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Series 63 > Administration of the USA > Flashcards

Administration of the USA Flashcards

1
Q

What are the justifiable reasons for denying an individual’s registration? 2

A
  1. Conviction for any felony (any time) or

2. securities-related misdemeanor within the last 10 years

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2
Q

True or False: A gift of assessable stock is considered both an offer and sale.

A

True

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3
Q

Is the payment of a stock dividend considered an offer or sale?

A

No

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4
Q

Is the conversion of a bond into stock considered an offer or sale?

A

No

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5
Q

If shares of stock are freely given with the purchase of a bond, is this considered an offer and sale?

A

Yes

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6
Q

True or False: An Administrator may issue a cease-and-desist order before a violation has occurred.

A

True

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7
Q

Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days.

A

Administrative cease-and-desist orders may be appealed in a state court if application is made within 60 days.

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8
Q

An ________ is any attempt or solicitation to acquire or dispose of a security for value.

A

An offer is any attempt or solicitation to acquire or dispose of a security for value.

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9
Q

A _______ is any agreement or contract to dispose of a security for value.

A

A sale is any agreement or contract to dispose of a security for value.

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10
Q

True or False: Registration may be denied due to ANY misdemeanor convictions.

A

False. Registration may be denied for ANY felony conviction or securities-related misdemeanor conviction.

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11
Q

If an offer is made using television or radio, where is the offer considered to have been made?

A

In the state in which the broadcast or telecast originated

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12
Q

If an offer is made using the mail, where is the offer considered to have been made?

A

In the state from which it originated and the state to which it is directed

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13
Q

With newspaper offers, no offer is made if more than __________ of the circulation is outside of the publishing state.

A

With newspaper offers, no offer is made if more than two-thirds of the circulation is outside of the publishing state.

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14
Q

Under what situations may the Administrator cancel a registrant’s registration? 4

A

If the registrant has

  1. died,
  2. ceased doing business,
  3. been declared mentally incompetent or
  4. cannot be located
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15
Q

True or False: A stock dividend is considered a sale.

A

False

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16
Q

May the Administrator levy fines on a registrant?

A

No

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17
Q

When will an offer fall under an Administrator’s jurisdiction?

A

If the offer originated in, was directed in, or was accepted in the Administrator’s state

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18
Q

If the Administrator believes a person has violated or is about to violate the USA, may a stop order be issued?

A

Yes

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19
Q

Does the Administrator require proof of wrongdoing to initiate an investigation?

A

No, but she does need to be able to refer to a rule or order when starting the investigation.

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20
Q

When conducting an investigation of wrongdoing, is the Administrator limited to state boundaries?

A

No. The Administrator may subpoena books, records, and witnesses from inside and outside the state.

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21
Q

If found civilly liable for violating the USA, what is the penalty? 5

A 
1. The original amount paid, 
plus 
2. the legal rate of interest, 
3. attorney fees, and 
4. court costs, 
5. minus any cash received
22
Q

The appeal of an administrative order is made before a court of _________________________.

A

The appeal of an administrative order is made before a court of competent jurisdiction (state court).

23
Q

Does the appeal of an administrative order act as a stay of the order?

A

No. The order remains in effect until the outcome of the hearing.

24
Q

What is a letter of rescission?

A

An offer to buy back a security from a client when that security was sold in violation of the USA

25
Q

A customer must respond to a letter of rescission within _____ days or lose the right to sue.

A

A customer must respond to a letter of rescission within 30 days or lose the right to sue.

26
Q

True or False: The Administrator may bring a case in a civil court.

A

True. Both the Administrator and a private citizen may bring a case in civil court.

27
Q

Define jurisdiction.

A

The power to interpret and apply the law or the territorial range of authority or control.

28
Q

An _______ is any attempt or solicitation to dispose of a security for value.

A

An offer (offer to sell) is any attempt or solicitation to dispose of a security for value.

29
Q

Can a BD punish one of its agents for responding to a subpoena?

A

No. This is a prohibited action.

30
Q

True or False: An individual may be denied registration due to lack of experience.

A

False. However, a lack of training, knowledge, and experience may be grounds for denial.

31
Q

If an agent has withdrawn registration, the Administrator may still take action for ___ year(s) after the withdrawal.

A

If an agent has withdrawn registration, the Administrator may still take action for one year after the withdrawal.

32
Q

A prospectus is mailed by an agent in one state to a client in another state. In which state(s) is the offer being made?

A

Both states

33
Q

Under the Uniform Securities Act, the statute of limitations for fraud is ____ years.

A

Under the Uniform Securities Act, the statute of limitations for fraud is five years.

34
Q

The statute of limitations for criminal violations of the Uniform Securities Act is ____ years.

A

The statute of limitations for criminal violations of the Uniform Securities Act is five years.

35
Q

May an Administrator subpoena records in another state to investigate potential violations that occurred in his own state?

A

Yes, the Administrator has broad inspectorial power, which stretches beyond his own state.

36
Q

May the books and records of a federal covered adviser be subject to inspection by an Administrator?

A

Yes

37
Q

True or False: An Administrator may cancel a registration without the opportunity for a hearing.

A

True. Cancellation may be due to the death of an agent or a firm no longer being in business.

38
Q

If a cease-and-desist order is issued against an agent, the agent may file an appeal within _____ days.

A

If a cease-and-desist order is issued against an agent, the agent may file an appeal within 60 days.

39
Q

Is being charged with a felony or securities-related misdemeanor grounds for statutory disqualification?

A

No. Statutory disqualification is due to conviction for any felony or securities-related misdemeanor in the past 10 yrs.

40
Q

True or False: The exercise of convertible securities is considered a sale under the USA.

A

False

41
Q

True or False: A warrant attached to the sale of a bond is considered a sale of the warrant.

A

True

42
Q

May the Administrator initiate criminal or civil liability action against a registrant?

A

Yes. An Administrator may initiate action, but may not impose fines or penalties for violations.

43
Q

True or False: A gift of non-assessable stock is considered a sale.

A

False. However, the gift of assessable stock IS considered both an offer and a sale.

44
Q

If the Administrator believes a person has violated or is about to violate the USA, may he issue an injunction?

A

No. The Administrator may not issue an injunction. Injunctions may only be issued by a court of competent jurisdiction.

45
Q

The maximum criminal penalty for violations of the USA is _____ years in prison and/or up to a $______ fine.

A

The maximum criminal penalty for violations of the USA is three years in prison and/or up to a $5,000 fine.

46
Q

Define assessable stock.

A

Stock that allows the issuing entity to demand additional funds from existing stockholders

47
Q

True or False: The Administrator may issue an injunction.

A

False. Only a court may issue an injunction; however, the Administrator may issue a cease and desist order.

48
Q

When a broker-dealer has filed an application to withdraw its registration, when will it become effective?

A

When the Administrator determines whether there is an action for revocation of the firm’s license pending at the time the application was filed.

49
Q

What could result in a denial of a broker-dealers application for registration with the Administrator?

A

-Any action for a foreign securities regulator may result in a denial

50
Q

An agent offered and sold an unregistered, nonexempt security to several of his clients in State A. These clients subsequently lost a considerable amount of money in this investment. Under the Uniform Securities Act what can the clients do?

A

The clients may initiate a civil lawsuit to recover their losses

51
Q

What action may the state securities Administrator take without giving the registrant an opportunity for a hearing?

A

Cancel a registration

52
Q

What actions fall under the jurisdiction of a state securities Administrator?

A
  1. The purchase of options through the Internet by a state resident
  2. The offer of securities by an out-of-state broker to a resident of the state.

Series 63 (7 decks)

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