Supervises personnel engaged in the above activities but does not sell services to the public

Question 4

Which of the following must register as an agent?

Answer 4

An individual representing a broker dealer who sells commercial paper

Question 5

A broker dealer is registered in state X. It has no offices in state Y, although it does do business in that state. Under the Uniform Securities Act, registration in Y is required if the client is

Answer 5

An investment adviser representative

Question 6

In the absence of any other possible exemption, registration with the SEC would be prohibited for which of the following investment advisers?

Answer 6

A pension consultant managing $150 million

Question 7

Which of the following securities is not exempt from the registration and advertising requirements of the USA?

Answer 7

Variable annuity contract issued by Metrodential Insurance Co.

Question 8

Registration is effective when ordered by the administrator in the case of registration by

Answer 8

Qualification

Question 9

Registration statements for securities under the Uniform Securities Act are effective for

Answer 9

1 year from the effective date

Question 10

Under he Uniform Securities Act, if a security is registered by qualification, the Administrator may require an agent to present the prospectus for a new issue to the offeree

Answer 10

Prior to making the sale

Question 11

An Administrator has jurisdiction over an offer to sell securities if it was made in a newspaper published within the state with no more than

Answer 11

Two-thirds of its circulation outside the state

Question 12

When making an offer of a new issue that is in registration to a prospective client, an agent claims that his registration with the Administrator is proof of his qualifications. Under the USA

Answer 12

Claiming his registration is approved by the Administrator subjects this agent only to civil liability if a sale results

Question 13

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 13

Within 60 days after the entry of the order

Question 14

An Administrator may summarily suspend a registration pending final determination of proceedings under the USA. However the Administrator may not enter a final order without each of the following except

Answer 14

Prior written acknowledgment of the applicant

Question 15

Which of the following statements regarding NASAA Guidelines is not true?

Answer 15

At least once every 5 years, the Administrator’s rules are subject to relevancy review

Question 16

An agent of a broker dealer has been found civilly liable for making untrue statements in connection with a public offering. The officers of the firm purchased a compliance program from a third party software developer that was designed to be able to protect against untrue statements reaching clients. Unfortunately, the program was never used because they could not figure out how it worked. What is the nature of the civil liability of the officers?

Answer 16

They are liable because they did not act responsibly

Question 17

In which of the following cases must the required documentation be received prior to any account activity?

Answer 17

Discretionary account with a broker dealer

Question 18

If a broker dealer is selling shares of an affiliated company, under which of the following conditions could the broker dealer sell these shares to an account over which the broker dealer has discretion?

Answer 18

If specific authorization is received from the customer

Question 19

A customer of a broker dealer purchases 100 shares of KAPCO common stock. The trade confirmation sent to the customer must include

Answer 19

Whether the broker dealer acted as agent or principal

Question 20

Opening a new account at a broker dealer involves completing a new account form. Which of the following is not a required question on that form?

Answer 20

What is the client’s marital status?

Question 21

When an existing client opens a margin account, there are additional documents to be completed. Which of the following are mandatory?2

Answer 21

The credit agreement

The hypothecation agreement

Question 22

A client wishing to open an options account must be furnished with a copy of the

Answer 22

ODD

Question 23

Market manipulation is one of the prohibited practices under the Uniform Securities Act. Which of the following is an example of a broker dealer engaging in market manipulation?2

Answer 23

Wash trade

Matched orders

Question 24

All of the following are prohibited practices under USA EXCEPT

Answer 24

Selling unregistered non exempt securities to a closed end investment company

Question 25

Broker dealer A wants to promote and reward teamwork. The firm plans to pay out a small percentage of year end profits to the clerical staff as a bonus for their hard work. Under the Uniform Securities Act, is this permitted?

Answer 25

Yes, as long as the compensation is not sales related

Question 26

The Uniform Securities Act holds that persons performing certain activities shall be registered as investment adviser representatives. That requirement would apply to which of the following?

Answer 26

John, who opens an investment advisory firm where he devotes his time exclusively to management responsibilities as the sole proprietor of the firm

Question 27

Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security for sale to the public. According to the USA, which of the following is not an issuer?

Answer 27

The Energy Resources Partnership, which issues certificates of interest or participation, in its oil, gas and mining titles

Question 28

Global Investment Strategies (GIS) is a broker dealer registered in 6 states. GIS would have to meet the financial and record keeping requirements of

Answer 28

The Securities and Exchange Commission

Question 29

State securities Administrators may not impose which of the following?

Answer 29

Minimum net worth levels on registered investment adviser representatives

Question 30

A consent to service of process required by an Administrator is

Answer 30

An agreement whereby a registrant will be bound by any legal action or subpoena served on the Administrator as if it had been served on the registrant

Question 31

Under the Uniform Se unities Act, which of the following statements regarding the limited offering exemption is true?

Answer 31

The security that is the subject of the private placement need not be registered

Question 32

All of the following are non issuer transactions except

Answer 32

Intel sold 10 million shares of its preferred stock in a private placement transaction to a syndicate of five pension funds

Question 33

The Uniform Securities Act provides an exemption from registration for certain securities and for certain transactions. However, the Administrator is not empowered to deny an exemption from state registration to…2

Answer 33

US government securities

Municipal bonds issued by another state

Question 34

With regard to the registration requirements of the Uniform Securities Act, which of the following statements are true?2

Answer 34

An application for registration must indicate the amount of securities to be issued in the state

The administrator may require registrants to file quarterly reports

Question 35

When registering a security under the Uniform Securities Act, the registrant must indicate all of the following except

Answer 35

The effective date of the offering

Question 36

Under the Uniform Securities Act, the Administrator has the power to deny, suspend or revoke the registration of an issue if it is in the public interest and 2

Answer 36

The administrator of another state has revoked the issue’s registration

An officer of the registrant has been convicted of a securities related crime

Question 37

If an investment adviser representative is engaged in criminal activity while violating a rule under the Uniform Securities Act, but had no knowledge of the rule violated, the maximum penalty that may be imposed is a

Answer 37

$5,000 fine

Question 38

Which of the following constitutes an offer at sale of stock?2

Answer 38

Gift of assessable stock

Purchase of shares through the exercise of a warrant

Question 39

To comply with the regulations regarding customer identification programs, the minimum identifying information that must be obtained from each customer before opening an account includes 2

Answer 39

Name

A taxpayer identification number (TIN)

Question 40

Disclosure to customers of a broker dealer’s control relationships is required in 3

Answer 40

Agency transactions

Principal transactions

Exempt transactions

Question 41

A customer opens a margin account with a broker dealer and signs a loan consent agreement. The loan consent agreement allows the firm to

Answer 41

Loan out the customer’s margin securities

Question 42

Which of the following actions should be taken by an agent when a client decides to open an options account?

Answer 42

Before the first options trade, review with the client the risks involved when trading options

Question 43

Which of the following statements regarding brokerage and advisory activities under the USA are True?

Answer 43

Sanctions for both investment advisers and broker dealers include administrative proceedings, judicial injunctions and civil and criminal prosecutions

Question 44

With regard to the NASAA Statement of policy on dishonest or unethical business practices of broker dealers and agents, proscribed actions would include 2

Answer 44

Offering to repurchase a security at its original cost if it does not increase in value

Borrowing money from a client who was a college roommate

Question 45

A broker dealer operating on the premises of a bank would have to make certain disclosures in an advertisement unless it was

Answer 45

A radio spot of 30 seconds or less

Question 46

A customer placed an order with an agent to sell 100 shares of ABC and he instructed the agent to limit any losses. The agent did not have written discretionary authority over the account and waited to sell the shares, hoping to get a better price for the customer. Several hours later, the price of the shares went down, so the agent sold 50 ABC shares to limit the customer’s losses. According to the Uniform Securities Act, this is a

Answer 46

Violation because the agent exceeded his authority

Question 47

NASAA has a Statement of Policy on Dishonest or Unethical Business Practices of Broker Dealer’s and Agents in Connection with Investment company shares. One of the things the policy does is restrict statements that may be made when referring to a mutual fund as no load. Under the Policy one could claim or imply that a mutual fund is no load as long as the fund did not have a 3

Answer 47

Contingent deferred sales load

12b-1 fee in excess of .25% of average net fund assets per year

Service fee in excess of .25% of average net fund assets per year