Flashcards in 1 - USA, Broker-Dealers & Agents Deck (26)
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: (1) no longer in business; (2) no longer in existence; (3) a court finds the investment adviser to be mentally incompetent; or (4) 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: (1) minors (those under 18), (2) deceased individuals, and (3) 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.
When does the registration of broker-dealers, agents, state-covered investment advisers, and investment adviser representatives expire?
December 31st of each year. All registrations come up for renewal on December 31st. A registration is renewed by paying a fee.
Any person engaged in the business of effecting transactions in securities for the account of others or for his or her own account.
What is an issuer?
An issuer is any person who issues or proposes to issue a security, such as companies or governments.
Any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
Define legal person
Legal 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.
Define natural person
Natural person means an individual. A living human being.
A broker-dealer has an office in the state. Does it have to register in the state?
Yes. A broker-dealer with a physical office in a state must register in that state. No further analysis is required.
A broker-dealer has a single retail client in the state. Does it have to register in the state?
Yes. A broker-dealer with a single retail client in a state must register in that state.
Who is an agent of an issuer?
An agent of an issuer is an employee of an issuer who sells the issuer's securities in the marketplace.
When is an issuer's agent exempt from registration?
An issuer's agent is exempt from registering if the agent: (1) sells exempt securities, (2) sells securities in an exempt transaction, or (3) sells the securities to existing directors, officers, or employees of the issuer and receives no additional compensation for such sales.