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Exam 4: Uniform Securities Act USA and State Registration Requirements

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Question 111

Multiple Choice

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A-2-Z Associates advertises itself as a full service brokerage firm that will buy and sell securities for its clients, as well as provide investment advice to them. Its brochure provides a variety of plans to which a client can subscribe. The basic plan is the cheapest and allows the client a maximum number of trades per month for a specified fee. Another, slightly more expensive, plan provides the client with the same maximum number of trades per month, but the client also receives a personalized quarterly review of his portfolio along with advice for restructuring his portfolio based on such factors as current market conditions and specific industry or company information. The most expensive plan is one in which the client is assigned to an individual portfolio manager, who will take total responsibility for the asset allocation of the client's portfolio and will provide the client with monthly reports. Based on the services A-2-Z provides, it must register with the state as:

A) a broker-dealer.
B) an investment adviser.
C) both a broker-dealer and an investment adviser.
D) an investment adviser representative.

E) C) and D)
F) A) and B)

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Question 112

Multiple Choice

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Which of the following scenarios would not be considered a "sale," as defined by the Uniform Securities Act (USA) ? I.Yoshito owned shares of Minnow Corporation and received shares of Whale Corporation from Whale when it merged with Minnow. II.Olivia's uncle, an agent with SecureMoney Brokers, sold Olivia ten call options on the stock of Microsoft. III.Hans purchased a bond of Indebted Corporation that had detachable warrants and subsequently sold the warrants. IV.Tom pledged some shares of stock he owned personally to secure a business loan for his company.

A) Neither I nor II would be considered sales.
B) Neither II nor III would be considered sales.
C) Neither I nor IV would be considered sales.
D) Neither III nor IV would be considered sales.

E) B) and C)
F) None of the above

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Question 113

Multiple Choice

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Rich Quick is a broker-dealer licensed in the state of Massachusetts and has offices only within the state. Two of Rich Quick's clients regularly vacation in Florida during the winter months, and Rich Quick executes trades for them when they call him from out-of-state. Based on these facts, I. Rich Quick needs to register as a broker-dealer in the state of Florida as well. II. Rich Quick needs to register only as an agent in the state of Florida. III. Rich Quick needs to establish an office in the state of Florida in order to transact business. IV. Rich Quick need not register in Florida.

The state official who has regulatory authority over the securities industry within the state is known as the

You execute a stock transaction for a client on Thursday, September 23^rd. The settlement date on the order ticket will be

Although an Administrator has broad powers, he or she cannot:

An investment adviser I. provides investment advice to clients. II. sells securities to clients. III. buys and sells securities in their clients' accounts for the clients.

A limited power-of-attorney gives the designated person the right to I. order the sale of an asset owned by the account holder and have a check written to the account holder for the amount of the proceeds. II. obtain account statements, including tax statements, on behalf of the account holder. III. order the purchase of an asset for the account holder's account.

Which of the following does not describe a prohibited practice for investment advisers? I. The adviser sells its non-institutional clients securities that it has issued. II. The adviser makes a discretionary trade for a client after receiving verbal authorization only and does not receive written authorization from the client within 10 business days of doing so. III. The investment adviser requires an advisory fee of $300 to be paid in advance at the beginning of each quarter.

An investment adviser may act as a custodian for a client's securities if I. the Administrator of the state doesn't have a rule prohibiting custodial arrangements. II. he informs the state Administrator in writing that he will be acting as a custodian for the client. III. he arranges to pay an independent certified public accountant to perform an unannounced audit of his books each year so that the accountant can report his findings to the state Administrator.

A broker-dealer cannot legally be

Under the NASAA Model Rules, the statute of limitations for civil liabilities is

In which of the following scenarios will the investment adviser be subject to criminal fraud charges?

What criminal penalties are specified for "willful violations" of the Uniform Securities Act?

Which of the following does not necessarily have to be included in the contract between an investment adviser and an individual client, according to the Uniform Securities Act (USA) ?

The settlement date refers to

Which of the following is an example of commingling?

MoeMoney Investment Advisers uses the services of two broker-dealers exclusively when it executes trades for its clients' accounts. The larger of the two broker-dealers provides MoeMoney with research from its analyst department in return for the business and also serves as the custodian for some of MoeMoney's clients' accounts. The smaller of the two broker-dealers picks up the utility bill for MoeMoney. MoeMoney is careful to disclose this form of "soft dollar" compensation to its clients. Is it in violation of any securities laws?

Which of the following may an investment adviser not use in an attempt to solicit new clients?

A "market not held" order is