In order for an investment adviser to maintain custody of funds and securities:
A The firm must have a three-year track record of no violations
B The Administrator must give permission to the investment adviser
C At least $100,000 in Treasury bills must b
D The investment adviser must notify the Administrator and there must be no rule against custody
An adviser must notify the Administrator of its intention to maintain custody of client funds and securities. In some cases, an Administrator may adopt a rule
What information may an issuer change by amending its registration statement after it receives an effective date?
A Nothing
B The underwriting spread
C The number of shares
D The public offering price
C The number of shares
Under the Uniform Securities Act, an issuer may amend its registration statement to increase the number of shares being sold after the statement has been declared effective by the Administrator. The issuer does not need to file a ne
Persons who violate federal insider trading regulations are subject to all of the following penalties, EXCEPT:
A Civil lawsuits by traders
B Prison terms
C FINRA fines
D Treble damages
C FINRA fines
Insider traders face SEC civil penalties of up to three times the amount gained or loss avoided (treble damages). Criminal penalties for individuals can be as much as a $5,000,000 fine and 20 years in prison. In addition, private individuals
A broker-dealer has filed an application to withdraw its registration. Which of the following statements is TRUE?
A By filing an application to withdraw, the firm agrees to settle all charges currently pending without admitting or denying them
B The withd
C The withdrawal will become effective when the Administrator determines whether there is an action for revocation of the firm's license pending at the time the application was filed
An application for withdrawal generally becomes effective 30 (not 60) da
A broker-dealer is a syndicate member involved in a firm-commitment underwriting of a highly anticipated upcoming initial public offering (IPO). During the underwriting, the broker-dealer holds onto some of the shares in order to sell them at a later date
D Unethical and prohibited under the Uniform Securities Act
This situation is known as withholding and is prohibited by both the Uniform Securities Act and the Securities Act of 1933. When a broker-dealer participates in a firm-commitment underwriting, it
A broker-dealer may need to file all of the following material with the Administrator, EXCEPT:
A The sales literature for an issue that will be sold within the Administrator's state only
B The marketing materials for a new issue of municipal bonds
C A for
B The marketing materials for a new issue of municipal bonds
Generally, the Administrator may require the filing of "any prospectus, pamphlet, circular, form letter, advertisement or other sales literature or advertising communication" intended for distri
Which of the following statements is NOT TRUE about federal covered advisers?
A They are not subject to registration as investment advisers under the Uniform Securities Act
B Investment adviser representatives of federal covered advisers can be required t
C They are not subject to the antifraud provisions of the Uniform Securities Act
The antifraud provisions of the Uniform Securities Act cover "all persons," including federal covered advisers.
Which of the following is not a security as defined by the USA?
A A futures contract in precious metals
B A certificate of interest in a mining title
C A preorganization certificate
D A certificate of interest in a profit-sharing agreement
A A futures contract in precious metals
Futures and commodity contracts are not securities. However, the Uniform Securities Act includes some seemingly odd instruments as securities, such as interests in mining or drilling titles and preorganization certi
Sue Whitman is a high-ranking official in the Comptroller's Office of Zanzibar Securities. Her title is Executive Vice President. Under the Uniform Securities Act, Mrs. Whitman is:
A Considered an agent but would not need to pass a qualifying exam
B Not c
B Not considered an agent since she is not involved in sales or trading
Only personnel engaged in securities transactions are agents. Officers can be considered agents, but it depends on their particular job functions. Persons who are involved in minister
Which of the following statements is NOT TRUE regarding the sharing of profits and losses in a client's account by an agent?
A The client's consent is required
B The agent's profits and losses must be in proportion to the percentage of her contribution
C
C The sharing is strictly prohibited
If an agent opens a joint account with a client, the agent may share in the profits, proportionate to her investment, provided employer and client approval was obtained.
The LEAST suitable investment for Mrs. McCarthy, a 70-year-old investor, would be a:
A Zero-coupon bond
B Fixed annuity
C Treasury note
D Utility stock mutual fund
A Zero-coupon bond
Periodically, you may encounter a suitability question that may not give you the amount of information you would normally require to make an informed recommendation to the client. When encountering these types of questions, you may need
Which of the following written disclosure statements is prohibited under NASAA's Model Rule on Unethical Business Practices of Investment Advisers?
A The investment adviser receives a management fee for a mutual fund it recommends
B The employees of the i
C If there is a monetary dispute, the client must agree to arbitration to settle the dispute
Unlike a broker-dealer that may have a pre-dispute arbitration agreement, an investment adviser may not compel an investor to settle disputes through arbitration.
Under the Uniform Securities Act, an investment adviser who has no place of business in a state is exempt from registration in that state if the adviser provides advice in which of the following situations?
I. The adviser had no more than five clients in
B I, III, and IV only
An adviser whose clients are all institutions or who has no more than five clients in a state is exempt from registration, provided that the adviser has no place of business in that state.
All of the following securities are considered federal covered, EXCEPT a(n):
A Investment companies registered under the Investment Company Act of 1940
B Regulation D, Rule 504 offerings
C Bank holding companies listed on national exchanges
D Regulation D
B Regulation D, Rule 504 offerings
Securities issued under Rule (Section) 504 of Regulation D are not federal covered securities. They must be registered in every state in which they are sold, unless they qualify for another exemption. Securities issued u
A broker-dealer has been selling unregistered, nonexempt securities in nonexempt transactions without the permission of the state securities Administrator. What action would the state Administrator most likely take?
A There is no violation and therefore n
C Require the broker-dealer to offer letters of rescission
In the absence of fraud, there is a violation if securities are illegally offered in a particular state when they should have been registered. The Administrator would most likely require the broke
Which of the following statements is TRUE regarding the bond that is required to be posted under the Uniform Securities Act as a condition for registration?
A Property can be accepted in lieu of a bond
B It protects against brokerage firm fraud
C It is us
C It is used to cover the costs of possible legal actions
A bond may be required by an Administrator to cover possible legal costs arising from violations of the Uniform Securities Act. The Administrator may accept cash or securities in lieu of a bond but
A newly hired employee is applying for registration as an agent in State Z. What information does the agent need to disclose on his application for registration (Form U4)?
I. Any alias that the agent has used
II. A real estate partnership that the agent c
D I, II, and III only
An applicant for registration must disclose any alias used, choice (I). The applicant must also disclose any personal bankruptcies or bankruptcies of entities that he controlled during the last 10 years, choice (II), and unsatisfied
A woman in Alabama is reading a daily financial newspaper containing an advertisement that could be interpreted as an offer to sell securities. The newspaper is published in New Jersey, but its circulation is spread evenly throughout the United States. Ac
B The ad is not an offer of a security in any state
An advertisement such as this could only be an offer of a security in the state in which the newspaper is published (in this case, New Jersey). However, if more than two-thirds of the newspaper's circula
Z Best, a broker-dealer, has filed an application for registration with the Administrator of New York. Three years ago, the firm was suspended from trading on the London Stock Exchange, due to the activities of a rogue trader. The firm's clients were not
C Deny registration, as any action by a foreign securities regulator may result in a denial by the Administrator
Under Sec. 204(H.1) of the USA, the Administrator may, by order, deny, suspend, revoke, cancel, or withdraw the registration of any registrant
A state securities administrator has decided that a broker-dealer is in danger of becoming insolvent. The Administrator orders the broker-dealer to maintain a minimum net capital of 200% of the federal minimum. How would this be viewed under NSMIA?
A The
D State Administrators are not allowed to impose requirements that are more stringent than SEC regulations
Under NSMIA, state securities Administrators are not allowed to impose requirements that are more stringent than SEC regulations.
Under the Uniform Securities Act, a person who sells securities in violation of state securities law is civilly liable for which TWO of the following penalties?
I. Fines
II. Interest
III. Punitive damages
IV. Attorney fees
A I and IV
B I and III
C II and
C II and IV
A person who sells securities in violation of state securities law is civilly liable for principal, interest, reasonable attorney fees, and court costs.
All order tickets must include which information?
I. Whether the order was solicited or unsolicited
II. The time and price at which the order was executed
III. The time at which the order was received and entered
IV. The account for which the order was en
B I, II, III, and IV
Which of the following actions would NOT be prohibited under the Uniform Securities Act?
A Soliciting transactions in unregistered, nonexempt securities while acting as an agent of a broker-dealer
B Knowingly backdating a confirmation
C Telling clients th
D Telling a client that certain securities issued by banks are exempt and that a prospectus is not required
An agent who is promoting a new issue knows that one of the officers of the issuing company was previously with another company that prospered because of her. The agent may:
A Suggest that the officer's involvement assures success
B Compare these two comp
C Make reference that this certain officer was with the other company
In attempting to promote a new issue, the agent may not claim that since the officer helped a former company prosper, the same will happen at the new company. However, there is nothing
Allied Advisory Services is a registered investment adviser with its home office in the state of Virginia. The minimum financial requirement for an investment adviser in Virginia is a net worth of $50,000. The firm would like to open an office and provide
B Leave its current net worth as is
According to the Uniform Securities Act, the minimum financial requirements of the state where an investment adviser maintains its principal place of business sets its registration requirements. No other state may impos
Market manipulation includes:
I. Disseminating false quotations or information
II. Buying a security on one exchange and selling it short on another
III. Creating a misleading appearance of trading in a stock
A I and III only
B III only
C I, II, and III
D
A I and III only
Market manipulation would include disseminating false quotations or information, or creating a misleading appearance of trading in a stock. Buying a security on one exchange and selling it short on another (arbitrage) would not be conside
An investment adviser with no place of business in a state will not be required to register with the Administrator under which of the following conditions?
A The adviser has been in business for 10 years
B The adviser has not been the subject of any disci
C The adviser will provide advice only to mutual funds
An adviser with no place of business in a state who only provides advice to mutual funds (a type of investment company), other investment advisers, broker-dealers, banks, trust companies, insurance co
A broker-dealer must keep all the following records, EXCEPT:
A Form ADV for any investment adviser for which the broker-dealer provides safekeeping services
B Original copies of all incoming client correspondence
C Signed copies of all discretionary accou
A Form ADV for any investment adviser for which the broker-dealer provides safekeeping services
According to the Securities Exchange Act of 1934 (Rules 17a-3 and 17a-4), a broker-dealer must keep all these records except for Form ADV. Investment advisers
Under the Uniform Securities Act, which of the following choices is NOT a security?
A Stock futures
B Keogh Participation Units
C Non-traded REITs
D Options on currency futures
A Stock futures
Under the Uniform Securities Act, futures, forwards, currencies, and commodities are not considered securities. Although futures are not securities, options on futures are. While a Keogh Plan is not a security, a participation unit in the
Which TWO of the following actions would fall under the jurisdiction of a state securities Administrator?
I. The purchase of options through the Internet by a state resident
II. The sale of long-term certificates of deposit by a bank
III. The delivery of
A I and IV
State securities Administrators have jurisdiction over securities transactions that are:
- Originated in their state
- Directed to and received in their state
- Accepted in their state
Delivery of securities to a particular state does not fall
XYZ Inc. is an investment adviser. One of its institutional clients would like to sell 1,000 shares of ABC stock. XYZ believes that this would be a suitable investment for another institutional client. XYZ proposes to arrange a trade between the two clien
D This is permitted if XYZ discloses to each client that it is acting as a broker for both parties in the trade and receives each client's written consent
An investment adviser that wishes to act as a broker for both a client and another person when effec
A securities agent and an investment adviser have offices next door to each other. The adviser directs brokerage business to the agent for execution and, in return, the agent rebates the adviser 10% of the commissions generated by these transactions. Acco
A Acceptable, provided it is disclosed on the adviser's Form ADV
According to the NASAA Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, this practice is acceptable provid
A sole proprietor who was registered as a broker-dealer is now charging a separate fee for securities advice. According to the Uniform Securities Act, the sole proprietor:
A Would need to register as an investment adviser
B Has an exemption from registrat
A Would need to register as an investment adviser
Any business entity not specifically exempted from registration and charging a separate fee for administering advice, is subject to registration as an investment adviser. Broker-dealers are excluded from t