Which of the following best fits the definition of an Investment Adviser under the Uniform Securities Act?
[A]An investment company which charges clients a fee for advisory services
[B]A financial planner with a degree in accounting which charges an addit
[B]A financial planner with a degree in accounting which charges an additional fee for giving clients advice about investing in securities
EXPLANATION
A financial planner/accountant (LATE professions) who charges an "additional fee" for advice related to
States, territories, and possessions of the United States including the District of Columbia and Puerto Rico, are all included in which of the following definitions under the Uniform Securities Act?
[A]City
[B]Country
[C]State
[D]Continent
[C]State
EXPLANATION
Under the Uniform Securities Act the definition of a State means any state, territory, or possession of the United States including the District of Columbia and Puerto Rico.
Under the Uniform Securities Act, which of the following activities would NOT be included in the definition of a person acting as an Investment Adviser Representative?
I. Making recommendations or giving advice regarding any securities
II. Managing client
[B]III & IV only
EXPLANATION
Be careful with regards to the question. Here, we are asking which would NOT be an IAR. The statutory definition of an "investment adviser representative" includes rendering advice or giving recommendations with regard to secu
Under the provisions of the Uniform Securities Act, an "investment adviser" could be which of the following:
I. a corporation
II. an association
III. a partnership
IV. an individual
[A]I, II
[B]II, III
[C]I, III, IV
[D]All
[D]All
EXPLANATION
All four choices represent persons which could become registered as an Investment Adviser.
Under the Uniform Securities Act, an Offer or Offer for Sale is any attempt to solicit a purchase or sale of a security for value and is considered to have been made in a State when:
I. A local financial radio talk show describes a new issue being sold in
[A]I only
EXPLANATION
Choice I, to talking about an offer "originating in a state" whereas choices II & III, are talking about offers being through "general" distribution which is not specific to any one state and would therefore NOT be considered an offe
Which one of the following must be registered as an investment adviser under the Uniform Securities Act?
[A]Accountants who provide incidental investment advice to clients without compensation.
[B]The trust department of a bank which receives compensation
[D]A financial journal's publisher who responds to reader's mail with financial planning advice.
EXPLANATION
Because the publisher responds to reader's mail and gives advice, they would have to register as an Investment Adviser.
Which of the following accurately describes an investment advisory firm registered under the Investment Advisers Act of 1940?
[A]This would be any investment adviser that operates within the boundaries of the United States.
[B]This would always describe a
[B]This would always describe a Federal Covered Adviser.
EXPLANATION
An investment advisory firm registered under the Investment Advisers Act of 1940 would meet the definition of a Federal Covered Adviser under the 1940 Act and the Uniform Securities Act.
A client calls their agent and is inquiring about an interest in an oil and gas program. The client is interested in purchasing limited partnership interests in the venture. The client has called to ask the agent if these limited partnership interests wou
[B]The agent should inform the client that limited partnership interests or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease would fall within the definition of a security.
EXPLANATION
Lim
When can an agent represent more than one broker-dealer?
[A]Permission is received from only one of the broker-dealers.
[B]At any time, permission is not required from either of the broker-dealers.
[C]Permission is received from the Insurance Commissioner
[D]Generally, this is a prohibited practice.
EXPLANATION
A person may not represent more than one broker-dealer at the same time. The supervisory requirements would become too complicated if a person carried dual registration.
An individual who represents an issuer in effecting transactions in an interest in a limited partnership would be defined as which of the following?
[A]A registered investment adviser
[B]A registered broker-dealer
[C]An agent of an Issuer
[D]An Investment
[C]An agent of an Issuer
EXPLANATION
Under the Uniform Securities Act, an individual who represents an issuer which is effecting transactions in the sale of interests of a limited partnership would be considered an agent.
The gift of an assessable security can be defined under the Uniform Securities Act as a(n):
[A]exempt transaction.
[B]sale of a security.
[C]unsolicited transaction.
[D]issuer transaction.
[B]sale of a security.
EXPLANATION
Assessable stock is a class of stock in which the issuing company can impose levies on stockholders for more funds. Historically, there were no restrictions on how much additional money a company could demand or on how f
According to the rules of the SEC and Uniform Securities Act, which of the following are TRUE?
I. Securities listed on the New York Stock Exchange (NYSE) are considered Federal Covered Securities.
II. Securities listed on the National Market System of the
[D]I, II, III, and IV
EXPLANATION
The SEC ultimately determines which securities are Federal Covered by making amendments to existing securities laws. In 2007, the SEC approved changes to existing rules related to securities listed on an exchange to inclu
According to the Uniform Securities Act under which of the following circumstances would an Investment Adviser be exempt from the anti-fraud provisions of securities law?
[A]An investment adviser would be exempt from the anti-fraud provisions provided tha
[D]There are no circumstances where an investment adviser would be exempt from the anti-fraud provisions of securities law.
EXPLANATION
When dealing with securities, no one is exempt from the anti-fraud provisions of Federal Securities Law.
Which of the following would NOT be considered a bona fide "gift" of securities?
I. A corporation gives preemptive rights to existing shareholders in relation to an existing issue of common stock.
II. After receiving several assessments, a grandfather giv
[D]I, II, III, and IV
EXPLANATION
All of the items listed would not be considered bona fide gifts. A corporation is required to distribute preemptive rights if a rights clause is involved in the issuance of common stock. A "gift" of assessable stock is no
ABC Broker-Dealer Firm is located in Wyoming and sells securities only to institutional clients in Nevada. Would ABC Broker-Dealer Firm be required to register in Nevada?
[A]Yes, because the firm is doing business in the State of Nevada
[B]Yes, because th
[D]No, because the only clients that the firm has in Nevada are institutional clients and the firm has no place of business in Nevada
EXPLANATION
Under the USA, it is unlawful for a firm to transact business in a state as a broker-dealer unless it is regi
Which of the following would NOT be considered a "Sale" under the Uniform Securities Act?
I. A grandfather gives his grandson 100 shares of common stock for his 21st birthday.
II. A customer opens a margin account and pledges stock in the account to buy o
[D]I, II, III, and IV
EXPLANATION
Each of the items described would not be considered a "sale" for purposes of the Uniform Securities Act. The grandfather giving the gift of stock is a bona fide gift. Pledging securities as collateral in a margin account
According to the Uniform Securities Act, an Agent is any individual who represents a Broker-Dealer or an Issuer in effecting or attempting to effect purchases or sales of securities including all of the following except:
[A]Common stock
[B]Right and Warra
[D]Securities issued by a State Bank
EXPLANATION
Under the Uniform Securities Act, an Agent is any individual who represents a Broker-Dealer or an Issuer in effecting or attempting to effect purchases or sales of securities unless the securities or transa
Which of the following is excluded from the definition of "security" according to the USA?
[A]A futures contract in grains
[B]A pre-organization certificate
[C]A certificate or interest in a mining title
[D]Certificates of interest in profit-sharing agree
[A]A futures contract in grains
EXPLANATION
Futures contracts are not "securities" under the USA.
Which of the following are Federal Covered Advisers?
I. An individual registered with the SEC as an Investment Adviser
II. An individual who is an Investment Adviser but is exempt from federal registration
III. An individual who only gives advice about U.
[B]I only
EXPLANATION
Choices II, III, and IV would NOT be considered Federal Covered Advisers. Investment advisers managing $110 million or more (previously $25 million) must register at the Federal level and are defined as Federal Covered Advisers.
A solicitor receives a call from an Investment Adviser (IA) who wants the non-employee to conduct solicitation activities for the IA. What are the obligations regarding registration according to the Uniform Securities Act?
[A]Since the solicitor is not a
[D]It is required that the solicitor register in the states in which it conducts its business.
EXPLANATION
A person hired by an investment adviser to perform solicitation activities on behalf of the IA must be registered in each state in which it solicits
Under the provisions of the Uniform Securities Act, an offer is made in a state when
I. it originates in that state.
II. it is broadcast by radio or TV from outside the state.
III. it is contained in a newspaper published outside the state but delivered t
[A]I only
EXPLANATION
Choice I represents an offer made in a state, but choices II and III would not be considered offers since the information was not specifically directed to that specific state.
Under the Uniform Securities Act, which of the following would represent persons who are excluded from the definition of an Agent?
I. An individual who represents an issuer in effecting transactions only in U. S. Government Securities
II. An individual wh
[A]I & II only
EXPLANATION
The term Agent does not include an individual who represents an issuer in effecting transaction in some Exempt Securities such as U. S. Government and Municipal Securities. If an Agent represents a Broker-dealer in effecting tra
A broker-dealer firm has no other clients and no place of business in State X. The broker-dealer would have to register in State X if they had which of the following as a client in State X?
[A]Investment Companies
[B]A client with $1,000,000 under managem
[B]A client with $1,000,000 under management with the Firm
EXPLANATION
Under the USA, it is unlawful for a firm to transact business in a state as a broker-dealer unless it is registered in the state or exempt from registration. The exemption applies to b
Which of the following actions would be permitted for a person who is not registered as an agent of a broker-dealer firm under the Uniform Securities Act?
I. Back-office duties that are entirely clerical in nature
II. The sending of mailers which have bee
[D]I, II, III, and IV
EXPLANATION
Unregistered persons are permitted to function in each of the capacities listed. Clerical duties and mail-room duties do not require registration. Dealings related to commodities or fixed insurance products may require re
All of the following would be considered to be excluded from the definition of an Investment Adviser under the Uniform Securities Act except?
[A]An IA who gives advice about bank securities for an advisory fee
[B]Accountants whose advice is incidental to
[A]An IA who gives advice about bank securities for an advisory fee
EXPLANATION
Lawyers, accountants, teachers, and engineers whose advice is incidental to the practice of their profession would be excluded from the definition of Investment Adviser. As we