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5 Cards in this Set

  • Front
  • Back
If an agent unknowingly sells an unregistered, nonexempt security and discovers the error afterward, what action is most appropriate?



(A) Have the client offer to sign a waiver accepting the sale as legal

(B) Immediately register the security in the state and notify the Administrator

(C) The agent should offer (in writing) to repurchase the security and pay a reasonable rate of interest minus any income derived from the security

(D) Compensate the client for any losses through a waiver of future brokerage or investment advisory fees
The agent may offer to rescind the trade by offering (in writing) to repurchase the security and pay a reasonable rate of interest minus any income derived from the security. An agent may not suspend provisions of the USA whether the client agrees or not.
An investment adviser recommends that a customer purchase shares of Silicon Switches, saying that the company has graduated to the level of quality acceptable to the New York Stock Exchange, which reduces the security's risk. According to the Uniform Securities Act, the adviser's statement is



(A) permitted because the NYSE sets stringent earnings requirements for listed stocks

(B) permitted because an investment adviser may recommend listed stocks

(C) not permitted because it is misleading to imply that an exchange-listed security is approved by the exchange

(D) not permitted because the transaction is not suitable for the customer
Acceptance for listing by the New York Stock Exchange does not necessarily reduce the risk of loss to the client, so the agent's statement is misleading and therefore prohibited. An NYSE listing does not imply that the exchange has passed on the quality of the issue, merely that the security met listing requirements. In addition, suitability of the investment is not a result of where it trades.
An agent working for a brokerage firm and his client both live in Illinois, and the agent makes an offer to the client by phone while the client is vacationing in California, which he accepts. The client travels to Texas before returning home and sends payment for the security from there. He makes his payment by sending a check from a money-market fund based in Ohio. The Administrator(s) of which of the following state(s) has(have) authority over the sale?

Illinois
California
Texas
Ohio



(A) I and II

(B) II and III

(C) II, III and IV

(D) I, II, III and IV
Because the offer was made from Illinois to a person in California, the state Administrators of both states have jurisdiction. The state from which payment was mailed and the state in which the checking account or money-market fund is based are irrelevant for the purpose of determining an Administrator's jurisdiction.
In registration by coordination under the Uniform Securities Act (USA), issuers may simultaneously submit the documents submitted to the Securities and Exchange Commission (SEC) as provided for by the



(A) National Securities Markets Improvement Act (NSMIA)

(B) Securities Exchange Act of 1934

(C) Securities Act of 1933

(D) Investment Company Act of 1940
Under the Securities Act of 1933, an issuer registering its securities with the Securities and Exchange Commission (SEC) can use the documents it submits to the SEC in its concurrent registration with states in which it plans to offer its securities.
A broker/dealer must register as an investment adviser if it charges

commissions for selling securities
commissions for selling securities while offering investment advice incidental to the sale of the securities
a fee for selling investment research and additional fees in the form of commissions for the sale of securities
fees for investment research sold exclusively to institutions exempt from state securities registration



(A) I and II

(B) I and IV

(C) II and III

(D) III and IV
A broker/dealer must register as an investment adviser if it charges a fee for selling investment research or separate fees in the form of commissions for the sale of securities. If a person is in the business of selling research for a fee, that person or firm must register as an investment adviser. If a broker/dealer charges commissions for selling securities and offers investment advice incidental to the sale of the securities, the broker/dealer need not register as an investment adviser because it is not compensated for the research.