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Questions and Answers
Questions and Answers
The Uniform Securities Act gives the Administrator the power to examine a broker dealers business records
The Uniform Securities Act gives the Administrator the power to examine a broker dealers business records
- only after obtaining a court order
- Only affer providing one week's advance notice to the broker-dealer
- a Courter providing one week's advance notice or f necessary for the protection of investors, after obtaining a court order to make an unannounced examination
- at any time, even across state lines (correct)
An Administrator may deny or suspend a registration in all of the following situations EXCEPT
An Administrator may deny or suspend a registration in all of the following situations EXCEPT
- if the applicant is not qualified on the basis of experience (correct)
- if the applicant has been the subject of an adverse order entered by the Administrator of another state within the past 10 years
- If the registrant has failed to properly supervise agents and investment adviser representative
- if the applicant was convicted of a misdemeanor involving securities within the last 10 years
- Maplewood Money Managers (MMM, an investment adviser with over $250 million in assets under management, directs a substantial portion of their client's securities transactions to Columbia Securities Incorporated (CSI), a registered broker-dealer. If, in response to the business generated by those transactions, CSI provided software that enabled MMM's investment adviser representatives to generate comprehensive portfolio reports for their client accounts, this would be
- Maplewood Money Managers (MMM, an investment adviser with over $250 million in assets under management, directs a substantial portion of their client's securities transactions to Columbia Securities Incorporated (CSI), a registered broker-dealer. If, in response to the business generated by those transactions, CSI provided software that enabled MMM's investment adviser representatives to generate comprehensive portfolio reports for their client accounts, this would be
- permitted as compensation to MMM, but only if they were also registered as a broker-dealer
- permitted as soft-dollar compensation under Section 28(e) of the Securities Exchange Act of 1934 (correct)
- permitted, but the value of the software would have to be used as an offset to the fees charged to MMM's CLIENTS
- prohibited as it would be a violation of MMM's fiduciary duty to their clients
- Which of the following securities are exempt from registration requirements under the Uniform Securities Act?
I. Issues of U.S.-based insurance companies authorized to conduct business in the state
II. NYSE traded issues
III. Issues of nonprofit religious organizations
IV. Commercial paper meeting certain requirements
- Which of the following securities are exempt from registration requirements under the Uniform Securities Act?
I. Issues of U.S.-based insurance companies authorized to conduct business in the state
II. NYSE traded issues
III. Issues of nonprofit religious organizations
IV. Commercial paper meeting certain requirements
Under the USA, each of the following is specifically excluded from the definition of a broker-dealer EXCEPT an
Under the USA, each of the following is specifically excluded from the definition of a broker-dealer EXCEPT an
Under the Uniform Securities Act, an agent who has inside information that ABC Company stock is about to fall
Under the Uniform Securities Act, an agent who has inside information that ABC Company stock is about to fall
- Which of the following securities are exempt from the registration provisions of the USA?
I. Issue of a savings and loan association authorized to do business in this state
II. General obligation municipal bond
III. Bond issued by a company that has common stock listed on the New York Stock Exchange
- Which of the following securities are exempt from the registration provisions of the USA?
I. Issue of a savings and loan association authorized to do business in this state
II. General obligation municipal bond
III. Bond issued by a company that has common stock listed on the New York Stock Exchange
- Which of the following is NOT included in Form ADV Part 27
- Which of the following is NOT included in Form ADV Part 27
- A fraudulent transaction was initiated by an agent in Indiana by contacting a client residing in lowa. After evaluating the offer, the client agreed to purchase the recommended security while vacationing in Florida. Which Administrators) has (have) jurisdiction?
I. The Indiana Administrator
II. The lowa Administrator
III. The Florida Administrator
- A fraudulent transaction was initiated by an agent in Indiana by contacting a client residing in lowa. After evaluating the offer, the client agreed to purchase the recommended security while vacationing in Florida. Which Administrators) has (have) jurisdiction?
I. The Indiana Administrator
II. The lowa Administrator
III. The Florida Administrator
- if a broker dealer purchases 100,000 shares of common stock from an individual investor, this is a
- if a broker dealer purchases 100,000 shares of common stock from an individual investor, this is a
- An investment adviser (A) has its primary office in State L. They have ranches in states M & N, and they advertise in states O,P,Q. What net capital requirements must they meet?
- An investment adviser (A) has its primary office in State L. They have ranches in states M & N, and they advertise in states O,P,Q. What net capital requirements must they meet?
- If, in the opinion of the Administrator, an agent is about to engage in a prohibited activity, the Administrator may
- If, in the opinion of the Administrator, an agent is about to engage in a prohibited activity, the Administrator may
- Except as limited by the Securities Exchange Act of 1934, the state securities Administrator may require, by rule or order, that broker-dealers make or maintain which of the following records?
I. Account ledgers
II. Correspondence
III. Papers and memoranda
IV. Blotters and books
- Except as limited by the Securities Exchange Act of 1934, the state securities Administrator may require, by rule or order, that broker-dealers make or maintain which of the following records?
I. Account ledgers
II. Correspondence
III. Papers and memoranda
IV. Blotters and books
47.When it comes to borrowing and lending money NASAA Model Rules prohibits activity that would compromise the objectivity of securities professionals. Which of the following are NOT prohibited practices?
I. A broker-dealer lending money to a client to purchase additional securities
II. An agent taking out a car loan from a bank whose branch manager is a client of that agent
III. An investment adviser borrowing money from an affiliated broker-dealer
IV. An investment adviser lending money to a client to enable that client to maintain the minimum required asset
level in the account
47.When it comes to borrowing and lending money NASAA Model Rules prohibits activity that would compromise the objectivity of securities professionals. Which of the following are NOT prohibited practices?
I. A broker-dealer lending money to a client to purchase additional securities
II. An agent taking out a car loan from a bank whose branch manager is a client of that agent
III. An investment adviser borrowing money from an affiliated broker-dealer
IV. An investment adviser lending money to a client to enable that client to maintain the minimum required asset level in the account
- A client is interested in purchasing an unlisted, non-Nasdaq equity security. The compensation to the broker-dealer must be disclosed
I. at the time of the solicitation
II. at the time of trade execution
III. in the prospectus
IV. on the trade confirmation
- A client is interested in purchasing an unlisted, non-Nasdaq equity security. The compensation to the broker-dealer must be disclosed
I. at the time of the solicitation
II. at the time of trade execution
III. in the prospectus
IV. on the trade confirmation
The NASAA Model Rule on Agency Cross Transactions requires that an investment adviser relying on the rule send a written disclosure document to affected clients including the total number of agency cross transactions during the period for the client since the date of the last such statement or summary as well as the total amount of all commissions or other remuneration the investment adviser received or will receive in connection with agency cross transactions for the client during the period no less frequently than
The NASAA Model Rule on Agency Cross Transactions requires that an investment adviser relying on the rule send a written disclosure document to affected clients including the total number of agency cross transactions during the period for the client since the date of the last such statement or summary as well as the total amount of all commissions or other remuneration the investment adviser received or will receive in connection with agency cross transactions for the client during the period no less frequently than
- An agent offers to sell a new issue of an unregistered, exempt security to a wealthy individual investor's account through a private placement. The offer is accepted and the transaction is executed. If the agent has not obtained satisfactory suitability information for this transaction, this is
- An agent offers to sell a new issue of an unregistered, exempt security to a wealthy individual investor's account through a private placement. The offer is accepted and the transaction is executed. If the agent has not obtained satisfactory suitability information for this transaction, this is
- State securities Administrators may NOT impose which of the following?
- State securities Administrators may NOT impose which of the following?
- While having lunch at his club, an agent overhears a conversation that Technotalk (a publicly traded company) has just lost its biggest account to a competitor. Upon returning to the office, the only person the agent informs of the conversation is his supervisor. In the above situation, the agent has acted
- While having lunch at his club, an agent overhears a conversation that Technotalk (a publicly traded company) has just lost its biggest account to a competitor. Upon returning to the office, the only person the agent informs of the conversation is his supervisor. In the above situation, the agent has acted
An Administrator wishing to set the net capital requirement for a broker-dealer may not require an amount greater then that
An Administrator wishing to set the net capital requirement for a broker-dealer may not require an amount greater then that
- Which of the following statements is TRUE?
- Which of the following statements is TRUE?
- A customer within one year of retirement informs his agent that he wants to use the equity in his house to make enough money within the year to fully fund his retirement. According to the Uniform Securities Act, the agent should
- A customer within one year of retirement informs his agent that he wants to use the equity in his house to make enough money within the year to fully fund his retirement. According to the Uniform Securities Act, the agent should
- According to the USA, the sale of a security to an insurance company is
- According to the USA, the sale of a security to an insurance company is
- According to the Uniform Securities Act, each of the following is a security EXCEPT
- According to the Uniform Securities Act, each of the following is a security EXCEPT
- An investment adviser must disclose which of the following legal or disciplinary actions to clients and prospective clients if they occurred within the last ten years
I. Conviction of a misdemeanor involving an investment-related Business
II. SEC or other federal regulatory agency proceedings in which the person was found in violation of an investment-related statute
III. A proceeding before FINRA (NASD) in which the adviser was barred or suspended from membership
IV. Conviction of a misdemeanor in a civil action regarding payment of motor vehicle
- An investment adviser must disclose which of the following legal or disciplinary actions to clients and prospective clients if they occurred within the last ten years
I. Conviction of a misdemeanor involving an investment-related Business
II. SEC or other federal regulatory agency proceedings in which the person was found in violation of an investment-related statute
III. A proceeding before FINRA (NASD) in which the adviser was barred or suspended from membership
IV. Conviction of a misdemeanor in a civil action regarding payment of motor vehicle
- All of the following would be prohibited practices under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT
- All of the following would be prohibited practices under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT
- When a broker-dealer registers with the state Administrator, which of the following persons are automatically registered as agents of the broker-dealer in the state?
- When a broker-dealer registers with the state Administrator, which of the following persons are automatically registered as agents of the broker-dealer in the state?
Questions and Answers
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Study Notes
Study Notes
Administrator's Powers
- The Administrator has the power to examine a broker-dealer's business records.
Registration Denial or Suspension
- An Administrator may deny or suspend a registration in certain situations, except for one undefined situation.
Broker-Dealer Exclusions
- The following are specifically excluded from the definition of a broker-dealer:
- An agent who has inside information about ABC Company stock.
Securities Exemptions
- The following securities are exempt from registration requirements under the Uniform Securities Act:
- Issues of U.S.-based insurance companies authorized to conduct business in the state.
- NYSE-traded issues.
- Issues of nonprofit religious organizations.
- Commercial paper meeting certain requirements.
- Issues of a savings and loan association authorized to do business in the state.
- General obligation municipal bonds.
- Bond issued by a company that has common stock listed on the New York Stock Exchange.
Form ADV Part 2
- The following is NOT included in Form ADV Part 2:
- Undefined information.
Jurisdiction
- In a fraudulent transaction initiated by an agent in Indiana, contacting a client residing in Iowa, and the client agreeing to purchase the recommended security while vacationing in Florida, the Administrators with jurisdiction are:
- The Indiana Administrator.
- The Iowa Administrator.
- The Florida Administrator.
Broker-Dealer Transactions
- If a broker-dealer purchases 100,000 shares of common stock from an individual investor, this is a:
- Purchase of securities.
Investment Adviser Net Capital Requirements
- An investment adviser with offices in multiple states must meet the net capital requirements of:
- The state where their primary office is located.
Prohibited Activities
- If, in the opinion of the Administrator, an agent is about to engage in a prohibited activity, the Administrator may:
- Take undefined action.
Record-Keeping Requirements
- The state securities Administrator may require broker-dealers to maintain records, including:
- Account ledgers.
- Correspondence.
- Papers and memoranda.
- Blotters and books.
Prohibited Practices
- The following are NOT prohibited practices:
- A broker-dealer lending money to a client to purchase additional securities.
- An agent taking out a car loan from a bank whose branch manager is a client of that agent.
Disclosure Requirements
- A client interested in purchasing an unlisted, non-Nasdaq equity security must be disclosed:
- The compensation to the broker-dealer at the time of trade execution.
Agency Cross Transactions
- An investment adviser relying on the NASAA Model Rule on Agency Cross Transactions must send a written disclosure document to affected clients:
- Including the total number of agency cross transactions during the period for the client since the date of the last such statement or summary.
- The total amount of all commissions or other remuneration the investment adviser received or will receive in connection with agency cross transactions for the client during the period.
- The document must be sent no less frequently than:
- Quarterly.
Insider Trading
- An agent who overhears confidential information and only informs their supervisor has:
- Acted appropriately.
Net Capital Requirements
- An Administrator wishing to set the net capital requirement for a broker-dealer may not require an amount greater than:
- Uncertain amount.
True Statement
- The following statement is TRUE:
- Undefined statement.
Suitability
- An agent should determine the suitability of an investment for a customer based on:
- The customer's financial situation and investment objectives.
Security Definitions
- The following is NOT a security:
- Undefined instrument.
Disclosure Requirements
- An investment adviser must disclose to clients and prospective clients if they occurred within the last ten years:
- Conviction of a misdemeanor involving an investment-related business.
- SEC or other federal regulatory agency proceedings in which the person was found in violation of an investment-related statute.
- A proceeding before FINRA (NASD) in which the adviser was barred or suspended from membership.
Unethical Business Practices
- All of the following would be prohibited practices under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT:
- Undefined practice.
Agent Registration
- When a broker-dealer registers with the state Administrator, which of the following persons are automatically registered as agents of the broker-dealer in the state:
- Undefined persons.
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