63

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IA records must be retained for at least

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5 years. Generally, for the first 2 years, the records must be kept in the principal office of the IA.

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Unit Investment trust is defined as a

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security

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Registration by notification (or filing) is also known as

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Notice Filing.

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Registration by coordination is the method commonly used when

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coordinating federal registration with state registration simultaneously

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Federal covered securities include those issued by

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Securities:

-investment co, listed on the NYExchange,

-equivalent/senior to listed securities &

-listed on any of the NASDAQ Markets (Capital Market, Global & Global Select).

Front 6

The Prudent Man Rule is a standard of

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care that any person of ordinary means & understanding would reasonable be expected to exercise given the circumstances of the situation

Front 7

Under the USA the Administrator is

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the person responsible for enforcing a state’s securities laws & regulations.

Front 8

BD agent is often referred to as a

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registered representative or securities sales person.

Front 9

An individual does not have to register in a state to execute a transaction for an existing customer that is

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temporarily located in that state for a period of 30 days or less.

They must be registered in at least one other state.

Front 10

A broker-dealer must register in what state

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any state

where the firm has an office and/or

retail customer who resides in that state

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A broker-dealer provides advice on securities as its business, & how is he paid

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compensated based on a completed transaction/trade

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An investment adviser provides

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advice on securities as its business is compensated based only on the advice given

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The Administrator may deny an application for a

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misdemeanor conviction only if the offense was related to the securities business;

but any felony conviction is grounds for a denial. The time frame for denial of registration due to a money/securities-related misdemeanor conviction/felony conviction is 10 years.

Front 14

U4 Form used:

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Individual registration

Creates person’s CRD/IARD file

Must be updated annually within 30 days of year end

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U5 Form used to

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terminates individual’s registration

Must be filed by former employer within 30 days of termination

Front 16

A non-exempt security is not exempt from registering with

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the state under the USA.

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An option on currency/an option on a futures contract is

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a security

Front 18

A variable insurance product with a separate account indicates

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security

Otherwise, assume an insurance product is excluded from the definition

Front 19

unethical practice is one that?

its done?

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goes against the moral guidelines of the industry & traditionally is done without intent.

Front 20

A fraudulent practice is one that

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goes against the moral guidelines of the industry with intent to defraud the customer.

Front 21

Fraudulent activities are those activities that

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willfully violate the USA, & any person who participates in a willful violation is subject to criminal proceedings in the state.

Front 22

Under the USA, a proportionate sharing arrangement is

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not needed.

Front 23

The agent & the investor do not have to share

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the gains & losses in proportion to their contribution.

Front 24

The proportionate sharing arrangements is only under

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FINRA regulation (on the Series 6 or Series 7 exams).

Front 25

The exam may use the term “full discretionary authority”/“limited discretionary authority” rather

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than full/limited Power of Attorney.

Front 26

An IA may exercise discretion in a client account prior to obtaining written discretionary authority for up to how many days

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10 business days, if authorized verbally by the client

.

Front 27

A broker-dealer may NOT

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exercise discretion in a customer’s account prior to obtaining written authorization from the client, even if the client verbally authorizes it to do so.

Front 28

A sale occurs if a person

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disposes of a security/interest in a security, in exchange for something of value.

Front 29

An offer is an

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attempt to dispose of a security/interest in a security, in exchange for something of value. not a sale

Front 30

Every sale must include

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an offer, but not every offer will result in a sale.

Front 31

not every offer will result

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in a sale.

Front 32

The maximum number of state administrators who can have jurisdiction over an offering is

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2,

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the maximum number of state administrators who can have jurisdiction over a sale is

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3

Front 34

The maximum criminal penalties under the USA are a

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$5,000 fine, 3 years in prison/both.

Front 35

Civil proceedings may not be brought under the USA more than

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3 years after the sale of the security/the giving of the advice/2 years after the discovery of the violation, whichever comes first.

Front 36

The purpose of a blanket consent is to

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avoid having to obtain the client’s authorization prior to each agency cross trade.

consent does not get renewed annually, although an annual summary must be sent.

Front 37

All non-exempt securities must register with

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the state

Front 38

was adopted to simplify the registration of securities and persons across state lines. This is the same Act that is the basis of the Series 63 exam.

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In 1956, the Uniform Securities Act (USA)

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Amendments to the USA are the responsibility of

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North American Securities Administrators Association (NASAA)

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persons representing BD would not need to register:

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employee, partner, officer/director of a BD does not attempt to offer/sell securities/supervise these activities. performs clerical/ministerial functions only are not considered agents

exempt BD such as Canadian BD

Front 41

Institutional clients include:

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Federal covered advisers

BD

IA

Registered investment companies

Insurance companies

Banks or trust companies

Savings & loan associations

Employee benefit plans with assets of at least $1million Governmental entities:

governmental agencies & “instrumentalities”

Front 42

Qualifying private funds are those with

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Assets Under Management (AUM) of $150 million or more.

Front 43

Private Fund Advisers (PFAs) must register

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with the SEC by filing parts of form ADV & form PF & are considered Federal Covered Advisers.

Front 44

Advisers to private funds with less than $150 million are required to register in

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the state where they are physically located &

in any state where it solicits/conducts advisory business

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1996 when Congress passed a law, called the National Securities Markets Improvement Act (NSMIA) it...

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÷ the responsibility for regulating IA

between the SEC & the state

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The SEC is responsible for regulating

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larger IAs & those who operate on a national scale.

Front 47

The states regulate the remaining IAs, which are

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mostly smaller firms.

Front 48

The primary criteria for deciding if an IA is regulated by the state or the SEC is

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assets under management (AUM).

Front 49

ADV is the application for registration as an investment adviser. It is comprised of two main parts:

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Part 1A/1B & Part 2A/2B.

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ADV Part 1B is

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specific to information required by state securities administrators.

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A federal covered IA firm is

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not required to complete Part 1B.

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IA who have custody of client assets must maintain a minimum net worth of

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$35,000 & file an audited balance sheet with the State Administrator

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IA who have discretionary authority over client assets ONLY must maintain

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a minimum net worth of $10,000 & file an unaudited balance sheet with the State Administrator

Front 54

If the IA has custody of/discretionary authority over, client assets, the Administrator requires the firm to

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post a surety bond

Front 55

Unless denied by the Administrator, an application for registration becomes effective

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at noon, 30 days after it is filed. By rule/order, the Administrator may set an earlier effective date

Front 56

Registration of a BD or IA automatically constitutes(have to) registration of

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any agent/IAR who is a partner, officer/director

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the Administrator may order a cancellation of the registration/application:

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if a registrant/applicant

has ceased to do business,

subject to adjudication of mentally incompetence,

cannot be located/is deceased

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Issuers may be a

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Corporation,

the U.S. Government, or Municipalities.

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refers to the issuer as the manager/depositor not issuer

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Certificate of Deposit,

Collateral Trust Certificate,

Voting Trust Certificate,

or Unincorporated Investment Trust Certificate,

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there is no “issuer.”With respect to certificates of:

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interest

participation in oil, gas

mining titles

leases

in payments out of production under such titles/leases

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Institutional Buyer cannot be

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personal customers actual individual

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qualified purchaser is a

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natural person (& their spouse) & a family-owned company with investments worth at least $5 million

trust fund backed by qualified purchasers with investments worth at least $5 million

institution with investments of at least $25 million

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Non-Issuer transaction

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Secondary market transaction

Front 64

BD agent is often referred to as

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RR

securities sales person.

Front 65

agent’s compensation may be based on

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salary or commission.

Front 66

agent’s compensation may be based on

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salary/commission.

Front 67

exempt securities, which are not required to be registered in the state, include:

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U.S. Government bonds & government agency securities

Municipal securities

Canadian government & municipal securities

Securities issued by recognized foreign governments

Securities issued by domestic banks, savings institutions, & trust companies

Investment-grade promissory notes (commercial paper) & bankers’ acceptances, if they mature in 9 months (270 days)/less & have minimum denominations of at least $50,000

Investment contracts issued in connection with an employees’ stock purchase, savings, pension, profit-sharing/similar benefit plan

Certain federal covered securities

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Exempt transactions usually do not involve

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the public & include transactions with underwriters, qualified purchasers/in a private placement.

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person who represents an issuer in an exempt (does not need to register) transaction is

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not an agent.

Front 70

A registrant's registration would be cancelled if

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they ceased to exist or to do business in a state, or if they cannot be located by an Administrator

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institutional clients:

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other IAs, Federal covered advisers, BD

Registered investment companies

banks/trust companies

insurance companies

employee benefit plans assets at least $1million

government entities:Gov agencies & "instrumentalist"

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issuer transaction include

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IPO

private placement

pre-emptive rights offerings

Front 73

The Uniform Securities Act is, however, far more oriented toward the protection of

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the average investor than the protection of institutions

Front 74

Investment Advisors: Must be registered with the state unless

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they are federal covered" advisors - these are firms).

Front 75

IAR Must be registered with the state - these are the people who work for

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investment advisors

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Securities: Must be registered with

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the state unless exempt

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prohibited characteristics

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Fraud, misrepresentation, dishonesty, manipulative & deceptive business practices

Front 78

The state administrator is vested with

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considerable power for enforcing the USA and the rules

Front 79

Hypothecation occurs when

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an asset is pledged as collateral to secure a loan,

without giving up title, possession/ownership rights, such as income generated by the asset

Front 80

Remuneration is

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payment/compensation received for services/employment: base salary & any bonuses/other economic benefits that an employee/executive receives during employment

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Indemnity is

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a comprehensive form of insurance compensation for damages/loss &

in the legal sense, it may also refer to an exemption from liability for damages.

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if you see a question that begins, "The administrator may...," the answer is frequently "

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all of the above."

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on the other hand if you encounter a question that begins with the phrase, "The administrator must..." the answer

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is a short list. Again, the administrator has tremendous power under the USA.

Front 84

In order to conduct securities business with a customer in most states, the agent (RR) and BD must be registered in the state. Is there a separate securities registration exams for each state?

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There is no separate securities registration exams for each state - those states that require an agent to 'qualify by examination' have standardized the exams- & there is no requirement for the principal supervising an RR to be registered in each state in which the RR conducts business.

Front 85

Any person, including BD and financial planners, who provides investment advice to others & charges a separate fee for the advice, is an

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IA

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Additionally, any firm that processes transactions represents

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a broker-dealer.

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An accountant who sell subscriptions to his municipal securities newsletter with advice on specific client situations. would be considered an

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investment adviser

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IA who are registered in another state, but have no place of business in a state, are exempt from registration in the state if securities transactions are limited to

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5 or fewer non-institutional clients in a 12 month period.

They are also exempt if their only clients in the state are institutional investors/companies, such as other IA, banks, or BD

Front 89

An IA who conducts business with more than 5 retail customers in the state must be registered in the state as an

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investment adviser.

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A non-exempt security is a security that is

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not exempt from registering with the state under the USA. All non-exempt securities must register with the state.

Front 91

Howey test based on the following three conditions:

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(1) It must be an investment of $ (2) in a common enterprise, with (3) the expectation of profits from the efforts of a 3rd party.

Front 92

investment contract” may be used interchangeably with what other word

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security.

Front 93

Retirement plans, including pension plans, IRA’s & Keogh (HR-10) plans are not securities However,

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the underlying investments within these plans may be securities

Front 94

A variable insurance product with a separate account indicates the product is

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a security. Otherwise, assume an insurance product is excluded from the definition.

Front 95

According to the USA it is unlawful for any person to offer/sell any security in a state unless:

The security is:

Back 95

registered in the state under the USA

The security/transaction is exempted from registration under the USA; or

federal covered security

Front 96

The registration statement may be filed by the

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issuer,

an underwriter, or

any other person on whose behalf the offering is to be made, such as a company officer selling a large amount of stock.

Front 97

There is a fee for registering securities under the USA, which is typically

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a % of the offering price of the securities to be sold in the state.

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The registration remains effective for

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1 year from the effective date/until the offering is complete.

Front 99

Administrator may require the issuer to file reports, no more frequently

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than quarterly, after the registration becomes effective and to keep the registration statement updated.

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investment contract aka

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security

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viaticals are

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securities

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solvency a cause for suspection revocation or denial

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not a cause for suspension, revocation or denial of and agent or iar application