Series 66: Unit 2

Front 1

3 cases where person is not classified as an agent

Back 1

1. when effecting transactions in securities exempt from registration
2. In transactions that are exempt from registration
3. When effecting transactions with existing employees, when no compensation is paid.
(Exempt transactions, exempt securities, no compensation)

Front 2

persons not included in the def. of a B/D

Back 2

Agents, issuers, banks and savings institutions, trust companies

Front 3

exemptions for B/D

Back 3

1. No place of business in state and deals exclusivly with financial institutions, other B/D, trust, insurance companies, pension or profit sharing.
2. have no place of business but are licensed and offer securities to individuals who are existing customers and are not residents of that state.(usually a 30 day period)

Front 4

exempt securities: USSIC

Back 4

1.Us govt and muni securities
2. Securities of govt that US has diplomatic relationships.
3. Securities of US commercial banks.
4. Invesment contracts issued in connection w employees
5. Commercial paper of $50,000 or more with maturities of 9months or less.

Front 5

Exempt transactions: PIT(SI)T(IU)

Back 5

1. Private placements
2. Isolated nonissuer transactions
3. transactions between savings and instituions or trust companies.
4. Transactions between issuer and underwriters

Front 6

Investment Adviser is a person that:

Back 6

Provided advice about securities
Provide that advice as part of an ongoing business and
Recieve compensation

Front 7

What constitutes a security (MEPI)

Back 7

1. investment of Money
2. in a common Enterprise
3. with expectation of Profits
4. to be derived primarily from the efforts of a person other than the Investor.

Front 8

Six items that are NOT securities

Back 8

1. Insurance, endowment policy, fixed annuity, interest in a retirement plan, collectibles, commodities(metals,grains), condos used for personal use, currency.

Front 9

Accredited investor

Back 9

under reg D which includes individuals with a net worth greater than $1million or $200,000 in income for the last two years

Front 10

Insitutional Investor

Back 10

Investor that manages large amounts of money for people, such as a mutual fund.

Front 11

filing the registration statement requirements

Back 11

Amount of securities to be issued in the state
States in which the security is to be offered, but not the amounts offered in those other states.
Any adverse order or judgement concerning the offering by reglatory authorities, court, or SEC.

Front 12

Discretion (AAA)

Back 12

Asset (security)
Action (buy or sell)
Amount (how many shares)`
**However determining the best price and time is not considered to be discretion

Front 13

Arbitrage

Back 13

is the simultaneous buying and selling of the same security in different markets to take advantage of different prices.(not a form or market manipulation)

Front 14

what constitutes an offer under USA? (ODA)

Back 14

Originated in the admins state
Directed to the admins state
Accepted in the admins state

Front 15

Administrator 4 broad powers

Back 15

1. make,amend, or recind rules and orders
2.conduct investigations and issue subpoenas
3. Issue cease and desist orders and seek injunctions.
4. deny, suspend, cancel, or revoke registrations and licenses.

(Admins can NOT issue fines and jail time--ONLY courts can)

Front 16

5-5-3 for fraud under USA

Back 16

Occurred in the past 5 years, $5000 max fine, and max 3 year prison sentence

Front 17

Civil penalty/Liabilities provisions

Back 17

statue of limitations runs for 2 years from discovery or 3 yrs after occurred whichever occurs first.

Front 18

30 days, 60 days

Back 18

The buyer/client has 30 days after the letter of rescission to respond.
Any person affected by an order of the admin may obtain a review of the order in court by filing a written petition within 60days.

Front 19

limitations for civil liability

Back 19

three years from the date of the event or two years from discovery, whichever occurs first

Front 20

Register by coordination

Back 20

Is used when an issue will be registered at both the federal and state levels. Stocks on the OTCBB require registration with SEC and any states in which they will be offered. All Nasdaq stocks and mutual funds are federal covered securities, so they are exempt from state registration. Rule 147 is the intrastate exemption requiring state, but not federal, registration.
IPOs are most common

Front 21

The Uniform Securities Act requires that an administrative order appeal must be requested within how many days after the order has been entered?

Back 21

Any person who receives an order from the Administrator can petition the court to change or set aside the order, but an appeal must be filed within 60 days after the order was entered.

Front 22

examples of exempt transactions

Back 22

A) unsolicited, nonissuer transactions.
B) isolated, nonissuer transactions.
C) the sale of securities to a closed-end investment company.

Front 23

Exempt transaction Defined

Back 23

Any offer or sale to a bank, savings institution, trust company, insurance company, investment company, or other financial institution, institutional buyer, or broker/dealer is an exempt transaction. Because the type of issuer (i.e., corporation, bank) was not stated, it is not known whether the security is exempt.

Front 24

consent to service of process

Back 24

is supplied with the initial registration and remains on file permanently.

Front 25

Notice filing

Back 25

Primarily applies to securities issued by investment companies, most of which are mutual funds, registered under the Investment Company Act of 1940.
Offerings of securities that are not federal covered securities must be registered with the states by either coordination or qualification, unless exempt.

Front 26

What is required for a banker's acceptance to be exempt from registration

Back 26

The maximum maturity is nine months.
The minimum denomination is $50,000 and it must be rated in one of the three highest rating categories by a nationally recognized statistical rating organization.

Front 27

statutory cooling-off period
State? Federal?

Back 27

10 days for state registration and 20 days for federal registration

Front 28

registration by notification

Back 28

Must have been filed with the SEC under the Securities Act of 1933.
In addition, the issuer must have been actively engaged in business operations in the United States for a period of at least 36 consecutive months prior to the federal filing.

Front 29

Assessable stock

Back 29

is a stock that is issued below its par or stated value.

Front 30

Non-Assessable Stock

Back 30

All stock issued today is

Front 31

federal covered security

Back 31

Has a federally imposed exemption from state registration. Securities covered by the Investment Company Act of 1940, the U.S. Federal Reserve (commercial bank securities), and securities issued by the U.S. government are all covered by federal legislation.