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36 Cards in this Set

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Issuer

Any person who issues or proposes to issue any security. The term includes the US, State, Local or foreign governments, corporations, and partnerships

Broker-Dealer

Is a person in the business of effecting transactions in securities for the accounts of others or for its own account.

Broker

When a firm effects securities transactions on behalf of its clients.

Agent of Broker-Dealer

A non-clerical individual who represents a broker-dealer in effecting securities transactions. Must be registered.

Agent of an Issuer

A non-clerical individual who represents an issuer in effecting securities with the public.

Investment Advisor


Provides Advice about Securities


Providing these services as a Business.


Receiving Compensation for these services.

Investment Advisor Representative


Any partner, officer, director or other individual who is associated with an investment advisor.


Makes recommendations. Gives advice.


Manages accounts for clients.


Determines which advice should be given.


Solicits, offers or negotiates the sale of investment advisory services.


Surpervises employees in these functions.

Uniform Securities Act

The USA (Blue Sky Laws) of 1956 is a model law which means it is a blueprint that each state may use.

Administrator

The state securities regulator (state Administrator) is the person responsible for not only administering and enforcing the securities laws but educating investors as well. Mission: to protect the consumers who purchase securities or pay for investment advice.

NASAA


North American Securities Administrators Association -


Organized in 1919, oldest international organization devoted to investor protection. They are responsible for updating the USA.

Securities Act of 1933

Federal law regulates the issuance, offer, and sale of securities. Requires that certain securities be registered with the SEC to be offered or sold to the public.

Securities Act of 1934

Established the Securities and Exchange Commission which enforces federal rules and regulations including the registration of certain financial professionals.

Investment Advisors Act of 1940

Federal law that governs advisor registration. Most of its concepts have been incorporated into the USA and in the model rules that NASAA has adopted.

National Securities Markets Improvement Act of 1996 (NSMIA)

Established in order to eliminate the duplication of state and federal securities regulation. NSMIA created a specific category of securities that are exempt from formal state registration.

NSMIA Exempt categories


- Securities offered on the U.S. Exchanges (NYSE, NASDAQ)


- Certain Regulation D offerings (private placement)


- Municipal securities issued outside the state


- Securities issued by registered investment companies (mutual funds)

Notice Filing

When a state requires a federal covered security to file copies of the documents that have been sumbitted to the SEC. There may be a filing fee.

NSMIA re: state requirements

Prohibits states from enforcing requirements that are more restrictive than existing federal requirements re: net capital, bonding, books and records maintenance.

Security


An investment of money


In a common enterprise


With an expectation of profits


Solely from the efforts of others

Not considered securities


- Insurance, endowment policies or fixed annuity contracts


- Individual retirement accounts (IRA, Keogh)


- Commodity futures contracts


- Currencies


- Collectibles


- Condominiums (not primary residence)

Viatical investments


Someone who is selling his life insurance at a discount from its face value. Rate of return is unknown since date of death is unknown. Suitable investors:


Net worth $150K and Income of $100K or


Liquid net worth of $250K

Effective Date of Registration of securities

The date on which the securities are for public distribution
Expiration Date of the effective date of securities

One year after its effective date

Types of securities registration


Notification (Filing)


Coordination


Qualification

Registration by Notification (Filing)

Used by well-established corporations that meet stringent financial requirements. Larger issuers with securities that trade on a national exchange and have previously registered with the SEC.

Registration by Coordination
May be used if the same offering is being registered under the Sec. Act of '33 simultaneously. The State Administrator may ask for copies of the latest prospectus, articles of incorporation, underwriting agreement or indenture.

Registration by Qualification

When a security's federal registration has already become effective or when no federal registration will be filed (intrastate filings). Determined by the Administrator.

Federal Covered Securities


Exchange Listed Securities


Securities sold to qualified purchasers ($5M)


Investment Companies (Mutual Funds)


- Notice Filing needed


Regulation D Rule 506 (private offering)


- Notice Filing needed

Consent to Service of Process

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

Filing Fee

A fee is paid at initial registration and annual at renewal. If an application is denied or withdrawn, the Administrator may retain all, or part, of the fee.

Surety bond

Insurance issued by a bonding company that agrees to pay the sum of money awarded by a court up to a certain amount. This is needed to cover USA violations. Needed by security professionals who have custody of or discretionary authority over their clients funds and securities.

Effective Date of Registration for agents, investment advisors and their representatives.

Effective at noon on the 30th day after the filing of the application. All registrations expire on 12/31.

Central Registration Depository

Computerized database that contains infromation about most broker-dealers and their agents. Contains states of registration, disciplinary issues, complaints.

Investment Adviser Registration Depository (IARD)

Electronic filing system that facilitates investment adviser registration, regulatory review, and public disclosure of info. FIRNA operates IARD.

State requirements for Broker - Dealers

Maintain a specified minimum amount of net capital


Copies of advertising and sales literature


Maintenance of records (trade tickets, confirms)


Financial reports

How to determine if a firm is considered a broker-dealer in a state:


- Identify the activity in which the firm is involved


- Determine if the firm has an office in the state


If yes, the firm must register


If no,


- are all clients institutional - then no


- if one or more clients are residents of the state - then yes

Spitting commissions is allowed only if:

Both agents are registered in the same state and employed by the same broker-dealer or one under common control.