Ch. 1

Question 1

Identify who is considered a person under the USA.

Answer 1

Business entities, issuers, estates, governments, individuals (e.g., clients, IARs and agents)

Question 2

A securities firm that executes trades for its own account or the accounts of others is deemed a _______.

Answer 2

Broker Dealer

Question 3

T/F: The Uniform Securities Act is exactly the same law in every state.

Answer 3

F; the USA is a model law, not the actual law of any state

Question 4

Identify the acronym: NASAA

Answer 4

North American Securities Administrators Association

Question 5

What is the three pronged test for determining whether a firm meets the IA definition?

Answer 5

ABC
A= advice/analyses
B= business
C= compensation

Question 6

T/F: States may make rules that are more restrictive than SEC (federal) rules.

Answer 6

F; NSMIA prohibits states from making laws that are more restrictive than existing federal requirements

Question 7

Identify who IS NOT considered a person under the USA.

Answer 7

Minors, incompetents, securities, and the deceased are NOT considered persons.

Question 8

T/F: Puerto Rico is a member of NASAA

Answer 8

T

Question 9

Who is the official that monitors and administers a states securities laws?

Answer 9

The Administrator or Commissioner

Question 10

Identify the acronym: NSMIA

Answer 10

National Securities Markets Improvement Act

Question 11

When acting in a __________ capacity, a firm is assuming risk.

Answer 11

Principal

Question 12

Identify the acronyms IA

Answer 12

Investment Advisor

Question 13

T/F: The US Virgin Islands are a member of NASAA

Answer 13

T

Question 14

What is the ABC Test for investment advisors?

Answer 14

The test that defines an IA as a firm that provides Advice as a part of a Business for Compensation

Question 15

Who enforces the Uniform Securities Act?

Answer 15

The Administrator

Question 16

How is a firm acting if it is trading for, or from, it’s own inventory?

Answer 16

As a principal/dealer

Question 17

T/F: Blue Sky Laws apply to broker dealers and agents operating within a state.

Answer 17

T

Question 18

What are the three components that must be met for a firm to be defined as an IA?

Answer 18

1. Provide advice regarding securities
2. Do so as a business
3. Receive specific compensation (the ABC test)

Question 19

Under the provisions of the USA, how is the institutional investor designation made?

Answer 19

Under the USA, an institutional investor is any person designated by rule or order of the Administrator

Question 20

How is a firm acting if it effects trades on behalf of its customers, without taking the other side of the trade?

Answer 20

Agent or broker

Question 21

What is the general definition of an investment banker?

Answer 21

A firm that provides advice/analyses regarding securities, as a part of a business, and for compensation

Question 22

T/F: The District of Columbia is a member of NASAA.

Answer 22

T

Question 23

What rules govern the registration of an issue in any state in which it will be offered?

Answer 23

Blue Sky Laws

Question 24

When acting in an ________ capacity, firms assist customers, but do not assumed risk.

Answer 24

Agency

Question 25

T/F: A firm producing investment research for BDs to deliver to its clients is considered an IA under the USA.

Answer 25

T; since advice is being provided, as a business, and compensation is received, the ABC test is met

Question 26

List the entities that make up NASAA

Answer 26

All 50 states, the US Virgin Islands, Puerto Rico, Washington DC, Canada and Mexico

Question 27

What is a principal trade?

Answer 27

A trade involving a firm ( BD or IA) buying or selling securities for its own account at its own risk.

Question 28

According to the USA, who is included under the term “person”?

Answer 28

Any legal entity, including individuals (clients/agents/IARs), BDs, issuers, corporations and partnerships

Question 29

The _______ ________ ___________ __________ is an organization consisting of state Administrators.

Answer 29

North American Securities Administrators Association

Question 30

According to the USA, who is included under the term person?

Answer 30

Any legal entity, including individuals (clients/agents/IARs), BDs, IAs, issuers, corporations, and partnerships.

Question 31

What is the general definition of an issuer?

Answer 31

Any person who issues or proposes to issue a security, such as government entities and corporations.

Question 32

Identify two significant creations that are credited to the National Securities Markets Improvement Act (NSMIA).

Answer 32

Federal Covered Advisers and Federal Covered Securities

Question 33

Identify the acronym: USA

Answer 33

Uniform Securities Act