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Series 63 > State Registration of Securities > Flashcards

State Registration of Securities Flashcards

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Series 63 flashcards
1
Q

List the securities that are exempt from registration 6.

A
  1. Government bonds
  2. municipal bonds,
  3. commercial paper,
  4. bankers’ acceptances,
  5. bank issues,
  6. non-profit and small business issues
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2
Q

Though some securities are exempt from registration, nothing is exempt from the ____________ provisions of the Act.

A

Though some securities are exempt from registration, nothing is exempt from the anti-fraud provisions of the Act.

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3
Q

True or False: An American Depositary Receipt (ADR) is a security.

A

True

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4
Q

True or False: Precious metals are not considered securities.

A

True

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5
Q

Is a voting trust certificate a security?

A

Yes

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6
Q

Is a Keogh plan considered a security?

A

No, but Keogh plan participation is considered a security.

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7
Q

Is an investment interest in livestock considered a security?

A

Yes

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8
Q

Is a certificate of interest in a mining lease a security?

A

Yes

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9
Q

Is a fixed annuity a security?

A

No, but variable contracts (e.g., variable annuities or variable life insurance) are considered securities.

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10
Q

Is an endowment life insurance policy a security?

A

No

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11
Q

Is a variable life insurance policy a security?

A

Yes, but a term or universal life insurance policy is not considered a security.

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12
Q

Is a universal life insurance policy considered a security?

A

No

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13
Q

Is Keogh plan participation considered a security?

A

Yes, but the Keogh plan itself is not a security.

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14
Q

Is a 401(k) plan considered a security?

A

No

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15
Q

Is treasury stock considered a security?

A

Yes. Treasury stock is stock that was issued and subsequently repurchased by the company.

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16
Q

Is a debenture considered a security?

A

Yes. A debenture is an unsecured corporate bond.

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17
Q

Is a preemptive right considered a security?

A

Yes

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18
Q

Is a warrant a security?

A

Yes. Warrants are financial instruments that allow investors to acquire stock at a preset price.

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19
Q

Is a preorganization certificate considered a security?

A

Yes

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20
Q

Is an IRA account considered a security?

A

No

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21
Q

Is a futures contract considered a security?

A

No, but an option on a futures contract is a security.

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22
Q

Is a multi-level distributorship considered a security?

A

Yes

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23
Q

Is a limited partnership a security?

A

Yes

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24
Q

Is an interest in oil and gas drilling program considered a security?

A

Yes

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25
Q

Is a whiskey warehouse receipt considered a security?

A

Yes

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26
Q

True or False: Securities issued by provinces and municipalities of Canada are subject to state registration.

A

False. Securities issued by Canadian provinces or municipalities are exempt from registration.

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27
Q

Are bonds issued by the City of New York exempt from state registration?

A

Yes

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28
Q

True or False: Securities issued by the states and municipalities of Mexico are exempt from registration under the USA.

A

True. An exemption is provided to securities issued by foreign governments with whom the U.S. has diplomatic relations.

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29
Q

Securities issued by any government with whom the U.S. has _____________ relations are exempt from state registration.

A

Securities issued by any government with whom the U.S. has diplomatic relations are exempt from state registration.

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30
Q

True or False: Securities issued by the U.S. Treasury and U.S. agencies are deemed exempt securities under the USA.

A

True

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31
Q

________ issued by insurance companies are exempt from state registration.

A

Bonds issued by insurance companies are exempt from state registration.

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32
Q

True or False: Securities of a Canadian company, but listed on the NYSE, are exempt from state registration.

A

True

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33
Q

Are bonds issued by a charitable organization subject to state registration?

A

No. Securities issued by non-profit organizations are exempt from registration.

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34
Q

What criteria must be met for commercial paper to be exempt from registration?

A

A 270-day maximum life, minimum denomination of $50,000, rated in one of the top-three categories according to an NRSRO

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35
Q

An executor of an estate sells a block of securities that are not registered. Is this a violation?

A

No. This is an example of an exempt transaction.

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36
Q

True or False: Bankers’ Acceptances rated AAA, maturing in 6-months, and issued in $25,000 denominations are exempt.

A

False. Because the BAs were not issued in at least $50,000 denominations, registration is required.

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37
Q

Under the USA, private placements are exempt if securities are offered to ____ or fewer retail clients over ____ months.

A

Under the USA, private placements are exempt if securities are offered to 10 or fewer retail clients over 12 months.

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38
Q

What does the USA consider a security issued by an investment company that is registered under the Inv. Co. Act of 1940?

A

The securities are considered federal covered.

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39
Q

True or False: Agents selling unregistered, non-exempt securities to banks and trust companies are violating the USA.

A

False. Transactions with banks and trust companies are considered exempt transactions.

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40
Q

If a Nasdaq stock trades in the secondary market, does the USA consider it an exempt security or exempt transaction?

A

Exempt security

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41
Q

True or False: Bonds issued by a railroad are exempt from state registration.

A

True. Securities issued by a railroad, common carrier, or public utility are exempt at the state level.

42
Q

Are securities issued by a software company exempt from state registration?

A

No

43
Q

True or False: According to the USA, debt issued by a fraternal organization would NOT be considered exempt.

A

False. Securities issued by non-profit organizations are exempt from state registration.

44
Q

Non-issuer trading of securities subject to reporting requirements of the Act of 1934 are _________ transactions.

A

Non-issuer trading of securities subject to reporting requirements of the Act of 1934 are exempt transactions.

45
Q

True or False: Occasional, secondary market transactions in an OTCBB stock are considered exempt transactions.

A

False. Only non-recurring secondary market transactions are considered exempt transactions.

46
Q

Is an unsolicited, non-issuer transaction in an OTC stock exempt from state registration?

A

Yes, because it is unsolicited.

47
Q

True or False: The sale of securities to a pension plan is considered an exempt transaction under the USA.

A

True

48
Q

Registration by Filing (Notification) requires issuers to be in business at least _____ months preceding registration.

A

Registration by Filing (Notification) requires issuers to be in business at least 36 months preceding registration.

49
Q

What method of state securities registration requires issuers to wait to hear from the Administrator before selling?

A

Qualification

50
Q

To use Filing (Notification) to register stock, the offering price must be at least $______ per share.

A

To use Filing (Notification) to register stock, the offering price must be at least $5.00 per share.

51
Q

Registration by Filing (Notification) requires that the underwriting commission be no more than _____%.

A

Registration by Filing (Notification) requires that the underwriting commission be no more than 10%.

52
Q

Registration by Coordination has a minimum cooling-off period of _____ days.

A

Registration by Coordination has a minimum cooling-off period of 10 days.

53
Q

Which method of state securities registration would likely be used for an IPO being offered in several states?

A

Coordination

54
Q

Registration by Coordination requires issuers to meet requirements of the USA as well as what other Act?

A

The Securities Act of 1933

55
Q

True or False: A state may require a registration fee from the issuer of a Nasdaq security.

A

False. Nasdaq securities are federal covered securities.

56
Q

True or False: An Administrator may not require a sales report from the issuer of an OTC security.

A

False

57
Q

Define an investment contract (according to the Howey Test).

A

An investment of money, in a common enterprise, with expectation of a profit due to efforts of third-party management.

58
Q

After receiving an effective date, what information may an issuer change by amending its registration statement?

A

The number of shares being offered. A new registration is required to change offering price or underwriter compensation.

59
Q

Regarding federal covered securities, may an Administrator cancel a registration?

A

No

60
Q

Regarding federal covered securities, may an Administrator prohibit the sale of the security in his state?

A

No

61
Q

As it applies to persons and securities, what does the term “exemption” mean in the USA?

A

Exemption signifies that a person or security is not subject to registration under the USA.

62
Q

True or False: Variable annuities are not securities and are, therefore, not subject to registration.

A

False. Any variable products are considered securities. However, fixed insurance products are not securities.

63
Q

True or False: IRAs and Keogh plans are considered securities.

A

False. The participation in these plans (what goes in the plan) is considered a security, but the plan itself is NOT.

64
Q

True or False: Options on commodities are securities.

A

True. Options are always considered securities (e.g., options on futures, a currency, an index, or equities).

65
Q

True or False: Two friends, anticipating a rise in value, purchase property. The property is considered a security.

A

False

66
Q

Identify the three forms of state securities registration.

A

Notification (filing), coordination, qualification

67
Q

How would a well-established corporation register a subsequent offering to be sold in multiple states?

A

Notification (filing)

68
Q

True or False: Paperwork related to coordination is filed with the Administrator at the same time as the SEC filing.

A

False. Registration will become effective simultaneously with SEC registration, but need not be filed at the same time.

69
Q

Do the anti-fraud provisions of the USA apply to exempt securities?

A

Yes. Nothing is exempt from fraud.

70
Q

What form of state registration is not available in all states?

A

Notification (filing)

71
Q

True or False: Securities issued by municipalities of Mexico are exempt under the USA.

A

True. An exemption applies to securities issued by foreign governments with whom the U.S. has diplomatic relations.

72
Q

True or False: Securities issued by municipalities of Canada are exempt under the USA.

A

True

73
Q

Transactions between the issuer and its underwriter are considered ________ transactions.

A

Transactions between the issuer and its underwriter are considered exempt transactions.

74
Q

May a state prevent the sale of a federal covered security in its state?

A

No. Federal covered securities are not regulated by the state.

75
Q

What’s notice filing?

A

The process in which information that is filed with the SEC is also filed or shared with the Administrator.

76
Q

True or False: A transaction by an executor is exempt.

A

True. Any transaction by an executor, administrator, trustee in bankruptcy, or conservator is considered exempt.

77
Q

Who must prove that an exemption exists?

A

The party claiming the exemption

78
Q

May the Administrator revoke the registration of a federally covered adviser?

A

No. However, she may require the IA to notice file.

79
Q

Under the USA, is a federal covered security trading in the secondary market an exempt security or an exempt transaction?

A

Exempt security

80
Q

Under the USA, is stock issued by an electric company an exempt security or an exempt transaction?

A

Securities issued by public utilities are considered exempt securities.

81
Q

List some securities that are considered federal covered and exempt from registration.

A

Those listed on national exchanges (e.g. NYSE, NASDAQ) and investment company securities (e.g., mutual fund shares)

82
Q

True or False: Federal covered securities issuers may be required to pay a filing fee to an Administrator.

A

True. Certain types of federal covered securities issuers may be required to pay a filing fee.

83
Q

Name some of the federal covered securities.

A
  1. Securities listed on an exchange,

2. securities issued by an investment company, and 3. securities sold as a private placement (Reg. D Rule 506)

84
Q

True or False: A state Administrator may require notice filing by an issuer of an NYSE security.

A

False. Notice filing is required for mutual funds and Reg D (Rule 506) offerings, but not exchange listed securities.

85
Q

For certain federal covered securities, may an Administrator require the issuer to complete the notice filing?

A

Yes. Notice filing is the process by which information filed with the SEC is also filed/shared with the Administrator.

86
Q

True or False: A viatical investment is considered a security.

A

True

87
Q

Is an option on a commodity futures contract a security?

A

Yes. Options are securities, but futures contracts alone are not. Options may be tied to an equity, index, or currency.

88
Q

Is an interest in a real estate condominium development considered a security?

A

Yes

89
Q

Are securities that are traded on the Toronto Stock Exchange subject to state registration requirements?

A

No. These secondary market transactions are considered exempt from registration according to the USA.

90
Q

Is a private placement considered an exempt transaction or an exempt security under the USA?

A

Exempt transaction

91
Q

Are securities that are traded on the OTCBB or the OTC Pink Market exempt?

A

No

92
Q

Is an isolated, non-recurring, non-issuer transaction in OTCBB or OTC Pink Market stock subject to registration?

A

No. It is considered an exempt transaction.

93
Q

An intrastate offering may use which method of state securities registration?

A

Qualification

94
Q

True or False: Securities that are issued by registered investment companies are considered federal covered securities.

A

True

95
Q

True or False: An issuer whose securities trade on the NYSE must pay a registration fee to a state Administrator.

A

False

96
Q

What is the minimum cooling-off period for registration by notification?

A

Five days

97
Q

If an IPO is being registered, an issuer is most likely using what form of state registration?

A

Coordination

98
Q

True or False: Securities that are listed on the NYSE are exempt from state registration.

A

True

99
Q

State registration remains in effect for ___ year(s).

A

State registration remains in effect for one year.

100
Q

What are some reasons for the Administrator denying the registration statement for a securities offering?

A

Filing false registration documents, issuer’s business is illegal, spread is unfair, or failing to pay the filing fee.

101
Q

What is an accredited according to Regulation D of the Securities Act of 1933

A
  1. You have earned income that exceeded $200k ($300k w/spouse) in each of the prior two years and reasonably expects the same for the current year or has a net worth over $1 million (excluding primary residence)
  2. An affiliate (director, executive officers, or general partners) of the issuer
  3. a financial institution (e.g. banks), large tax-exempt plans, or private business development companies

Series 63 (7 decks)

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