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Flashcards in State Regulations (General Registration Procedures) Deck (61):
1

Prompt notification to the Administrator must be made when:

A) a non-exempt issuer’s dividend is reduced.
B) a federal covered adviser with a place of business in the state, relocates that office to a different city.
C) there is a material change to any information contained in a broker/dealer’s application for registration that is on file with the state.
D) there is a change to the marital status of an agent.

C) there is a material change to any information contained in a broker/dealer’s application for registration that is on file with the state.

Whenever there is a material change to the information contained in the registration application of a securities professional, the Administrator must be promptly notified. Marital status is not included on the Form U-4. Federal covered investment advisers are not under the Administrator’s jurisdiction.

2

Under the USA, the Administrator may do all of the following EXCEPT:

A) conduct hearings in public, unless at the Administrator's discretion and with agreement of all parties, the Administrator decides otherwise.
B) prescribe form and content of financial statements required under the act.
C) take jurisdiction over any person who sells or offers to sell when either the offer is made in the state or an offer to buy is made and accepted in the state.
D) mandate the method used to maintain and file

D) mandate the method used to maintain and file records.

The Uniform Securities Act does not grant the Administrator the power to make any specific bookkeeping method mandatory. The only requirement is that the books and records must accurately reflect the nature of the firm's business.

3

Broker/dealers and investment advisers must keep all of the following records EXCEPT:

A) memoranda.
B) electronic correspondence.
C) account books.
D) records of incoming and outgoing telephone calls.

D) records of incoming and outgoing telephone calls.

The company is not required to keep a record of telephone calls unless the Administrator specifically rules that it do so; however, memoranda, correspondence (whether electronic or paper), and account books must be kept.

4

Except as limited by the Securities Exchange Act of 1934, the state securities Administrator may require, by rule or order, that broker/dealers make or maintain which of the following records?

1. Account ledgers.
2. Correspondence.
3. Papers and memoranda.
4. Blotters and books.

1. Account ledgers.
2. Correspondence.
3. Papers and memoranda.
4. Blotters and books.

The Administrator may require broker/dealers to keep and maintain account ledgers, correspondence, papers and memoranda, and blotters and books provided the state requirements do not exceed federal requirements under the Securities Exchange Act of 1934.

5

If Brokers, Inc., a broker/dealer registered in this state, refuses to comply with the Administrator's order to retain records for 2 years longer than required by the Securities Exchange Act of 1934, which of the following statements are TRUE?

1. The securities Administrator cannot require registrants to retain books and records longer than required by the SEC.
2. Brokers, Inc., is not in violation of the Securities Exchange Act of 1934.
3. Both the securities Administrator and Brokers, Inc., are in violation of both the Securities Exchange Act of 1934 and the Uniform Securities Act.
4. Brokers, Inc., must comply with orders issued by state securities regulators whether or not the orders are in compliance with the NSMIA.

2. Brokers, Inc., is not in violation of the Securities Exchange Act of 1934.
3. Both the securities Administrator and Brokers, Inc., are in violation of both the Securities Exchange Act of 1934 and the Uniform Securities Act.

The securities Administrator is in violation of the National Securities Markets Improvement Act of 1996 (NSMIA), which prohibits state securities regulators from establishing requirements in addition to those required by the Securities Exchange Act of 1934.

6

Mountain High Securities is a broker/dealer registered in Wyoming and Colorado with their principal office located in Colorado. With reference to the Uniform Securities Act, it would be correct to state that:

A) it is required that any broker/dealer meet the recordkeeping requirements of each state in which they are registered.
B) the Administrator of Colorado would have to approve of the broker/dealer method of recordkeeping.
C) the books and records could not be kept in digital form.
D) meeting the recordkeeping requirements of Colorado is sufficient even if those of Wyoming are more stringent.

D) meeting the recordkeeping requirements of Colorado is sufficient even if those of Wyoming are more stringent.

For B/Ds registered in more than one state (who are not SEC Registered and, in this question, one must assume they are not), meeting the requirements of their "home" state, in this case Colorado, is sufficient anywhere they are registered. However, one of the things the Administrator does not do is approve or disapprove of the recordkeeping method used. If they were SEC registered, then all they have to do is meet the SEC's requirements.

7

An investment adviser is registered in States A and B with their principal office in State B. The Administrator of State A can request to see:

A) proof that the IA meets State A's financial and recordkeeping requirements.
B) internal communications regarding the company's participation in a local charitable event.
C) sales records relating to clients who are residents of State B.
D) advertisements run in State A.

D) advertisements run in State A.

The Administrator of State A can request that advertisements placed in his state be filed because that is business relating to his state. As long as the IA meets the "home" state's financial and recordkeeping requirements, that is good everywhere.

8

If information filed with the Administrator by a broker/dealer as part of its registration changes in a material way, the registrant must:

A) update the information on the registration on the next annual renewal date.
B) submit an entirely new registration form within 30 days of the material change in information.
C) amend or update the information promptly regardless of the renewal date.
D) amend the registration statement within 60 days of the material change.

C) amend or update the information promptly regardless of the renewal date.

When material information changes, the registrant must promptly amend or update the information regardless of the renewal date. The requirement to amend a registration applies to investment advisers, broker/dealers, and securities. However, the Uniform Securities Act does not define the term "promptly".

9

GEMCO Securities Inc., a broker/dealer registered in the state, has over 10,000 clients ranging from small individual accounts to substantial institutions. GEMCO has determined that the most efficient way to maintain contact with their clients is through electronic communications. Under the USA, these emails must be retained by the broker/dealer for a minimum of:

A) eight years.
B) three years.
C) two years.
D) five years.

B) three years.

The USA specifies that all records, including electronic communications (emails), must be maintained for a minimum of three years. For investment advisers, the requirement is five years.

10

Which of the following are required to provide a consent to service of process to the Administrator in a state in which registration is sought?

1. An agent employed out of state but who seeks registration in a state in which business is conducted.
2. A federal covered investment company not required to be registered in a state in which business is conducted but required to supply notice filing materials by the state Administrator.
3. A broker/dealer registered in 11 states that seeks registration in a 12th state.
4. An investment adviser with less than $25 million of assets under management who is not covered by federal legislation.

1. An agent employed out of state but who seeks registration in a state in which business is conducted.
2. A federal covered investment company not required to be registered in a state in which business is conducted but required to supply notice filing materials by the state Administrator.
3. A broker/dealer registered in 11 states that seeks registration in a 12th state.
4. An investment adviser with less than $25 million of assets under management who is not covered by federal legislation.

Every legal or natural person seeking registration or making a notice filing must supply a consent to service of process with their registration applications. For example, a federal covered investment company, while covered under federal law, need not register with the state administrator but must submit notice filings materials that include a consent to service of process. Once a state covered adviser is required to register in 15 or more states registration with the SEC as a federal covered adviser becomes available, but not here at only 12.

11

A consent to service of process must be filed for registration of:

1. investment adviser representatives.
2. broker/dealers.
3. investment advisers.
4. agents.

1. investment adviser representatives.
2. broker/dealers.
3. investment advisers.
4. agents.

The consent to service of process is required for all initial registrations with the Administrator. It appoints the state Administrator as attorney for the registrant so that legal papers may be properly served. On the exam, the consent to service of process is considered to be a permanent document not subject to annual renewal.

12

The Uniform Securities Act requires that a consent to service of process be filed for the registration of:

1. trustees.
2. issuers.
3. investment advisers.
4. broker/dealers.

3. investment advisers.
4. broker/dealers.

The state securities Administrator has jurisdiction over investment advisers, broker/dealers, and any who are associated with those entities. Issuers don't register, it is their securities that do. The Administrator may have jurisdiction over securities offered for sale by a company in the Administrator's state and generally requires a consent to service of process for a securities registration.

13

Under the Uniform Securities Act, which of the following statements regarding the consent to service of process are TRUE?

1. A consent to service of process makes legal process served on the Administrator as legally binding as process served on the registrant personally.
2. Only out-of-state applicants need to file a consent to service of process.
3. Investment advisers and investment adviser representatives must file a consent to service of process to become registered.

1. A consent to service of process makes legal process served on the Administrator as legally binding as process served on the registrant personally.
3. Investment advisers and investment adviser representatives must file a consent to service of process to become registered.

A consent to service of process grants legal authority for the Administrator to receive legal notices on behalf of the registrant. All applicants for registration must file a consent to service of process regardless of whether they are in-state or out-of-state advisers

14

Which of the following is required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser?

A) State licensing fee.
B) Consent to service of process.
C) Form U-4.
D) Renewal notice to the SEC.

A) State licensing fee.

All investment adviser representatives are registered with the states, not the SEC. Renewal requires the payment of the annual renewal registration or licensing fee. The consent to service of process is a permanent document submitted with the initial application for registration.

15

Which of the following statements is TRUE?

A) The state Administrator has authority to amend federal law to meet the needs or special circumstance in his state.
B) The USA only provides for civil liabilities for persons involved in illegal securities transactions in their state, while federal law provides criminal penalties.
C) State Administrators are permitted to establish regulations relating to the registration, testing and fees for broker/dealers, agents, investment advisers and investment adviser representatives.
D) The Uniform Securities Act is national law that each state enforces through a state Administrator.

C) State Administrators are permitted to establish regulations relating to the registration, testing and fees for broker/dealers, agents, investment advisers and investment adviser representatives.

The state Administrators are permitted to establish the requirements for broker/dealer, agent, investment adviser and investment adviser representative registrations, including testing, filing, and fee regulations. The Uniform Securities Act is model legislation for state regulation (not federal regulation) that each state may adapt to its own needs. The state Administrator does not have authority to amend federal law to meet special circumstance in his state. Each state can model its legislation on the Uniform Securities Act, but a state cannot change federal law and must abide by federal securities legislation. The USA provides for both civil and criminal penalties for persons involved in illegal securities transactions in their state.

16

The Uniform Securities Act authorizes the state Administrator to require:

1. either oral or written qualification examinations of investment adviser representatives and officers of investment adviser partnerships or corporations.
2. officers of investment advisers to pass a qualification examination.
3. an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in the state.
4. investment adviser representatives to pass a qualification examination.

1. either oral or written qualification examinations of investment adviser representatives and officers of investment adviser partnerships or corporations.
2. officers of investment advisers to pass a qualification examination.
3. an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in the state.
4. investment adviser representatives to pass a qualification examination.

The state Administrator may require qualification examinations for officers of investment advisers, as well as its representatives, and may require them to publish an announcement in one or more newspapers published in the state. The Administrator may also require either an oral or written examination.

17

Which of the following statements regarding broker/dealer registration under the Uniform Securities Act are TRUE?

1. In the absence of any action by the Administrator, the effective date of a registration is noon of the 45th day.
2. The Administrator may initiate a disciplinary action within 2 years of a broker/dealer's withdrawal of registration.
3. The Administrator may request that the broker/dealer furnish a statement of assets and liabilities.
4. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.

3. The Administrator may request that the broker/dealer furnish a statement of assets and liabilities.
4. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.

Normally, registration of persons becomes effective at noon of the 30th day following filing. If the Administrator requires the filing of amendments, the clock starts over again with the filing of those amendments. Broker/dealers have financial requirements, and the Administrator has a maximum of 1 year after termination to initiate any actions.

18

A consent to service of process required by an Administrator is a(n):

A) agreement whereby a registrant will be bound by any legal action or subpoena served on the Administrator as if it had been served on the registrant.
B) agreement to perform all services and duties that the Uniform Securities Act (USA) requires of those individuals covered by the USA.
C) legal procedure that authorizes the Administrator to issue injunctions.
D) formal statement declaring that an investment adviser will comply with all advertising requirements of the USA.

A) agreement whereby a registrant will be bound by any legal action or subpoena served on the Administrator as if it had been served on the registrant.

A consent to service is a formal legal agreement whereby a registrant will be bound by a legal action or subpoena served on the Administrator as if it had been served on the registrant. A consent to service is not an authorization to issue an injunction.

19

A consent to service of process allows the Administrator to:

A) terminate a registrant's application.
B) to be the registrant's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding against the registrant, or the registrant's successor.
C) verify the accuracy and completeness of registration without obtaining the registrant's prior approval.
D) ensure that the legal appeal process is expedited as a result of the Administrator's access to information.

B) to be the registrant's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding against the registrant, or the registrant's successor.

The consent to service of process provides the Administrator with power of attorney to accept legal papers on behalf of registrants. This power of attorney does not grant the Administrator the authority to terminate the registration at will nor does it empower the Administrator to verify information or expedite the registration process.

20

Under the Uniform Securities Act, when must a consent to service of process be filed with the Administrator?

A) When a case is pending.
B) It need not be filed, unless requested by the Administrator.
C) With the original application only.
D) With the original application and renewal.

C) With the original application only.

Initial applications for registration must be accompanied by a consent to service of process. This document becomes a permanent part of the application and appoints the Administrator to accept subpoenas on behalf of the applicant.

21

Which of the following statements is NOT true regarding the authority of the Administrator under the Uniform Securities Act?

A) The Administrator may require examinations for investment advisers.
B) The Administrator may require financial reports from broker-dealers.
C) The Administrator may not examine the records of a broker-dealer without seeking a court order from a federal court.
D) The Administrator may require a broker-dealer to have a minimum net capital as a condition of registration.

C) The Administrator may not examine the records of a broker-dealer without seeking a court order from a federal court.

The Administrator has inspection power to view all records within or outside the state as is appropriate or necessary in the public interest, without seeking court approval Administrators may require minimum capitalization as a condition of registration. The Uniform Securities Act states that the Administrator may, by rule, provide for an examination, which may be written or oral or both, to be taken by any class of or all applicants. As a practical matter, an oral examination would apply to the business entity (broker-dealer or investment adviser) while written examinations are taken by agents and investment adviser representatives. The Administrator is also given the authority by the act to require the filing of financial reports regarding the net worth of the firm.

22

Which of the following statements regarding the Administrator's authority to examine the books and records of registrants is TRUE?

A) Broker/dealer records may be examined at any time, but the same is not so in the case of investment advisers.
B) Such examinations are not necessary or appropriate for the protection of investors or in the public interest.
C) If a broker/dealer's or investment adviser's records are located outside the Administrator's state, they only may be examined to collect evidence for a hearing.
D) The records may be examined at any time for any reason within or outside the state if it is in the public interest to do so.

D) The records may be examined at any time for any reason within or outside the state if it is in the public interest to do so.

All required records must be made available for examination by a state Administrator, within or outside the state, as is appropriate or necessary in the public interest.

23

Under the Uniform Securities Act, a state registered investment adviser's records may be examined by the Administrator or his designee:

A) only with permission from the investment adviser.
B) at any time during regular business hours.
C) only by court order.
D) only if not repetitious of an SEC exam in the prior six months.

B) at any time during regular business hours.

All records must be available for examination by the Administrator at any time during regular business hours, within or outside the state.

24

Which of the following statements regarding agent registration under the Uniform Securities Act are TRUE?

1. In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day.
2. The Administrator may initiate a disciplinary action within 2 years of an agent's withdrawal of registration.
3. The administrator may request the agent furnish a statement of assets and liabilities.
4. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.

1. In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day.
4. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.

Normally, registration of persons becomes effective at noon of the 30th day following filing. If the Administrator requires the filing of amendments, the clock starts over again with the filing of those amendments. Agents do not have financial requirements and the Administrator has a maximum of 1 year after termination to initiate any actions.

25

Under the Uniform Securities Act, if the Administrator does not deny an application for registration and no disciplinary proceeding is underway in regard to it, how many days after filing the application as an investment adviser representative does registration generally become effective?

A) 7 days.
B) 10 days.
C) 30 days.
D) 5 days.

C) 30 days.

Registration becomes effective 30 days after the application is filed unless the Administrator begins a proceeding or issues a stop order before that time. The Administrator may specify an earlier date, or if an application must be amended, the Administrator may extend the date to 30 days after the amendment was filed.

26

Under the Uniform Securities Act, agent's registrations expire:

A) three years from their effective date, unless renewed.
B) every December 31, unless renewed.
C) one year from their effective date, unless renewed.
D) two years from their effective date, unless renewed.

B) every December 31, unless renewed.

The expiration date for the registration of agents, broker/dealers, investment advisers, and investment adviser representatives under the Uniform Securities Act is December 31. Note that the question asks for the expiration date under the Uniform Securities Act, which is December 31. Do not be confused by actual practice, which may vary in some states.

27

Although certain common stocks, known as federal covered securities, are exempt from state registration, the Administrator has the power to request from the issuer all of the following EXCEPT:

A) copies of the registration statement filed with the SEC.
B) a contact person located within the state for purposes of legal service.
C) a copy of the issuer's articles of incorporation.
D) a consent to service of process.

B) a contact person located within the state for purposes of legal service.

The consent to service of process eliminates the need for any local representation for legal purposes.

28

A registration of an agent of a broker/dealer is in effect until:

A) December 31 unless renewed.
B) the anniversary of initial registration.
C) withdrawn by the agent or revoked by the Administrator.
D) the last day of his employer's fiscal year.

A) December 31 unless renewed.

Registrations for broker/dealers, agents, investment advisers, and investment adviser representatives expire on December 31 of each year unless renewed.

29

Unless renewed, the registration of which of the following securities professionals expires on December 31?

1. Agents.
2. Broker/dealers.
3. Investment advisers.
4. Investment adviser representatives

1. Agents.
2. Broker/dealers.
3. Investment advisers.
4. Investment adviser representatives

All registrations of securities professional expire on December 31, unless renewed.

30

Which of the following statements referring to renewal of a broker/dealer's registration under the Uniform Securities Act are CORRECT?

1. Annual renewal takes place on the anniversary of the registrant's initial registration.
2. Each renewal application must be accompanied by the appropriate fee.
3. Each renewal application must be accompanied by a consent to service of process signed by an authorized supervisory person of the firm.
4. Registrations expire December 31 unless renewed or canceled.

2. Each renewal application must be accompanied by the appropriate fee.
4. Registrations expire December 31 unless renewed or canceled.

The consent to service of process is filed with the initial application for registration and becomes a permanent part of the registrant's file. The USA states that all registrations of persons expire on December 31 unless renewed, withdrawn, or canceled.

31

An individual wishing to register as an agent with a broker/dealer may have to:

1. pass an examination.
2. post a bond.
3. maintain minimum net capital.
4. meet minimum state educational requirements

1. pass an examination.
2. post a bond.

In almost all cases, an individual wishing to register as an agent must pass an examination. Many Administrators require that all agents post a bond, whereas others only require bonding for those with investment discretion in customer accounts. Minimum net capital requirements apply to broker/dealers, not agents.

32

The document that gives the Administrator the right to process complaints against a registrant is known as a(n)

A) durable power of attorney
B) writ of habeas corpus
C) injunction
D) consent to service of process

D) consent to service of process

The consent to service of process gives the Administrator the right to process legal complaints against the applicant.

33

Under the USA, a person who has passed the appropriate NASAA examination but whose license has not yet been issued can participate in:

A) prospecting for new clients in person.
B) prospecting for new clients by mail.
C) accepting unsolicited orders.
D) filing payroll reports.

D) filing payroll reports.

A person who has passed the NASAA exam cannot transact securities business until the Administrator notifies the employer that the registration is effective. Filing payroll reports is a clerical activity and registration would not be required to perform that function.

34

During the application process for registration as an agent, the Administrator may request information about the applicant’s:

1. financial condition
2. citizenship
3. record involving a non-securities misdemeanor conviction 5 years ago
4. proposed method of doing business

2. citizenship
4. proposed method of doing business

The Administrator asks all registrants about their proposed method of doing business. Individual registrants may be asked about their citizenship. Non-securities misdemeanors are not relevant and financial condition is only a requirement for broker/dealers and investment advisers.

35

An agent terminates his association with broker/dealer A and begins to work for broker/dealer B. Under the Uniform Securities Act, which of the following must take place?

1. Broker/dealer A must notify the Administrator.
2. Broker/dealer B must notify the Administrator.
3. The agent must notify the Administrator.
4. The supervisor to which the agent reported must notify the Administrator.

1. Broker/dealer A must notify the Administrator.
2. Broker/dealer B must notify the Administrator.
3. The agent must notify the Administrator.

In the event an agent transfers from one broker/dealer to another broker/dealer, all three (the former employer, the new employer, and the agent) must report the transfer to the Administrator.

36

The agreement that the Administrator can receive subpoenas on behalf of a registered agent, broker/dealer, or investment adviser involved in any securities sale that violates the Uniform Securities Act is the:

A) right of retribution.
B) agreement to actionable offenses.
C) right of rescission.
D) consent to service of process.

D) consent to service of process.

Every applicant for registration and every issuer must file an irrevocable consent to service of process appointing the Administrator as attorney to receive service of any lawful process in any civil suit, action, or proceeding. It has the same legal effect as if the person had been served personally.

37

Each of the following statements about postregistration provisions is true EXCEPT:

A) both broker/dealers and investment advisers must comply with recordkeeping rules.
B) a correcting amendment must be filed with the Administrator if any information filed becomes inaccurate or incomplete.
C) the securities Administrator does not have the authority to conduct an on-site examination of an investment adviser registered in his state if the adviser does not have an office in that state.
D) a registered investment adviser may be required to file advertisements.

C) the securities Administrator does not have the authority to conduct an on-site examination of an investment adviser registered in his state if the adviser does not have an office in that state.

Administrators have the authority to conduct an on-site examination of a registered investment adviser even if there is no place of business maintained in the Administrator's state. Under the Act, Administrators may require the filing of advertising used by broker/dealers and investment advisers, who must also comply with certain recordkeeping requirements and file correcting amendments.

38

Under the USA, agent registrations expire:

A) 3 years after the effective date.
B) each year on December 31.
C) 365 days after the effective date.
D) 2 years after the effective date.

B) each year on December 31.

Every agent, broker/dealer, investment adviser, and investment adviser representative registration expires each year on December 31.

39

If a natural person files an initial application for state registration on October 1, the registration will most likely expire:

A) December 31 of that year.
B) on a date set by the Administrator of that state.
C) on the anniversary date of the following year.
D) the registration does not expire until the person resigns, retires, or is expelled by the Administrator.

A) December 31 of that year.

Although the Administrator may change the date, registrations typically expire on December 31 of each year. In this question, the registered person would have to renew his registration in 3 months. Thereafter, renewal would occur every 12 months on December 31.

40

To register a sole proprietorship as an investment adviser in a state, the application for initial registration (Form ADV) must be filed with the appropriate party. This application must include:

1. a consent to service of process.
2. the appropriate fees.
3. any information to be furnished or disseminated to any client or prospective client.
4. a copy of the articles of incorporation for the business

1. a consent to service of process.
2. the appropriate fees.
3. any information to be furnished or disseminated to any client or prospective client.

To register as an investment adviser in a state, Form ADV is filed with the Administrator or with a central registration depository designated by the Administrator. The application must include, among other things, a consent to service of process, appropriate fees, and the brochure or any other information that will be used to solicit clients. Sole proprietorships are not incorporated.

41

What document must accompany an initial registration application for those individuals required to register as agents under the Uniform Securities Act?

A) A birth certificate confirming the registrant is over 18 years of age.
B) State photo identification.
C) Consent to service of process.
D) Proof of U.S. citizenship.

C) Consent to service of process.

The USA requires that a consent to service of process accompany an application for registration. Although the Administrator will generally request information about the applicant's citizenship, it is not necessary to be a US citizen. Proof of age is not a requirement.

42

All of the following statements regarding the registration of an investment adviser in a state are true EXCEPT:

A) the initial application must include a consent to service of process along with Form ADV and the appropriate fees.
B) if the investment adviser is not an individual, any officer or partner active in the advisory business is automatically registered as an investment adviser representative.
C) the adviser's registration expires on December 31 each year.
D) the annual renewal process involves payment of the appropriate fees and refiling of the consent to service of process.

D) the annual renewal process involves payment of the appropriate fees and refiling of the consent to service of process.

The consent to service is a permanent document that remains on file with the Administrator; it need not be resubmitted for yearly renewal. The initial application for registration must include a consent to service of process along with Form ADV and the appropriate fees. If the investment adviser is not an individual, all officers or partners of the business entity that play an active role in the giving or supervision of giving advice are automatically registered as IARs.

43

When filing the consent to service of process, which of the following is TRUE?

A) It must be filed annually on the dates specified by the Administrator.
B) It is not required of investment adviser representatives, only investment advisers.
C) It is supplied with the initial registration and remains on file permanently.
D) It expires simultaneously with the registration on December 31.

C) It is supplied with the initial registration and remains on file permanently.

The consent to service of process is supplied with the initial registration and remains on file permanently.

44

If an investment adviser files an initial registration with a state on June 30, which of the following statements regarding the filing fee to be paid is TRUE?

A) The fee will be prorated from the effective date.
B) No filing fee is required until December 31.
C) The full year's fee must be paid.
D) The fee will be prorated from the filing date.

C) The full year's fee must be paid.

While some states make exceptions for filings late in the year, under the USA there is no pro-rating of filing fees. The full year's fee must be paid with the initial registration request.

45

Which of the following statements regarding registration of securities professionals under the Uniform Securities Act are TRUE?

1. A successor firm is exempt from paying registration fees until the renewal date.
2. A successor firm is exempt from filing a consent to service of process until the renewal date.
3. Investment advisers with discretion over client accounts are not required to maintain a certain minimum net worth.
4. When an agent with an SEC-registered broker/dealer terminates the association, both the agent and the broker/dealer must notify the Administrator.

1. A successor firm is exempt from paying registration fees until the renewal date.
4. When an agent with an SEC-registered broker/dealer terminates the association, both the agent and the broker/dealer must notify the Administrator.

When one firm succeeds another, no fees are due until renewal date. However, the successor firm must file a consent to service of process at the time it registers. When an agent terminates or is terminated, both the agent and the broker/dealer notify the Administrator. Investment advisers with discretionary authority must maintain minimum net worth of $10,000 - did you catch the not in choice III?

46

Broker/dealers, investment advisers, and agents must renew their licenses with the state Administrator:

A) annually upon the date of original registration.
B) licenses are permanent unless revoked, suspended, or canceled.
C) every December 31, unless otherwise specified by state law.
D) semiannually.

C) every December 31, unless otherwise specified by state law.

Under the Uniform Securities Act, registrations must be renewed every December 31. Registrations are not permanent and can be denied, revoked, or canceled according to the terms of the act.

47

Which of the following statements relating to the registration requirements of investment advisers is TRUE?

A) A registration becomes effective at noon, 30 days after the application has been filed, providing the registration is not in the process of denial.
B) A registration is automatically effective at noon, 30 days after the application has been filed.
C) If an amendment to the registration is subsequently filed, the registration becomes effective 15 days after the amendment is filed.
D) Registrations of securities professionals expire one year after their effective date, unless renewed.

A) A registration becomes effective at noon, 30 days after the application has been filed, providing the registration is not in the process of denial.

A registration is effective at noon, 30 days after the application has been filed if there is no denial or stop order in process. Registrations of securities professionals expire on December 31, unless renewed. If an amendment to the registration is subsequently filed, the registration becomes effective 30 days, not 15 days, after the amendment is filed; filing the amendment starts the process anew.

48

Kapco Advisers registers with the Administrator on April 1. Pete Patel, an IAR with Kapco, registers on the same day. Both of them file renewal papers, accompanied by the appropriate fees, on March 31 of the following year. Which of the following statements are TRUE?

1. Kapco's renewal was timely.
2. Kapco's renewal was late.
3. Patel's renewal was timely.
4. Patel's renewal was late.

2. Kapco's renewal was late.
4. Patel's renewal was late.

Regardless of when initial registration occurs, the renewal date for all professionals is December 31.

49

On April 15, ABC Advisers, Inc., made application for registration as an investment adviser with state X. Absent a denial or stop order, registration will become effective:

A) 1-May
B) 15-May
C) 15-Apr
D) 30-Apr

B) 15-May

If no denials or stop orders are in effect and no proceedings are pending to do so, registration automatically takes effect at noon on the 30th day after the application was filed.

50

Under the Uniform Securities Act, which of the following statements is TRUE regarding registration of an investment adviser if the application has not been amended?

A) Unless specified earlier by the Administrator, the registration becomes effective at noon on the 60th day after application.
B) Unless specified earlier, registration becomes effective no sooner than 15 days after the application is filed.
C) Unless specified earlier, registration becomes effective no later than 90 days after the application is filed.
D) Unless specified earlier by the Administrator, the registration becomes effective no later than noon on the 30th day after application.

D) Unless specified earlier by the Administrator, the registration becomes effective no later than noon on the 30th day after application.

While the Administrator may specify an earlier date, absent any denial orders or pending proceedings, registrations become effective at noon on the 30th calendar day after the date of filing. The application is considered to be filed on the date received in the offices of the Administrator, not the date of mailing by the applicant.

51

Under the Uniform Securities Act, if no denial or proceedings are pending, when does an investment adviser registration become effective?

A) No sooner than 15 days.
B) When the Administrator so orders, but not to exceed 90 days.
C) When the Administrator so orders, but not to exceed 30 days.
D) 60 days after application or an amendment is filed.

C) When the Administrator so orders, but not to exceed 30 days.

Registrations become effective at noon on the 30th calendar day after the date of filing if there are no denial orders or pending proceedings.

52

Under the Uniform Securities Act, if not denied, an application for registration as investment adviser will generally become effective how soon after filing?

A) 30 days.
B) Immediately.
C) 10 days.
D) 15 days.

A) 30 days.

If not denied and no disciplinary proceedings are instituted, an application for registration becomes effective at noon on the 30th day after being filed.

53

An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients:

A) when informed by the investment adviser that the representative's registration is effective.
B) immediately.
C) within 48 hours.
D) when informed by the Administrator that the representative's registration is effective.

A) when informed by the investment adviser that the representative's registration is effective.

Passing the exams does not automatically give one an effective investment adviser representative's license. Notice is received by the investment adviser from the appropriate state and/or federal authorities and then, in accordance with that firm's procedures, advisory activity may start. The Administrator does not have direct contact with the individual.

54

To transact business in a state as an investment adviser representative, a person must:

A) be registered as a representative of an investment adviser and have passed the appropriate NASAA exam for IARs.
B) be registered as an agent of a brokerage house and have passed the appropriate NASAA exam for IARs.
C) have passed the agent's exam and taken no other exams.
D) be employed by a commercial bank located in the state.

A) be registered as a representative of an investment adviser and have passed the appropriate NASAA exam for IARs.

To transact business in a state as an investment adviser representative, a person must be registered as a representative of an investment adviser and have passed either the NASAA Series 65 or Series 66 exam. One is not considered a registered investment adviser representative as a result of passing the Series 6 or 7 registered representative exam, or by virtue of employment with a bank.

55

Under the Uniform Securities Act, which of the following is TRUE regarding registration of investment adviser representatives?

A) Representatives are automatically registered when they become employed by a registered investment adviser.
B) A representative's registration remains in effect even during a period when the representative is not employed by a registered investment adviser.
C) Registration in the state where a representative has his business office enables the representative to do business in any state.
D) To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process.

D) To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process.

In general, representatives are not automatically registered when they become employed by an adviser. To register, they must file an application, a consent to service of process, and a filing fee. Registration is not effective during any period when the representative is not employed by a registered adviser, and the Administrator must be notified when a representative's employment begins or ends. Representatives must be registered in each state in which they do business.

56

It is a violation of the Uniform Securities Act if an agent:

A) makes any material representation in the offer or sale of a security.
B) offers or sells any security unless it is registered.
C) splits commissions with another agent in the office and fails to disclose this to clients.
D) files a fraudulent application.

D) files a fraudulent application.

It is a violation of the Uniform Securities Act to file a fraudulent or misleading application for registration as a securities industry professional (agent, broker/dealer, or investment adviser). An agent may always make material representation in the sale of a security; it is a material misrepresentation that is not permitted. An unregistered security may be sold in an exempt transaction and an exempt security does not need registration. One of the few things that does not have to be disclosed to clients is a commission sharing arrangement with another agent in the office.

57

Alex Alexander is planning on registering as an agent for a broker/dealer. Which of the following would be the least likely requirement for a successful application?

A) Taking and passing an examination
B) Submitting fingerprints
C) Filing an application for registration
D) Paying the filing fees

B) Submitting fingerprints

Fingerprints are not a specific requirement of the Uniform Securities Act.

58

Under the Uniform Securities Act, a consent to service of process must accompany which of the following?

1. An agent's application for renewal of registration.
2. A civil complaint against a broker/dealer.
3. An investment adviser's initial registration application

3. An investment adviser's initial registration application

All initial applications for registration must be accompanied by a consent to service of process. This is not required for renewal applications.

59

How quickly must a broker/dealer notify the Administrator if material information relating to that broker/dealer's registration should change?

A) within 24 hours.
B) no later than the time of license renewal.
C) promptly.
D) within days.

C) promptly.

If the information contained in any document filed with the Administrator is or becomes inaccurate or incomplete in any material respect, the registrant must file a correcting amendment promptly.

60

Under the Uniform Securities Act, it is required to file an application with the Administrator to become a registered broker/dealer in the state. Among the disclosures that must be made on that application are:

1. the form of business organization to be used by the firm.
2. any felonies or certain misdemeanors on the records of partners or officers.
3. business history of the principals of the firm.
4. financial information about the firm.

1. the form of business organization to be used by the firm.
2. any felonies or certain misdemeanors on the records of partners or officers.
3. business history of the principals of the firm.
4. financial information about the firm.

Many disclosures have to be made and this is just a partial list. This would be the same answer if the question asked about an investment adviser.

61

A broker/dealer registered with State A created a website 2 years ago to promote their services. Recently, they hired a new media person who totally redesigned the site. Under the recordkeeping requirements of the Uniform Securities Act,

A) a copy of the new website page must be maintained for a period of three years from the use of the original site
B) copies of both the original and the new website page must be maintained for five years after original use
C) there are no requirements for storage of electronic data
D) a copy of the original website page must be maintained for three years from original use

D) a copy of the original website page must be maintained for three years from original use

Websites are treated as would be any other advertisement. So, the original site design is kept for three years and, whenever revised, the new copy is maintained and starts a new retention requirement for that copy. Therefore, you will likely have several different versions in your advertising file at the same time.

Decks in Series Class (76):