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Questions and Answers
- On the basis of information gathered from reliable sources, an Administrator has reason to believe that a broker-dealer located in the state is engaging in practices that might be a violation of the Uniform Securities Act. As a result, the Administrator assembles a task force to conduct a surprise audit of the firm's operations. In doing so, the Administrator's task force would be able to enter the broker-dealer's premises
When submitting an application for registration as a broker-dealer, which of the following must be disclosed
I. form of business organization
II. any felonies or certain misdemeanors on the records of partners or officers
III. business history of the principals of the firm
IV. financial information on the firm
- The state securities Administrator has the authority to
34.The Uniform Securities Act requires client consent for assignment of the investment advisory contract. It would be considered that contracts were assigned in all of the following situations EXCEPT
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35.A registered broker-dealer is under common control with a registered investment adviser. An individual who is an agent of the broker-dealer and an investment adviser representative of the adviser has a client with $250,000 under an asset management program. The terms of the account call for discretionary power to be given for the account and alrest management program. The , i the opion out alf, hi purtiona 50 shares othe sale wilbe on stock is an appropriate addition to the portfolio. The broker-dealer is a market maker in RMBM, and the sale will be made as a principal, a fact that is disclosed to the client on the trade confirmation. In this situation, the registered person has acted
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36.Under the Uniform Securities Act, an agent is a(n)
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- Which of the following persons is NOT an associated person of an investment adviser?
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- Which of the following is defined as a security under the Uniform Securities Act?
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- 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 State Y is required if the client is a(n)
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- Under SEC Release IA-1092, the term investment adviser does NOT include which of the following?
I A broker-dealer who charges for investment advice
II. A publisher of a financial newspaper with regular and general circulation
III. A person who sells security analysis
IV. A CPA who, as an incidental part of his practice, suggess tax sheltered investents to wealthier clients
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Study Notes
Administrator's Authority
- The Administrator has the authority to conduct a surprise audit of a broker-dealer's operations if there is reason to believe the firm is violating the Uniform Securities Act.
- The Administrator's task force can enter the broker-dealer's premises as part of the audit.
Broker-Dealer Registration
- When submitting an application for registration as a broker-dealer, the following must be disclosed:
- Form of business organization
- Any felonies or certain misdemeanors on the records of partners or officers
- Business history of the principals of the firm
- Financial information on the firm
Authority of the State Securities Administrator
- The state securities Administrator has the authority to take action in cases of suspected violations of the Uniform Securities Act.
Assignment of Investment Advisory Contract
- The Uniform Securities Act requires client consent for assignment of the investment advisory contract.
- Contracts are considered assigned in all situations except one where the client has given consent.
Registered Broker-Dealer and Investment Adviser
- A registered broker-dealer under common control with a registered investment adviser can have an agent who is also an investment adviser representative.
- The agent can have discretionary power to manage a client's account.
Definition of an Agent
- Under the Uniform Securities Act, an agent is a person who represents a broker-dealer in effecting transactions or inducing transactions.
Associated Persons of an Investment Adviser
- The following is NOT an associated person of an investment adviser: a person who is not a partner, officer, or employee of the adviser.
Definition of a Security
- A security under the Uniform Securities Act includes a note, stock, treasury stock, bond, debenture, certificate of interest, or participation in any profit-sharing agreement.
Broker-Dealer Registration Requirements
- A broker-dealer registered in one state may need to register in another state if it does business in that state with clients who are residents of that state.
Exclusions from Investment Adviser Definition
- The term investment adviser does NOT include:
- A broker-dealer who charges for investment advice, but only as an incidental part of their business
- A publisher of a financial newspaper with regular and general circulation
- A person who sells security analysis or provides investment advice that is solely incidental to their business
- A CPA who suggests investments to wealthier clients as an incidental part of their practice
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Description
Explore the responsibilities of an Administrator under the Uniform Securities Act when suspicions of violations arise, including the authority to conduct surprise audits. Understand the procedures involved in these situations.
