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59 Cards in this Set
- Front
- Back
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If convicted of a willful violation, fines may be: a) $3,000 and prison up to 5 years b) $5,000 and prison up to 3 years c) $3,000 and prison up to 3 years d) 5,000 and prison up to 5 years |
b) $5,000 and prison up to 3 years
Note: No indictment can be made more than 5 years after the violation. |
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The statue of limitations for bringing a lawsuit for civil case is:
a) 2 yrs. of contract or 3 yrs. after discovery, whichever comes 1st b) 2 yrs. of contract or 3 yrs. after discovery, whichever comes last c) 3 yrs. of contract or 2 yrs. after discovery, whichever comes 1st d) 3 yrs. of contract or 2 yrs. after discovery, whichever comes last |
c) 3 yrs. of contract or 2 yrs. after discovery, whichever comes 1st |
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A customer has how many days to accept a right of rescission on an illegally traded security if bought back by the agent returning the purchase price and interest minus any paid income received.
a) 90 days b) 60 days c) 30 days d) 15 days |
c) 30 days |
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Violations of securities laws are subject to: a) criminal penalties and fines b) criminal penalties, civil liabilities c) criminal penalties, civil liabilities, revocation of registration d) criminal penalties, civil liabilities, revocation of registration and but no fines |
c) criminal penalties, civil liabilities, revocation of registration
Note: Fines may be included under criminal penalties and civil liabilities |
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If you only sell exempt securities and represent a broker dealer, do you still need to register as an agent? |
Yes. If you represent a broker dealer in the sale of a security (any security), you must register as an agent (there are NO exceptions to this rule)! |
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If you represent an Issuer and you sell exempt securities or exempt transactions for the issuer, do you need to register as an agent? |
If you represent an Issuer selling exempt securities or in exempt transactions, you do NOT need to register as an agent.
If the securities are NOT exempt or in exempt transactions then you do need to register. |
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A "guaranteed" security is a guarantee as to payments of: a) dividends or interest b) dividends, interest or principal c) principal and interest d) principal and dividends |
b) dividends, interest or principal
This is done by someone other than the issuer. |
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As an agent, if you terminate employment who must notify the Administrator: a) Broker Dealer and Agent b) Broker Dealer c) Agent d) Broker Dealer or Agent |
a) Broker Dealer and Agent |
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If a security is only offered in one state, the best method of registration is: a) Coordination b) Notice Filing c) Qualification |
c) Qualification
Note: key word "one state" aka Intra state offering |
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When a shareholder shares his/her securities, this is considered: a) issuer, secondary market b) non-issuer, primary market c) private placement d) non-issuer, secondary market |
d) non-issuer, secondary market |
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A private placement is a: a) registered, non-exempt transaction b) unregistered, non-exempt transaction c) registered, exempt transaction d) unregistered, exempt transaction |
d) unregistered, exempt transaction |
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You are a bank representative work from a US bank and are selling their securities issued by the bank. You must register as: a) an agent b) an IAR c) you do not need to register d) as an agent if you receive a commission |
c) you do not need to register |
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Transactions between issuers and underwriters are:
1) exempt 2) non-exempt 3) exempt, unless a commission has been paid 4) non-exempt, unless no commission has been paid |
1) exempt |
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Initial (primary) offerings are considered: a) issuer transactions, primary market b) non-issuer, primary market c) issuer transaction, secondary market d) non-issuer transaction, secondary market |
a) issuer transactions, primary market |
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True or False A person acting in a fiduciary role conducting transactions in order to liquidate an estate, is exempt from state regulations. |
True |
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Fiduciary transactions are exempt from state security laws, including all except: a) Executor, administrator, a receiver b) a sheriff, marshal c) trustee in bankruptcy, guardian or conservator d) attorney |
d) attorney
He or she may be if allocated by the other roles, but not just because they are an attorney. |
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A private placement is an: a) registered security in an exempt transaction b) unregistered security in an exempt transaction c) registered security in a nonexempt transaction d) unregistered security in nonexempt transaction |
b) unregistered security in an exempt transaction |
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A broker dealer receives a complaint that their agent is selling unregistered securities, who must prove the securities are exempt from registration? a) Agent b) Broker Dealer c) Agent and Broker Dealer d) No one since it is exempt |
b) Broker Dealer
Why? Because the "person", in this case it is the broker dealer, who is claiming the securities are exempt from registration.
The "person" claiming the exemption must be able to prove they are entitled to it. |
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When a new partner is added to the Investment Advisory Firm who must notified: a) clients b) FINRA c) SEC d) state |
a) clients |
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Investment Advisory fees are based on: a) capital gains over a period of time b) overall total performance over a definitive period of time specified in the contract c) gains over a specific period of time but not the losses d) only when client's securities appreciate in value |
b) overall total performance over a definitive period of time in the contract |
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You were convicted of a securities related crime 15 years ago and you are being accused of violating a securities law, can you lose your license? |
No. Max time is 10 years ago for a conviction. Being accused is not the same as a conviction. And just because you are being investigated means you lose your license. |
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You can lose your license if: a) are subject to an injunction issued by a regulatory authority b) you are being investigated by the NASD c) convicted of a securities criminal act more than 10 years ago |
a) are subject to an injunction issued by a regulatory authority |
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When an IAR leaves a firm, who must notify the administrator? a) IAR b) IA c) IAR and IA d) IAR or IA |
d) IAR or IA |
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Discretionary trading on a client's account is needed for securities purchased: a) timing, price, amount and type b) amount and type c) timing and price d) price, amount and type |
b) amount and type
Note: not needed for timing and price (remember TP) |
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True or False Advertising and sales literature need to be filed on exempt securities. |
False: Advertising and sales literature need not to be filed on exempt securities. |
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True or False Limited partnerships are securities. |
True: Limited partnerships are considered to be securities. |
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Conviction of a misdemeanor is not grounds for a license suspension, denial or revocation Unless: a) it occurred within the last 10 years b) it is related to the securities business c) a and b d) neither a or b |
b) it is related to the securities business
Note: conviction, misdemeanor |
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Conviction of a felony is not grounds for a license suspension, denial or revocation Unless: a) it occurred within the last 10 years b) it is related to the securities business c) it is not related to the securities business d) any conviction of a felony, regardless in or out of business is reason to remove from industry |
d) any conviction of a felony, regardless in or out of business is reason to remove from industry
Note: being accused is not reason enough but if you are convicted that changes things. |
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Your license is grounds for suspension or be revoked if convicted of a misdemeanor of:
a) breaking into a home b) theft of client funds c) possession of marijuana d) reckless driving |
b) theft of client funds
Conviction of a misdemeanor is not grounds for losing your license UNLESS it is related to the financial industry. Forgery, theft etc. |
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A client must receive the final prospectus no later than: a) trade date b) sale date c) before the contract is signed d) confirmation date |
d) confirmation date
A confirmation is generally sent out the day after the trade has occurred or within that same week.
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Buying and immediately selling securities without making a payment is known as: a) Churning b) Hot Issue c) Free Riding d) Market Manipulation |
c) Free Riding |
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Underwriting firms that withhold 'hot issues' from the public that are expected to increase rapidly in price in the secondly market, this practice is called: a) Market manipulation b) free riding c) Hypothecation d) free riding and withholding |
d) free riding and withholding
It is against the law to do this. |
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In order to hypothecate a client's securities what is needed: a) a margin account b) written consent immediately after the initial transaction c) Neither d) Both
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d) Both is needed a margin account and written consent and must be obtained promptly after the initial transaction. |
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In order to offer securities in the state, a registration statement must include: a) the amount & other states which it will be offered to b) the price c) the quantity, the price and the location |
a) the amount & other states which it will be offered to
In other words, the quantity and (location) where you plan to offer |
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The Administrator may require who to post a surety bond: a) Agents b) Advisors c) Broker/Dealers d) Agents, advisors and broker/dealers |
d) Agents, advisors and broker/dealers |
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Agents are required to update changes to data filed with the Administrator: a) promptly b) within 30 days c) within 60 days d) within 90 days |
a) promptly
Agents are required to update changes to data filed with the Administrator "promptly". |
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Agents may share in the profits & losses in a client's account if permission is granted by: a) the client b) the firm c) neither d) both |
d) both the client and the broker dealer firm. |
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Advising your client to buy securities on one exchange and simultaneously selling the same security on another exchange is known as: a) Churning b) Market making c) Arbitrage d) Hot Issue |
c) Arbitrage
It is not illegal to do this. |
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Upon termination of rep a(n) ____ or a(n) ____ must notify the state Administrator:
a) agent; broker dealer b) IAR; IA c) IA; IAR d) broker dealer; agent |
b) IAR; IA
IAR or IA must notify the state Administrator Agent and BD must notify and when going to a new BD, all 3 must notify. Why, IAR/IA are higher up. |
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The USA requires BD and IA firms to retain records for how long: a) 3, 5 b) 5, 3 c) 3, 3 d) 5, 5 |
a) 3, 5
Broker dealers keep records for 3 years. Investment advisors keep records for 5 years. Agents are not required to keep records, although most do. |
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True or false A person selling exempt securities or exempt transactions while representing the issuer needs to register as an agent. |
False. If it exempt they do not need to register. But if the security being sold is non-exempt while representing the issuer they do have to register as an agent. |
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True or False A person selling exempt securities or exempt transactions while representing the broker dealer needs to register as an agent. |
True. Regardless of if the security is exempt or non exempt they always have to be registered as an agent. |
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A firm sells advice for a fee and collects a commission, they have to register as: a) broker/dealer b) Investment Advisor c) Broker/dealer and Investment Advisor d) Neither |
c) Broker/dealer and Investment Advisor |
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To induce a transaction in a security by: 1) effecting transaction w/o change ownership 2) creating false/misleading appearance of active trading or 3) affecting transactions that would raise/decrease the price of a security, is considered: a) churning b) Free Riding c) Selling away d) Market Manipulation |
d) Market manipulation |
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The Administrator can issue: a) an injunction b) cease and desist c) an order d) all of the above |
d) all of the above |
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Maximum penalties by the USA are: a) $3,000 fine, 5 years in jail b) $3,000 fine, 3 years in jail c) $5,000 fine, 3 years in jail d) $5,000 fine, 5 years in jail |
c) $5,000 fine, 3 years in jail |
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All are securities except: a) gift of assessable stock b) IRA c) Warrants d) Rights |
b) IRA
Retirement plans are not considered to be a security. However, the pension and profit sharing plans investment contracts are considered securities.
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True or False Fixed annuities are considered a security. |
False. Variable annuities are considered securities, but not fixed annuities, because they depend on the performance of a separate account (3rd party) with securities that are non-exempt. The Insurance companies that offer a security that is guaranteed or guarantees attached are exempt. |
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In order for a corporation to be an exempt security what requirements must be met: a) Min denominations of $50k, term 9 months, and have 1 of the 3 highest credit rating b) Min of $35,000, 270 days and B+ rating c) Min of $50k, 1 of 3 highest credit rating and note term not more than 180 days d) Min $35K,1of3 highest credit rating & 1yr term |
a) Min denominations of $50k, term 9 months, and have 1 of the 3 highest credit rating
Remember 9 months is 270 days |
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True or False
Series EE and Series HH Savings Bonds are exempt securities. |
True
All securities issued or guaranteed by the government of the US are exempt form the registration requirements and therefore are exempt securities. |
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The simultaneous buying and selling of the same security in two different markets to take advantage of the temporary price disparity. (This is not considered market manipulation.) a) Free Riding b) Market Manipulation c) Churning d) Arbitrage |
The simultaneous buying and selling of the same security in two different markets to take advantage of the temporary price disparity. (This is not considered market manipulation.) d) arbitrage |
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Regulation D |
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Form ADV |
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If an individual represents an issuer of exempt securities or an securities in an exempt transaction: a) Agent registration is required regardless of commissions b) Agent registration is not required regardless of commissions c) Agent registration is not required as long as no commissions are paid |
c) Agent registration is not required as long as no commissions are paid |
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If an individual represents an issuer of non-exempt securities or an securities in a non-exempt transaction: a) Agent registration is required regardless of commissions b) Agent registration is not required regardless of commissions c) Agent registration is not required as long as no commissions are paid |
a) Agent registration is required regardless of commissions |
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If an individual represents a BD of non-exempt securities or an securities in a non-exempt transaction: a) Agent registration is required b) Agent registration is not required c) Agent registration is not required as long as no commissions are paid |
a) Agent registration is required regardless of commissions or if it is exempt or non exempt securities or transactions. |
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True or False Agents register in other states by notice filing. |
True
By filing:
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Which of the following are considered exempt from registration as an investment adviser under the Uniform Securities Act? |
B) An investment adviser with no place of business in the state who gives investment advice only to federal covered advisers Explanation: B/c the question asks who is exempt, which is different from who is excluded from the definition of an investment advisor.
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Under the Uniform Securities Act, which of these securities is considered exempt? |
A) I, II & III
Explanation: Exempt securities include bonds issued by state and local governments as well as both stocks and bonds of companies that are listed on an exchange. |
