Exam 4: Uniform Securities Act USA and State Registration Requirements

Gazillions is an investment adviser with offices in the state that is registered with the SEC And has $100 billion dollars under management. A client has filed a complaint asserting that the firm has been involved in fraudulent activities. In this case,

Once you have passed the Series 63 examination, which entity must then approve your application to sell securities?

Which of the following would meet the requirements for an "exempt security?"

Jack and Jill are a newly married couple in their mid-20s. They are determined to retire by the time they are 50 and have arranged a meeting with a representative of Professional Investment Advisers to structure a financial plan that will allow them to achieve this goal. The representative, Mr. Hill, advises them to invest at least 60% of their money in bond funds to minimize the risk of loss on the way to their goal. Mr. Hill has

Erin is a registered agent who works for SecureMoney Brokers-dealers. One of her clients, Mrs. McTurk, is a recently-widowed woman who relies on Erin for advice about her investment portfolio. Mrs. McTurk reminds Erin of her own grandmother, and she is happy to provide guidance within the sphere of her own knowledge. Based on these facts, which of the following statements is true?

An investment adviser suggests that his client, Arnold, a 74-year old gentleman, should consider a reallocation of the assets in his portfolio. The adviser tells Arnold that he has far too much invested in bonds, which don't earn as much as stocks. He advises Arnold to take 80% of the money he has in bonds and invest it in an aggressive growth mutual fund that has provided an average annual return of 40% over the past three years. Arnold is impressed and follows this advice. Shortly thereafter, there is a steep drop in the market in general, and the net asset value of the aggressive growth mutual fund falls 85%. Does Arnold have any remedies available to him?

John Ketchum is an investment adviser representative with Load Investment Advisers, which has a family of load funds that it encourages its representatives to promote. Representatives of the firm that sell shares in these funds to their clients receive a greater share of the load than they do if they sell load funds offered by other firms. Based on these facts, which of the following statements is true?

Joe Romeo is a broker-dealer registered with the state. He has recently hired Betty Buxom as his administrative assistant. As part of her duties, he has given her the responsibility for effecting the purchases and sales of securities for some of his firm's smaller accounts. Ms. Buxom has never applied for nor been granted registration as a broker-dealer or agent. Based on these facts,

Stu Pede is an agent with broker-dealer Cavalier. A customer calls with a request to establish a classic IRA and asks for Stu's advice regarding where the money in the IRA should be invested. Stu suggests a municipal bond fund, explaining to his client that the interest income earned on it will be tax-free at the federal level, and some of it may even be tax-free at the state and local levels. Has Stu engaged in any prohibited practices?

Which of the following describes a prohibited practice in the sale of shares of investment companies? I. Sandy Slacker hands her client the fund's prospectus and tells him that the prospectus will provide him all that he needs to know about loads and fees associated with the fund. II. Elliot Eager tells a client who has an investment objective that includes current income that a certain bond fund has a current yield of 8% and provides the client with a prospectus so that the client can peruse the average annual returns that the fund has generated in past years when the client has the time. III. After explaining all the fees and loads involved in two different bond funds as well as the difference between current yield and total return, Patty shows the client the data on the average annual returns that the two bond funds provided. She explains to the client that the municipal bond fund has a lower yield than the similar-risk corporate bond fund because the interest income the client will receive from the municipal bond fund will be free from federal taxation, while the interest income on the corporate bond fund is fully taxable.

Which of the following documents must a broker-dealer deliver on or prior to the confirmation due date to a client who is purchasing a security?

Which of the following entities are subject to post-registration provisions? I. broker-dealers II. agents III. investment advisers IV. investment adviser representatives

Ari Gaunt is a registered agent employed by Small &Associates Broker-Dealers. He has been notified of a hearing regarding the revocation of his license for making unauthorized trades on some of his clients' accounts. Which of the following statements is necessarily true?

The discretionary powers over a clients' accounts differ between broker-dealers and investment advisers in that

and Mrs. Cleaver are nearing retirement and have made an appointment with Mr. Eddie, an investment adviser representative who works for Haskell Investment Advisers, to get advice on how they can better structure their investments to meet their retirement goals. Their son, Theodore, who has recently graduated college and has a great job as a software writer for a video game company, accompanies them. Mr. Eddie explains that the main goal of any plan is diversification and recommends that Mr. and Mrs. Cleaver spread their investment monies equally among six load mutual funds that Mr. Eddie can sell them. He suggests that Theodore follow suit and invest any monies he has equally among the same ten funds. Has Mr. Eddie done anything wrong?

A client calls CanDo Broker-Dealers with a market-not-held order to buy 5,000 shares of China Security and Surveillance Technology, Inc. (CSR), which sells on the NYSE, "at a good price today." The stock had opened at $5.13, traded as high as $5.36 during the day, and closed at $5.10. CanDo executed the purchase at a price of $5.31, so at market close, the client had lost $1,050. The client can

An agent working for a broker-dealer mistakenly sends an investment adviser some bonds that the adviser purchased on behalf of his client instead of directing the bonds to the financial institution that is serving as the qualified custodian of the client's funds. If the investment adviser wants to avoid being considered custodian of this client's account, what must the adviser do?

In which of the following scenarios would the Administrator of a state not have jurisdiction? I. A monthly newspaper published by a resident of the state who is not a registered investment adviser has a column in which the publisher makes specific investment recommendations for clients who write in for advice. About 80% of the circulation of the publication is to out-of-state residents. II. An internet blog posted by an out-of-state resident makes investment recommendations. III. An out-of-state firm solicits buyers for its promissory notes within the state.

Sam Shyster had his day in court-and lost. His license to do business as an investment adviser in the state has been revoked. What legitimate options does Sam have available to him now?

The current yield on a bond fund refers to