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Which of the following transactions is NOT exempt from the registration requirements of the Uniform Securities Act?
Which of the following transactions is NOT exempt from the registration requirements of the Uniform Securities Act?
Foster Advisers operates as an investment adviser that is registered in a state where the Administrator, by rule, prohibits investment advisers from holding custody of client funds and securities. This means that Foster Advisers may not
I. have physical custody over its clients' monies and certificates
II. manage client accounts on a discretionary basis
III. examine customers' stock certificates
Foster Advisers operates as an investment adviser that is registered in a state where the Administrator, by rule, prohibits investment advisers from holding custody of client funds and securities. This means that Foster Advisers may not I. have physical custody over its clients' monies and certificates II. manage client accounts on a discretionary basis III. examine customers' stock certificates
Which of the following persons is defined as an agent by the Uniform Securities Act?
Which of the following persons is defined as an agent by the Uniform Securities Act?
If an individual acting on behalf of an issuer engages in the sale of securities issued by a savings institution organized and supervised under the laws of any state, which of the following statements is TRUE?
If an individual acting on behalf of an issuer engages in the sale of securities issued by a savings institution organized and supervised under the laws of any state, which of the following statements is TRUE?
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NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents would likely consider which of the following to be prohibited activities?
I. A client is rather insistent on purchasing a security deemed unsuitable by the agent. In an effort to dissuade the client, the agent furnishes several websites of analysts who have issued negative reports on that security
II.An agent takes an order from the client's attorney without written trading authorization
III. An agent takes an order from the secretary of a nondiscretionary client who is too busy to give the order herself
IV. An agent encourages a client to acquire a security on the basis of research recently published by the broker-dealer for its institutional clients
NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents would likely consider which of the following to be prohibited activities?
I. A client is rather insistent on purchasing a security deemed unsuitable by the agent. In an effort to dissuade the client, the agent furnishes several websites of analysts who have issued negative reports on that security
II.An agent takes an order from the client's attorney without written trading authorization III. An agent takes an order from the secretary of a nondiscretionary client who is too busy to give the order herself IV. An agent encourages a client to acquire a security on the basis of research recently published by the broker-dealer for its institutional clients
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An investment adviser structured as a partnership lends money to a customer to buy recommended securities. Under NASAA's Model Rule dealing with Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, this activity is
An investment adviser structured as a partnership lends money to a customer to buy recommended securities. Under NASAA's Model Rule dealing with Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, this activity is
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Which of the following persons are included in the definition of an agent under the Uniform Securities Act?
I. An individual who represents First Securities Brokers, Inc., in selling shares of XYZ Corporation, a New York Stock Exchange listed company
II. An individual who, as part of the job description, represents the City of Chicago in selling its bonds to the public
III. An individual who represents First Securities Brokers, Inc., whose sole activity consists of selling individual investors securities issued by the U.S. government
IV. An individual who is employed by the Federal Reserve Board to sell Treasury Bills to retail investors
Which of the following persons are included in the definition of an agent under the Uniform Securities Act? I. An individual who represents First Securities Brokers, Inc., in selling shares of XYZ Corporation, a New York Stock Exchange listed company
II. An individual who, as part of the job description, represents the City of Chicago in selling its bonds to the public
III. An individual who represents First Securities Brokers, Inc., whose sole activity consists of selling individual investors securities issued by the U.S. government
IV. An individual who is employed by the Federal Reserve Board to sell Treasury Bills to retail investors
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Conceptual Financial Solutions (CFS), a broker-dealer registered in States S, B, F and G, has a television commercial broadcast on a station whose studio is located in State S. An individual client who resides in State B, makes an offer to buy based on that advertisement. The State B Administrator would have jurisdiction
Conceptual Financial Solutions (CFS), a broker-dealer registered in States S, B, F and G, has a television commercial broadcast on a station whose studio is located in State S. An individual client who resides in State B, makes an offer to buy based on that advertisement. The State B Administrator would have jurisdiction
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Conducting excessive transactions for a single customer is known as
Conducting excessive transactions for a single customer is known as
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Which of the following statements is NOT true regarding the authority of the Administrator under the Uniform Securities Act?
Which of the following statements is NOT true regarding the authority of the Administrator under the Uniform Securities Act?
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An individual may NOT act as an agent for more than one broker-dealer
An individual may NOT act as an agent for more than one broker-dealer
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Which of the following would be a permissible activity for an agent?
I. Placing an order in an existing discretionary account without specific authorization for that trade
II. Borrowing money from his mother, client, for the purposes of putting a down payment on a home
III. Accepting an order from a third party who explain that the writen documentation will arrive prior to the settlement date
IV. Disclosing receipt of material inside information after using it for personal trades only
Which of the following would be a permissible activity for an agent?
I. Placing an order in an existing discretionary account without specific authorization for that trade
II. Borrowing money from his mother, client, for the purposes of putting a down payment on a home
III. Accepting an order from a third party who explain that the writen documentation will arrive prior to the settlement date
IV. Disclosing receipt of material inside information after using it for personal trades only
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States may require a surety bond as a prerequisite to registration under the Uniform Securities Act for each of the following EXCEPT a(n)
States may require a surety bond as a prerequisite to registration under the Uniform Securities Act for each of the following EXCEPT a(n)
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The wife of a customer calls an agent to sell $25,000 worth of securities for a down payment on a house. Although the account is in her husband's name, she says her husband told her to sell the securities. To comply with NASAA'S Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents, the agent should
The wife of a customer calls an agent to sell $25,000 worth of securities for a down payment on a house. Although the account is in her husband's name, she says her husband told her to sell the securities. To comply with NASAA'S Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents, the agent should
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Under the Uniform Securities Act, requirements for registration as an investment adviser may include which of the following?
I. An announcement of the application for registration in one or more newspapers in the state
II. Minimum financial requirements for advisers who do not have custody of client securities or funds
III. A surety bond for advisers who do not exercise discretion and/or do not have custody of client funds or securities
Under the Uniform Securities Act, requirements for registration as an investment adviser may include which of the following?
I. An announcement of the application for registration in one or more newspapers in the state
II. Minimum financial requirements for advisers who do not have custody of client securities or funds
III. A surety bond for advisers who do not exercise discretion and/or do not have custody of client funds or securities
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Which of the following sales would be exempt from the antifraud provisions of the Uniform Securities Act?
Which of the following sales would be exempt from the antifraud provisions of the Uniform Securities Act?
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Under the Uniform Securities Act, an investment adviser is exempt from registration if the person has no place of business in a state and does not direct communication
I. to more than 5 noninstitutional clients
II. to more than 15 noninstitutional clients
III. within 9 consecutive months
IV. within 12 consecutive months
Under the Uniform Securities Act, an investment adviser is exempt from registration if the person has no place of business in a state and does not direct communication
I. to more than 5 noninstitutional clients
II. to more than 15 noninstitutional clients
III. within 9 consecutive months
IV. within 12 consecutive months
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Which of the following statements regarding an investment adviser representative is TRUE?
Which of the following statements regarding an investment adviser representative is TRUE?
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An agent omits facts that a prudent investor requires to make informed decisions. Under the Uniform Securities Act, this action is
An agent omits facts that a prudent investor requires to make informed decisions. Under the Uniform Securities Act, this action is
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An agent mistakenly sold an unregistered, nonexempt security to a customer. Which of the following actions should the broker-dealer take?
I. Offer to buy the security back from the customer
II. Ask the customer to sign a customer agreement
III. Register the stock by qualification
IV. Offer to pay interest at an annual rate determined by the Administrator, less income paid, from the date the security was purchased
An agent mistakenly sold an unregistered, nonexempt security to a customer. Which of the following actions should the broker-dealer take?
I. Offer to buy the security back from the customer
II. Ask the customer to sign a customer agreement
III. Register the stock by qualification
IV. Offer to pay interest at an annual rate determined by the Administrator, less income paid, from the date the security was purchased
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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)
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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An investment adviser is preparing an advertisement. Which of the following would be acceptable?
I. An endorsement on radio or TV from a celebrity who is a client of the firm
II. Identifying his best investment recommendations for the past 6 months
III. Offering to provide his investment recommendations for the past 12 months
IV. Promoting his system of charts and formulas while mentioning their limitations and difficulties
An investment adviser is preparing an advertisement. Which of the following would be acceptable?
I. An endorsement on radio or TV from a celebrity who is a client of the firm
II. Identifying his best investment recommendations for the past 6 months
III. Offering to provide his investment recommendations for the past 12 months
IV. Promoting his system of charts and formulas while mentioning their limitations and difficulties
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Under the Uniform Securities Act, which of the following is included in the definition of an investment adviser?
Under the Uniform Securities Act, which of the following is included in the definition of an investment adviser?
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Under the NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, an investment adviser may guarantee investment results
Under the NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, an investment adviser may guarantee investment results
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What document must accompany an initial registration application for those persons required to register under the Uniform Securities Act?
What document must accompany an initial registration application for those persons required to register under the Uniform Securities Act?
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An investment adviser with no place of business in the state has 10 clients in the state. For which one of the clients would registration be required?
An investment adviser with no place of business in the state has 10 clients in the state. For which one of the clients would registration be required?
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A retail customer of broker-dealer A is on vacation in Nevada. Broker-dealer A, who is registered and maintains an office in Florida, wishes to make the customer aware of an investment opportunity that has just become available.
Which of the following is TRUE?
A retail customer of broker-dealer A is on vacation in Nevada. Broker-dealer A, who is registered and maintains an office in Florida, wishes to make the customer aware of an investment opportunity that has just become available. Which of the following is TRUE?
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Under the Uniform Securities Act, a person whose business model is selling reports concerning specific securities to investors on a subscription basis will be defined as
Under the Uniform Securities Act, a person whose business model is selling reports concerning specific securities to investors on a subscription basis will be defined as
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MidWest Advisory Services has $175 million in assets under management and has offices in 10 mid-western states.
Regarding recordkeeping requirements, MidWest must meet those
MidWest Advisory Services has $175 million in assets under management and has offices in 10 mid-western states. Regarding recordkeeping requirements, MidWest must meet those
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An agent has a client who works in the legal department of ABC Manufacturing Corp. The client informs the agent that the company is going to be taken over by a competitor at a sizeable premium to the current market price. If the agent uses this information to solicit buy orders from clients and prospects, this is an example of
An agent has a client who works in the legal department of ABC Manufacturing Corp. The client informs the agent that the company is going to be taken over by a competitor at a sizeable premium to the current market price. If the agent uses this information to solicit buy orders from clients and prospects, this is an example of
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Which of the following would NOT be considered a fraudulent practice under the Uniform Securities Act?
Which of the following would NOT be considered a fraudulent practice under the Uniform Securities Act?
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Under the Uniform Securities Act, an investment adviser is exempt from registration if he has no place of business in a state and his only clients are any of the following EXCEPT
Under the Uniform Securities Act, an investment adviser is exempt from registration if he has no place of business in a state and his only clients are any of the following EXCEPT
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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, suggests tax-sheltered investments to wealthier clients
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, suggests tax-sheltered investments to wealthier clients
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Study Notes
Exemptions from Registration Requirements
- Foster Advisers, an investment adviser, is exempt from registration because it does not hold custody of client funds and securities due to the Administrator's rule.
Definition of an Agent
- An agent is defined as an individual who represents an issuer, selling securities issued by a savings institution organized and supervised under state laws.
Prohibited Activities
- Furnishing negative reports to a client to dissuade them from purchasing a security is not a prohibited activity.
- Taking an order from a client's attorney or secretary without written trading authorization is a prohibited activity.
- Lending money to a customer to buy recommended securities is a prohibited activity under NASAA's Model Rule.
Investment Adviser Definition
- An investment adviser is defined as any person who, for compensation, engages in the business of advising others on investing in securities.
Jurisdiction and Registration
- The State B Administrator has jurisdiction over Conceptual Financial Solutions (CFS), a broker-dealer registered in multiple states, regarding an individual client's offer to buy based on a television commercial.
Churning and Excessive Transactions
- Conducting excessive transactions for a single customer is known as churning.
Administrator's Authority
- The Administrator has the authority to require a surety bond as a prerequisite to registration for broker-dealers, investment advisers, and agents.
- The Administrator does not have the authority to prohibit investment advisers from holding custody of client funds and securities.
Permissible Activities for Agents
- Placing an order in an existing discretionary account without specific authorization for that trade is a permissible activity.
- Disclosing receipt of material inside information after using it for personal trades only is not a permissible activity.
Registration Requirements for Investment Advisers
- Requirements for registration as an investment adviser may include an announcement of the application for registration in one or more newspapers in the state, minimum financial requirements, and a surety bond.
Exemptions from Registration for Investment Advisers
- An investment adviser is exempt from registration if they have no place of business in a state and do not direct communication to more than 5 noninstitutional clients.
Antifraud Provisions
- Omitting facts that a prudent investor requires to make informed decisions is an antifraud violation under the Uniform Securities Act.
Corrective Actions
- If an agent mistakenly sold an unregistered, nonexempt security to a customer, the broker-dealer should offer to buy the security back from the customer.
Investment Adviser Representatives
- An investment adviser representative must comply with NASAA's Statement of Policy on Dishonest and Unethical Business Practices of Broker-Dealers and Agents.
Advertisement Guidelines
- An investment adviser's advertisement must not guarantee investment results and should identify the limitations and difficulties of their system.
Definition of an Investment Adviser
- An investment adviser is defined as any person who, for compensation, engages in the business of advising others on investing in securities.
Document Requirements
- A document must accompany an initial registration application for those persons required to register under the Uniform Securities Act.
Recordkeeping Requirements
- MidWest Advisory Services, an investment adviser with $175 million in assets under management, must meet recordkeeping requirements.
Insider Trading
- Using material inside information to solicit buy orders from clients and prospects is an example of insider trading.
Fraudulent Practices
- Using inside information to solicit buy orders from clients and prospects is a fraudulent practice under the Uniform Securities Act.
Exemptions from Registration
- An investment adviser is exempt from registration if they have no place of business in a state and their only clients are institutional clients.
SEC Release IA-1092
- The term investment adviser does not include a broker-dealer who charges for investment advice, a publisher of a financial newspaper, a person who sells security analysis, or a CPA who suggests tax-sheltered investments to wealthier clients.
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Test your knowledge on which transactions are exempt from the registration requirements of the Uniform Securities Act. Identify the transaction that is NOT exempt from registration.
