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Flashcards in exempt Deck (16):
1

The term Agent does not include an individual who represents an issuer in effecting:

US Government Securities
Municipal Securities
Canadian Government Securities, including Securities issued by any province of Canada
Banks
Promissory Notes and Investment Contracts

2

Exempt Transactions?

Isolated non-issuer transactions, meaning secondary market transactions by investors
Transactions in certain covered securities namely securities sold to qualified purchasers or securities sold in a private placement
Transactions with investing employees, partners, or directors of the issuer if no commission or other remuneration is paid

3

What investment products are excluded from the definition of a security?

Fixed life insurance
Endowment policies
Fixed annuity contracts
Commodity futures contracts, collectibles, precious metals, real estate

4

Federal covered security?

NYSE or Nasdaq
investment company or pooled investment fund shares(mutual funds)
securities sold to "qualified" purchasers which includes wealthy individuals, couples, or family businesses or trust sponsored by a qualified person

5

Exempt under federal?

US Government securities
muni bonds. only if offered outside the state of issue
securities that are unregistered and issued as private placements under the SEC rules such as Reg D

6

Excluded from the federal definition of securities?

Securities issued by non-profit organizations
muni bonds offered only in the state where the issuer is located
intrastate offerings
a security issued with a guarantee from another entity as to principal, interest, or dividends.

7

A sell or sale is?

Receiving a security as a bonus for buying another security or product
receiving rights or warrants to buy another security
receiving a "gift" of asessable stock

8

Investment advisors or investment advisor representatives must be registered unless their only clients in the state are:?

Investment companies, Other investment advisors, Federal Covered advisors, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets of not less than $1M, Government agencies, Other institutional investors

9

Exempt securities under USA?

US Government securities, Municipal securities, securities issued or guaranteed by the country of Canada or its provinces, securities issued by US Banks, savings institutions, or trust companies, securities issued by a federal savings and loan association, credit unions, securities issued by insurance companies, any securities listed on a registered stock exchance(NYSE or Nasdaq) non-profit issues, promissory notes, public utility & common carries securites( rail road companies), investment contracts in connection with employee stock purchase

10

Federal exemption to the IA definition?

• Venture Capital- Money Managers seeking Private equity
• Insurance
• Local – all clients in the state, advisor doesn’t solicit exchange listed Sec.
• F oreign – No U.S. locations, < 15 clients & AUM< $25MM
• P rivate – Hedge Funds with AUM > $150MM

11

An individual represents the Canadian government and its provinces when the government and provinces are issuing securities and effecting transactions related to the issue of these securities. When it comes to the regulations and definitions of the Uniform Securities Act, which of the following is TRUE?

[A] The actions of the individual would be those of a broker/dealer, and the individual would be required to register as such.
[B] The actions of the individual would be those of an agent, and the individual would be required to register as such.
[C] The actions of the individual would be those of a broker/dealer, but the individual would qualify for an exclusion due to the issuer/securities.
[D] The actions of the individual would be those of an agent, but the individual would qualify for an exclusion due to the issuer/securities.

Answer D

Exclusions are limited, however, to those representing US Government and Municipal Securities, Canadian Government/Province Securities, Bank Securities, Promissory Notes at 9 months, and certain Investment Contracts related to employee stock plans. Remember that insurance securities and federal savings and loan associations do NOT allow the individual to qualify for the exclusion from the definition of agent.

12

According to the Uniform Securities Act, which of the following is not excluded from the definition of broker/dealer?

[A] an agent
[B] an investment advisor
[C] an issuer
[D] a bank, savings institution, or trust company

[B] an investment advisor
EXPLANATION

The statutory exclusions from the definition of a broker-dealer in the USA do not include Investment Advisors. A firm can be registered as a broker/dealer and as an investment advisory firm. Agent's work for broker/dealers and issuers use broker/dealers to help them distribute new issues of securities.

13

Under the Uniform Securities Act the definition of Investment Adviser would NOT apply to which of the following situations?

An individual who, for compensation, engages in the business of advising others as to the value of securities
A Bank who, for compensation, engages in the business of advising others as to the value of securities
A Trust Company who, for compensation, engages in the business of advising others as to the value of securities
An accountant, who for extra compensation, engages in the business of advising others as to the value of securities
[A] I & II only
[B] II & III only
[C] I & IV only
[D] II, III, & IV only

[B] II & III only

Excluded from the definition of Investment Advisor are institutions such as Banks, savings institutions, Trust companies, and investment companies. These entities and would not be defined as an investment adviser even if they charge a fee for advisory services.

14

According to the Uniform Securities Act, which of the following would be specifically excluded in the definition of a Broker-Dealer?

[D] Issuers
EXPLANATION

Of the choices offered the only one that is "specifically" excluded from the definition of Broker-Dealer is an issuer.

15

According to the Uniform Securities Act, exclusions from the definition of broker/dealer include:

1 an issuer
2 a person that has a place of business in a state and only does transactions in securities with financial institutions
3 agents for the broker/dealer
4 agent for an issuer

[A] I
[B] I, II, IV
[C] I, III, IV
[D] I, IV

[C] I, III, IV

EXPLANATION

The definition of a broker/dealer under the Uniform Securities Act specifically excludes choices I, III, and IV. Choice II would have to be registered as a broker/dealer since they have a place of business in the state.

16

Which of the following “securities” are exempt under the Uniform Securities Act?

U.S. Government Securities and Municipal Securities
Unsolicited transactions
Securities that are listed on the New York Stock Exchange (NYSE)
Underwriter transactions, such as transactions that take place between members of an investment banking syndicate
[A] I and III only
[B] II and IV only
[C] I, II, and III only
[D] I, II, III, and IV


[A] I and III only
EXPLANATION

Be very careful about the wording of questions. Here, all items listed would fall under exemptions of the Uniform Securities Act, HOWEVER, the question specifically asks about “securities”, and is not referring to exempt transactions. Only US Government Securities, Municipal Securities, and Securities listed on a national exchange such as the NYSE would be exempt SECURITIES. The other two items listed fall under the category of exempt TRANSACTIONS.