Series 66 - Chapter 3

Front 1

Initial application to register as a financial professional begins with:

Back 1

Name and address
Type of business to be conducted
Qualifications and business history of any partner, officer, director, and any other person in a controlling position
Financial condition and history
Any injunction, admin order, felony conviction, or conviction of a securities-related misdemeanor
Details regarding unsatisfied judgments or liens against the registrant
Whether a bonding company has ever denied, paid out on, or revoked a bond for the registrant

If info changes, file amendment (within 30 days)

Front 2

Consent to Service of Process

Back 2

a document that irrevocably appoints the admin as the registered person's attorney for the service of legal papers

filed once, initially

Can serve the Administrator as opposed to a person

Front 3

Filing fee

Back 3

Paid at time of registration and annually upon renewal

Front 4

If two firms combine to become one firm

Back 4

The new firm can fill the unexpired portion of the registration term by filing an application - but the successor firm is not required to pay a new fee

Front 5

Examinations

Back 5

Applicants may be required to take an examination, but some people may be excused (CFA excused for Series 66)

Front 6

Surety bond

Back 6

insurance issued by a bonding company that agrees to pay the sum of money awarded by a court up to a certain amount, as a result of registrant's violations of the USA

applies to registered broker-dealers and agents that have custody of, or discretionary authority over, client funds or securities

bonds not required of broker-dealers whose net capital exceeds specified minimum amounts as set by federal law
registrants can deposit cash or securities instead of a bond

also applies to investment advisers who have custody of/discretionary authority over client funds or securities - if their net worth exceeds a specified minimum amount set by the Administrator, a bond will not be required (IARs are not required to post bonds)

Front 7

Provided no problems, registration becomes effective...

Back 7

...at noon on the 30th day after filing the application (or an amendment)

Front 8

All registrations of financial professionals expire on...
Annual renewal process is...

Back 8

...December 31st. Annual renewal = updating application and paying a fee. Consent to Service of Process doesn't have to be renewed.

Front 9

Net capital

Back 9

Admin may require broker-dealers to maintain at least a specified minimum amount of net capital (broker dealer's liquid net worth) - but it cannot exceed SEC regulations

Front 10

Advertising and sales literature

Back 10

Must be filed with Administrator, except for materials relating to exempt securities, exempt transactions, federal covered securities

Front 11

Maintenance requirements

Back 11

Account records, correspondence, books must be maintained as required by the Administrator -- records must be preserved for 3 years, with first 2 years in easily accessible location

Front 12

Financial reports

Back 12

filed with administrator quarterly, annually, or as often as determined

Front 13

Special examination

Back 13

All required records of a broker-dealer, whether located within or outside the state, are subject to periodic or special examination as determined by Admin

Front 14

Exclusions

Back 14

Some people do not meet the definition of broker-dealer, so they are not required to register

Front 15

Excluded from definition of broker-dealer

Back 15

Agents, issuers, banks, savings, and loan companies, savings institutions, and trust companies
Person that has no place of business in the state and only transacts business with issuers, other broker-dealers, financial institutions, or institutional buyers
Person that has no place of business in the state and is registered where the person maintains her place of business and only conducts business with existing clients who are not residents of the state (eg on vacation, attending school)

(essentially, if you have an office in the state you have to register in the state)


Bank holding companies/bank subsidiaries are not excluded

Front 16

Is a firm considered a broker-dealer in the state?

Back 16

1. identify the activity in which the firm is involved
2. determine if the firm has an office in the state
yes - firm must register
no - if clients are institutional, not required, if they are retail clients, the firm must register

Front 17

Exclusions from agent of an issuer -- when the individual effects securities transactions:

Back 17

On behalf of an exempt issuer (US gov, Canadian gov, other specific foreign nat'l gov, securities of banks, trust companies, savings institutions)
When security is exempt (commercial paper, maturity of <9m, investment contracts for employees)
When the sale is made through an exempt transaction
-private placements
-sales to qualified purchasers
-transactions between an issuer and an underwriter
-transactions with a trust company or savings institution
-transactions involving the sale of the issuer's stock to partners, directors, or employees of the company, provided the transaction is initiated by the employee or an officer selling the stock of the company

Individual cannot receive commission/compensation for the sale of the security to avoid reg as an agent

Front 18

Agent of a broker-dealer

Back 18

The person must be registered, even if the security is exempt
Must be registered under USA, filing form U4 through CRD
All parties must notify if transferring
U5 filed if quitting

Front 19

Agent can conduct business with an existing client without being registered in the state if:

Back 19

-(for up to 60 days) An agent's application for registration is pending in a state, provided: agent is eligible to register, agent's broker dealer is registered in that state, agent is registered with a national securities association (eg FINRA), agent is registered in at least one other state

Front 20

Partners, officers, directors of a broker-dealer are automatically registered as agents

Back 20

When the broker-dealer initially registers

Front 21

Canadian broker-dealers and agents

Back 21

broker-dealers and agents that are properly registered in canada and have no place of business in a state are exempt from certain provisions of USA (except antifraud)

Also with people from Canada who are temporarily in a state

NAFTA did not expand this to Mexico

**broker dealer summary -- 3-11**