TC Final 3

1. An IA must be registered in a state under the USA even if it has no place of business in the state if:
[A] its only clients in the state are Investment Advisers.
[B] its only clients in the state are considered accredited investors.
[C] its only client

B.
Selling to an Accredited investor would require IA registration. The other choices are all expressly exempt from registration.

1. For an agent under the Uniform Securities Act, which of the following intentional or deliberate actions by an agent of a broker-dealer are in violation of the antifraud provisions of the Act?
I.The agent sells clients new issues of nonexempt securities

ALL
All of the above are cases in which the agent knowingly and intentionally violated the antifraud provisions of the Uniform Securities Act.

1. According to the Uniform Securities Act, all the following must be included in a written advisory contract except:
[A] that the investment advisor will not receive compensation based on the profit or loss in the account
[B] that the investment advisor

B.
All choices except "B" are true statements regarding an investment advisory contract. "B" is incorrect because investment advisory contracts would not include registration information.

2. Which of the following actions, according to the USA, must be taken by a State's Administrator prior to the revocation of an investment adviser's registration?
[A] The Administrator must consult with a disciplinary panel which agrees with the Administr

C.
The administrator may revoke an IA's registration but must provide appropriate notice, opportunity for a hearing, and written facts and conclusions by law.

1. Under the Uniform Securities Act, investment advisory fees may be based on a percentage of all of the following EXCEPT:
[A] Client's funds deposited with the IA.
[B] Total value of the client's managed accounts at a specified point in time.
[C] Average

D.
As a general rule, performance-based fees are prohibited. Therefore, fees based on appreciation or capital gains are prohibited.

3. The Uniform Securities Act provides that which of the following statements is/are correct with regard to post registration provisions for registered IA's whose principal place of business is in a given state?
I.The IA is responsible for scheduling the

II, III and IV only
All records required to be kept may be examined by the Administrator at any time within or outside of the state. IAs do not schedule their own annual examinations!

1. Under which of the following circumstances may an investment adviser (IA) act as a principal and sell a security to a client according to the Uniform Securities Act?
[A] Only when a security has been listed on a national exchange
[B] The customer's mon

D.
When an Investment Advisor Acts as principal, it must be disclosed to the client in writing before completion of the transaction.

2. Which of the following situations could place an investment adviser in a position where the IA could be held liable to a client in a civil case?
I.Recommending investments that are suitable for the client, but that lose money
II.Failing to register and

C.
A suitable investment may lose money without any fault on the part of the IA. The other two examples are blatant violations of the USA.

2. Under the Uniform Securities Act (USA), an agent of a broker-dealer who violates the USA may be subject to which of the following consequences?
I.The agent may face an injunction
II.The agent may face civil liabilities
III.The agent may face criminal p

ALL
An agent of a broker-dealer could be subject to "All" choices offered if violations occur.

2. Which of the following is FALSE when discussing Administrative proceedings according to Uniform Securities Act regulations?
[A] A summary order to deny certain exemptions may be made by the Administrator.
[B] If the Administrator issues a denial order

B.
Orders by an Administrator may be appealed in court within 60 days after the order is issued, therefore choice "B" is not true. All other choices represent true statements.

2. Which of the following would be grounds for denial, revocation, or suspension of the registration of a broker-dealer?
[A] The discovery that the broker-dealer failed to supervise its agents.
[B] The discovery that a director of the firm had a pending l

A.
Minor rule infractions are not grounds for denial, revocation, or suspension of registration.

2. Which of the following statements is true with regard to an Administrator's authority under the Uniform Securities Act to examine the books and records of a registrant?
[A] They may be examined with prior notice only.
[B] They may be examined at anytim

B.
The state's administration is allowed to examine books and records at anytime inside or outside of the state

3. The regulations for the storage of e-mail communications for investment advisors under the Uniform Securities Act requires:
[A] the maintenance of printed emails only.
[B] IAs to maintain only certain communications that relate to the receipt or disbur

B.
The rules require the maintenance of only communications relating to investment advice, receipt, or disbursement of securities, funds, and records of securities trades.

1. According to the USA, an agent has willfully violated the antifraud provisions of the USA if he or she intentionally performs which of the following acts?
I.The agent knowingly sells non-exempt new issues of securities and does not deliver a prospectus

ALL
A "willful" act is an intentional, deliberate act. All of these acts are fraudulent and/or deceptive practices.

2. The burden of proving an exemption or exception to a definition under the Uniform Securities Act is placed on:
[A] The person claiming the exemption or exception
[B] The state securities Administrator
[C] The Securities Exchange Commission
[D] The Atto

A.
In any proceeding under the Uniform Securities Act, the burden of proving an exemption or an exception from a definition is placed on the person claiming it.

2. Which of the following actions could result in civil liability according to the Uniform Securities Act?
I.The failure to disclose to a client that the advisor will act as a principal for the advisor's own account in a sale of a recommended security
II.

ALL
All choices are correct with regard to civil liabilities according the Uniform Securities Act.

1. Under the Uniform Securities Act, every investment advisory contract must be in writing and must include
[A] that assignment of the contract is prohibited
[B] that the IA's liability is limited
[C] that the IA's compensation is based on a share of capi

D.
Assignment of the contract is permitted with the written consent of the client. The IA may not limit its liability or as a general rule share in the capital gains of the accounts of clients.

1. Which of the following statements that relate to Investment Advisers (IA's) is FALSE according to the Uniform Securities Act?
[A] The registration of IARs is the responsibility of the IA.
[B] SEC registration of an IA exempts the IA from any state anti

B.
Nobody is exempt from state antifraud provisions!

1. Stella has made a business of advising her clients as to the value of securities that are listed on the New York Stock Exchange. She does not perform any transactions for her clients. Even though she does not effect transactions for her clients, she mu

I and III
An investment advisor (IA) that only gives advice about listed securities and does not execute or effect any transactions would have to be registered as an investment adviser (IA) but would not have to be registered as a broker-dealer.

2. An IA may be liable for civil damages to a client if:
I.The IA fails to disclose a material fact in soliciting the clients
II.The IA fails to disclose that the IA will sell a recommended security from its own account.
III.The IA fails to reasonably sup

ALL
Failure to disclose a material fact is fraud. An IA is liable for the negligence of its employees.

1. What provisions, set forth by the Uniform Securities Act, apply to both federal covered advisers and investment advisers of the same state?
[A] The state's registration provisions
[B] The record and book-keeping requirements
[C] The state's minimum fin

D.
All firms doing business in a state are subject to the anti-fraud provisions of the Uniform Securities Act.

2. Under the Uniform Securities Act, an Administrator may inspect required books and records:
[A] Any time the Administrator deems it necessary
[B] When the Administrator suspects fraudulent activity
[C] Annually at the time of renewal of registration
[D]

A.
State Administrators can examine books and records of a registrant registered in their state at any time within or outside of the state without prior notification.

2. The Administrator of a state receives information from a reliable source pertaining to questionable activities on the part of a federal covered adviser. It seems that instead of taking the necessary actions when receiving customer complaints, the advis

A.
Under the USA, an Administrator has the authority and power to conduct investigations and issue stop orders . Although a federal covered adviser is exempt from the registration and record-keeping requirements of the Act, they are not exempt from the an

2. When handling violations of the Uniform Securities Act the Administrator can:
I.Release information about violations on the Administrator's website
II.Arrest suspects for probable case
III.Subpoena witnesses

B.
The Administrator is not a law enforcement officer and is not able to arrest suspects. The Administrator has the power to publish information concerning the violation and to subpoena witnesses.

1. Which of the following would be considered approved acts of an agent?
I.Backdating confirmations one day.
II.Representing that a bond yields 6% when it actually yields 5%.
III.Paying to an investment advisor a percentage of the commissions generated in

D.
All choices offered represent acts which would be considered violations of the Uniform Securities Act.

2. Which of the following statements are true with regards to the responsibilities of a registered investment adviser under the USA?
I.The filing of financial reports with the state may be required of the IA.
II.On an annual basis, the RIA must schedule a

C.
All of the statements are true with regard to the responsibilities of an Investment Adviser except II. II is not correct because an annual examination of books and records would have to unannounced and done by an independent public accountant.

1. The antifraud provisions of the Uniform Securities Act apply to which of the circumstances below:
I.The sale of exempt securities by a registered broker-dealer.
II.A broker-dealer makes an offer on a security with no sale resulting.
III.Securities are

D.
The antifraud provisions of the Uniform Securities Act apply to all offers and sales of securities, whether the person selling them is exempt from the Act or not.

1. Which of the following must be disclosed in writing to clients prior to an IA giving financial advice to a client?
[A] The IA must disclose the schedule of commissions charged for different investments.
[B] The IA must disclose that the IA receives com

B.
Disclosure related to charging fees as well as commissions must be made in the advisory contract prior to giving a client financial advice. Each of the other items listed does not need to be disclosed or does not need to be disclosed prior to giving fi

1. In order to take advantage of lower commissions for several of his clients, an investment adviser (IA) often places block trades on their behalf. It is not unusual for the IA to receive several different prices for the securities when placing and execu

C.
As an investment adviser (IA), one must fulfill certain fiduciary responsibilities to his or her clients. When acting on behalf of clients, IA's must put the client's best interests before both their own interests and the interests of fellow employees.