Series63Notes Flashcards
(119 cards)
1
Q
1 - 1 Overview
A
Universal life is not defined as a security.
2
Q
1 - 2 Overview
A
When a term life policy is extended beyond the term period, the premium will increase.
3
Q
1 - 3 Overview
A
Fixed annuities are not subject to the USA since they are not securities.
4
Q
1 - 4 Overview
A
An agent of an issuer is exempt from registration if selling exempt securities or involved in an exempt transaction.
5
Q
1 - 5 Overview
A
NASAA members include all states, District of Columbia (D.C), U.S. territories, Canada, and Mexico.
6
Q
1 - 6 Overview
A
The definition of a state includes the 50 states, D.C., U.S. territories, but DOES NOT include the British V.I., Mexico, or any province of Canada.
7
Q
1 - 7 Overview
A
Viatical investments are securities.
8
Q
1 - 8 Overview
A
A certificate of interest in a mining lease is a security.
9
Q
1 - 9 Overview
A
Federal covered securities are exempt from state registration.
10
Q
1 - 10 Overview
A
Futures and commodities are not defined as securities. An option on them would be.
11
Q
1 - 11 Overview
A
An individual who represents the issuer of exempt securities is not subject to registration as an agent.
12
Q
1 - 12 Overview
A
An individual who represents the issuer in an exempt transaction is not subject to registration as an agent.
13
Q
1 - 13 Overview
A
Lawyers, accountants, teachers, and engineers are excluded from the definition of an investment adviser.
14
Q
1 - 14 Overview
A
An unpaid intern at a B/D who is involved in sales or solicitations is considered an agent and must register.
15
Q
1 - 15 Overview
A
A solicitor for an IA may be required to register with the Administrator.
16
Q
1 - 16 Overview
A
An endowment policy is not a security.
17
Q
1 - 17 Overview
A
Notice filing is required for issuers of investment company shares and private placements under Rule 506 of Reg. D.
18
Q
1 - 18 Overview
A
Limited registration is granted to Canadian B/D’s and their agents. Not Mexican B/D’s or agents.
19
Q
1 - 19 Overview
A
The Administrator is permitted to issue a cease and desist order, but not an injunction.
20
Q
1 - 20 Overview
A
The definition of a person does not include minors.
21
Q
2 - 1 Administration of the Uniform Securities Act
A
State Administrators in one state are permitted to share information with other state administrators. .
22
Q
2 - 2 Administration of the Uniform Securities Act
A
An offer or sale includes rights offerings and exercising an option.
23
Q
2 - 3 Administration of the Uniform Securities Act
A
The Administrator may not deny registration for a misdemeanor DUI.
24
Q
2 - 4 Administration of the Uniform Securities Act
A
Registration can be denied if convicted of a securities violation in a foreign country within the past 5 years.
25
2 - 5 Administration of the Uniform Securities Act
A gift of assessable stock is considered both an offer and sale.
26
2 - 6 Administration of the Uniform Securities Act
The Administrator may issue subpoenas both inside and outside the state.
27
2 - 7 Administration of the Uniform Securities Act
Registrations may be cancelled by the Administrator without a hearing if the registrant is deceased, missing, mentally incompetent, or out of business.
28
3 - 1 Registration of Securities Professionals
3 Rebates received by an IA from an agent must be disclosed on the IA's ADV.
29
3 - 2 Registration of Securities Professionals
State registered advisers do not file documents with the SEC.
30
3 - 3 Registration of Securities Professionals
Form U-4 is used by agents and IAR's to register.
31
3 - 4 Registration of Securities Professionals
Form U-5 is used to report termination of employment filed by the B/D.
32
3 - 5 Registration of Securities Professionals
Form U-6 is filed with regulators to report civil, criminal or regulatory actions.
33
3 - 6 Registration of Securities Professionals
Foreclosures are not reported on the U-4, however tax liens are.
34
3 - 7 Registration of Securities Professionals
Order tickets do not require pre-approval, but must be reviewed by a supervisor at the end of the day.
35
3 - 8 Registration of Securities Professionals
Items older than 10 years need not be disclosed on the U-4.
36
3 - 9 Registration of Securities Professionals
IA's who manage more than $110 million in assets are federal covered advisers and must register with the SEC.
37
3 - 10 Registration of Securities Professionals
IA's who manage less than $100 million in assets must register with the state.
38
3 - 11 Registration of Securities Professionals
IA's who manage between $100 million and $110 million may register with the state or the SEC.
39
3 - 12 Registration of Securities Professionals
If a B/D has an office in a state, it must register in that state.
40
3 - 13 Registration of Securities Professionals
B/D records are kept for 3 years.
41
3 - 14 Registration of Securities Professionals
IA records are kept for 5 years.
42
3 - 15 Registration of Securities Professionals
If an agent's employment is terminated, the agent, the old B/D and any new B/D must notify the Administrator.
43
3 - 16 Registration of Securities Professionals
IA's register using Form ADV.
44
3 - 17 Registration of Securities Professionals
IA's are not required to give a brochure to clients that are registered investment companies.
45
3 - 18 Registration of Securities Professionals
The anti-fraud rules would not apply to fixed annuities since they are not defined as a security.
46
3 - 19 Registration of Securities Professionals
In lieu of a surety bond, the Administrator may accept cash or securities.
47
3 - 20 Registration of Securities Professionals
A consent to service of process is only filed once.
48
3 - 21 Registration of Securities Professionals
An adviser's net worth would not include home furnishings or automobiles.
49
3 - 22 Registration of Securities Professionals
Account numbers, terms of the order, execution price, time that the order was received, and the person who accepted the order are all required on an order ticket.
50
3 - 23 Registration of Securities Professionals
Principal approval is NOT required when a trade is executed.
51
3 - 24 Registration of Securities Professionals
Form ADV-E is filed by the auditor of an IA who has custody of client funds or securities.
52
3 - 25 Registration of Securities Professionals
Lack of experience may not be the sole grounds for denial of a registration.
53
3 - 26 Registration of Securities Professionals
Registration of an agent is effective on the 30th day from filing.
54
3 - 27 Registration of Securities Professionals
Withdrawals from registration are effective 30 days after filing.
55
3 - 28 Registration of Securities Professionals
Agents may split commissions with other agents of the same B/D if the agents and B/D are registered in the same state.
56
3 - 29 Registration of Securities Professionals
A Transfer on Death(TOD) account designation is used to avoid probate, not estate taxes.
57
3 - 30 Registration of Securities Professionals
An IA has custody if securities received inadvertently are not returned within 3 business days.
58
3 - 31 Registration of Securities Professionals
IA clients must receive a brochure at least 48 hours before signing a contract, or at the time of signing if it can be cancelled without a penalty within 5 days.
59
3 - 32 Registration of Securities Professionals
An Investment Adviser Representative must register in any state in which they have a place of business.
60
3 - 33 Registration of Securities Professionals
When registering securities, disclose the amount to be offered in the state, not the total amount being offered.
61
3 - 34 Registration of Securities Professionals
Advisers to investment companies must register with the SEC regardless of the amount of assets under management.
62
4 - 1 Registration of Securities
Under Reg. D, accredited investors include individuals with net worth over $1 million, or $200,000 of annual income ( $300,000 with spouse ).
63
4 - 2 Registration of Securities
According to the USA, private placements are exempt from registration in a state, if offered to no more than 10 non-institutional investors within a 12 month period.
64
4 - 3 Registration of Securities
When created, an order ticket does not disclose the capacity the B/D acted in or the execution price.
65
4 - 4 Registration of Securities
A bond rating is not included on a confirmation.
66
4 - 5 Registration of Securities
Registration by Filing is not used for an IPO, and is not used by all states.
67
4 - 6 Registration of Securities
Registration by Coordination is used for inter-state offerings.
68
4 - 7 Registration of Securities
Registration by Qualification is used for intra-state offerings and requires the most documentation.
69
4 - 8 Registration of Securities
A bond rating is not included on a confirmation
70
4 - 9 Registration of Securities
If registration is denied, revoked or suspended, registrants may request a hearing to be held within 15 days.
71
4 - 10 Registration of Securities
Securities issued by an insurance company are exempt, not variable annuities.
72
4 - 11 Registration of Securities
Church bonds are exempt from registration.
73
4 - 12 Registration of Securities
The sale of exempt securities in a state does not exempt an agent from registration.
74
4 - 13 Registration of Securities
Selling units in a Canadian limited partnership is not an exempt transaction.
75
4 - 14 Registration of Securities
Secondary market transactions are exempt transactions.
76
4 - 15 Registration of Securities
A correcting amendment is filed with the Administrator if information in a registration statement becomes inaccurate.
77
4 - 16 Registration of Securities
Under Rule 147, securities sold only in one state are exempt from federal registration.
78
4 - 17 Registration of Securities
Securities issued by a Canadian municipality are exempt from registration , not those issued by a Canadian corp.
79
4 - 18 Registration of Securities
Transactions between a B/D and issuer are exempt.
80
4 - 19 Registration of Securities
A non-issuer transaction in a security listed on the Toronto Stock Exchange is exempt.
81
4 - 20 Registration of Securities
Transactions between an underwriter and issuer are exempt transactions.
82
4 - 21 Registration of Securities
Do not confuse Notice Filing with registration by filing.
83
5 - 1 USA - Fraudulent and Unethical Practices
IA's may have discretion with a client’s verbal approval for 10 days, after which it must be in writing.
84
5 - 2 USA - Fraudulent and Unethical Practices
A B/D may commingle customer cash, not securities.
85
5 - 3 USA - Fraudulent and Unethical Practices
An agent cannot liquidate a client's position based solely on a research report recommendation to sell.
86
5 - 4 USA - Fraudulent and Unethical Practices
Agents cannot underline or summarize a prospectus.
87
5 - 5 USA - Fraudulent and Unethical Practices
A summary prospectus may be used when selling mutual funds.
88
5 - 6 USA - Fraudulent and Unethical Practices
Written complaints must be responded to, but it is not a requirement to notify the administrator.
89
5 - 7 USA - Fraudulent and Unethical Practices
For securities sold in a bank environment, disclose they are not FDIC insured, not guaranteed by the bank and are subject to loss of value.
90
5 - 8 USA - Fraudulent and Unethical Practices
Front running is entering a trade based on advance knowledge of a large order prior to the order being reported, and insider trading is trading in advance of material non-public information about an issuer of securities.
91
5 - 9 USA - Fraudulent and Unethical Practices
IA's may not disclose client information without written consent.
92
5 - 10 USA - Fraudulent and Unethical Practices
IA's may charge a performance fee to qualified clients. (those with at least $1 million under management or net worth of more than $2 million)
93
5 - 11 USA - Fraudulent and Unethical Practices
Possessing material non-public information (inside information) is not a violation, only if it is acted on.
94
5 - 12 USA - Fraudulent and Unethical Practices
Agents may not solicit orders for unregistered, non-exempt securities. However, they may accept unsolicited orders.
95
5 - 13 USA - Fraudulent and Unethical Practices
A sign of churning is frequency of trades.
96
5 - 14 USA - Fraudulent and Unethical Practices
Trading ahead of a research report is prohibited.
97
5 - 15 USA - Fraudulent and Unethical Practices
Civil suits succeed the life of the plaintiff or defendant .
98
5 - 16 USA - Fraudulent and Unethical Practices
The Administrator may not levy fines, change the law or issue an injunction. However the administrator may change rules and interpret the law.
99
5 - 17 USA - Fraudulent and Unethical Practices
IA's are required to keep a copy of all advertising sent to 2 or more persons.
100
5 - 18 USA - Fraudulent and Unethical Practices
Agents may call a prospective client only between 8 am and 9 pm, local time of the party called.
101
5 - 19 USA - Fraudulent and Unethical Practices
A B/D may use testimonials , an IA may not.
102
5 - 20 USA - Fraudulent and Unethical Practices
A no load mutual fund may have a 12b-1 fee that does not exceed .25%.
103
5 - 21 USA - Fraudulent and Unethical Practices
A Not Held order does not require written authorization.
104
5 - 22 USA - Fraudulent and Unethical Practices
Any purchaser of an IPO within the first 25 days of the effective date which will be listed on the NYSE or Nasdaq must receive a prospectus. For non-listed securities the requirement is 90 days from the effective date for an IPO and 40 days from the effective date for a non-IPO.
105
5 - 23 USA - Fraudulent and Unethical Practices
An agent is selling away when executing transactions that are not recorded on the books of the B/D.
106
5 - 24 USA - Fraudulent and Unethical Practices
Names placed on the Do Not Call List are maintained indefinitely.
107
5 - 25 USA - Fraudulent and Unethical Practices
IA contracts may not contain an exculpatory clause.
108
5 - 26 USA - Fraudulent and Unethical Practices
Soft dollars can only be used to acquire services that benefit clients.
109
5 - 27 USA - Fraudulent and Unethical Practices
Soft dollar arrangements must be disclosed in the IA's ADV.
110
5 - 28 USA - Fraudulent and Unethical Practices
When executing an agency cross transaction , one side of the trade must be unsolicited.
111
5 - 29 USA - Fraudulent and Unethical Practices
A cease and desist order may be appealed to a state court within 60 days.
112
5 - 30 USA - Fraudulent and Unethical Practices
The statute of limitations for civil liabilities is 2 years from discovery of a violation , or 3 years from the violation, whichever is first.
113
5 - 31 USA - Fraudulent and Unethical Practices
The statute of limitations for criminal violations is 5 years.
114
5 - 32 USA - Fraudulent and Unethical Practices
Maximum criminal penalties are a $5,000 fine and/or 3 years in prison.
115
5 - 33 USA - Fraudulent and Unethical Practices
The Administrator may not impose civil or criminal penalties.
116
5 - 34 USA - Fraudulent and Unethical Practices
An agent instructing a client to open an account in the state in which her parents reside (and the B/D is registered), instead of where she resides (where the B/D is not registered), is prohibited.
117
5 - 35 USA - Fraudulent and Unethical Practices
For a 529 plan, equities are suitable is the child will not be attending college for a number of years. When the child is a year away from attending college, short term bonds would be suitable.
118
5 - 36 USA - Fraudulent and Unethical Practices
A variable annuity is NOT suitable if the client wants liquidity.
119
5 - 37 USA - Fraudulent and Unethical Practices
The maximum civil penalty for insider trading is three times the profit made or the loss avoided.
