1 - USA, Broker-Dealers & Agents Flashcards
This deck focuses on the registration requirements for broker-dealers and agents.
What is consent to service of process as it relates to the registration of securities professionals?
Consent to service of process allows the Administrator to accept legal documents on an individual’s behalf.
At the state level, when does an investment adviser’s application for registration become effective?
At the state level, an investment adviser’s registration becomes effective at noon on the 30th day after the application is filed.
At the federal level, when does a federal covered investment adviser’s application for registration become effective?
Within 45 days after the application is filed a federal covered investment adviser’s registration will be granted or proceedings will be instituted to determine whether the application should be denied.
How many reasons must an Administrator have to take disciplinary action against an investment adviser?
An Administrator must have at least two reasons to take disciplinary actions against an investment adviser. One of these reasons must be that the disciplinary action is in the public’s best interest.
Is lack of experience a proper ground for an Administrator to deny a registration?
No. A lack of experience alone is not grounds for denial of a registration.
Is a lack of qualification a proper ground for an Administrator to deny a registration?
Yes. A lack of qualification, including not having passed the Series 63 examination, is a valid reason to deny a registration.
What are the notice, hearing, and written findings requirements when a state securities Administrator subjects an individual to disciplinary action?
The Administrator must provide notice and give an opportunity for a hearing. If a hearing is held, the Administrator must provide written findings that support the disciplinary action.
Under what circumstances must an individual subject to disciplinary proceedings be given a hearing?
An individual subject to disciplinary actions must be given a hearing if the individual requests one. A hearing must be held within 15 days of such request.
Under what four circumstances can an Administrator cancel the registration of an investment adviser?
An Administrator can cancel the registration if the investment adviser is:
- no longer in business;
- no longer in existence;
- a court finds the investment adviser to be mentally incompetent; or
- the investment adviser cannot be located after a reasonable search.
When is a withdrawal of state registration effective?
A withdrawal of state registration occurs 30 days after filing with the Administrator, unless disciplinary actions are pending. An individual cannot withdraw to avoid disciplinary actions.
After a registration is withdrawn, for how long may an Administrator initiate disciplinary actions?
An Administrator has jurisdiction to initiate disciplinary proceedings for one year after withdrawal.
When can a state Administrator take disciplinary action without a hearing?
If the Administrator suspects fraudulent activity it can issue a cease and desist order. This immediately requires a person to refrain from doing a certain activity. This order can be issued before the fraud actually occurs.
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.
