Exam 4: Uniform Securities Act USA and State Registration Requirements

Under which of the following scenarios can a client legitimately sue a purported professional in the securities industry and expect an award for damages? I. The securities were sold by an agent whose registration was not yet effective with the state, but who had already applied for registration. II. The security was a variable annuity, and the sales representative neglected to reveal the details of the surrender clause to the client. III. The security was the stock of a company, the stock had recently been registered with the state for sale, had been granted registration, and the selling agent had told his client that the security had been state-approved for sale.

An investment adviser representative with Capital Investment Advisors, Inc. advised his client to invest $5,000 in bonds of a firm that the adviser claimed was an investment "almost as risk-free as investing in U.S. government bonds; maybe even more so, given the magnitude of the government deficit these days." The client paid a total of $200 for this Advice. The bonds paid interest at the rate of 6%, with semiannual payments, and the client received $300 in interest payments before the firm went belly-up at the end of a year, and its bonds were deemed worthless. The client has filed suit, and its attorneys' fees and court costs are expected to be $1,000. When the investment is a bond, the state has recently been assessing an interest rate equal to the interest rate paid by the security as an equitable interest payment guideline in civil penalties. The maximum the client can expect in civil penalties is

You are an agent with a broker-dealer and have learned of limited partnership interests being sold by a small company that is planning to come out with a product that you think is going to "wow" the market. You would like to get in on the action, but the minimum investment needed is $10,000, and you don't have that kind of dough lying around. You talk to your brother, who is also one of your clients, and get him interested in investing in the firm, too. The two of you decide to pull your money together, each putting in $5,000, and you agree to split any profits or losses. Is this permitted?

An investment adviser or its representative may

The state of Massachusetts has issued a general obligation (G.O.) bond that pays 3% interest. As an agent selling this bond, you can legitimately tell the investor that

Desi Genuos is an agent with Broker-Dealer CanDo. A client has asked Desi to recommend a mutual fund that does not have a sales charge. Desi recommends a fund that has no front- End load although it does have a deferred sales load if the investor redeems his shares within the first three years of ownership, but the client has informed Desi that he is looking at this as a long-term investment. Based on these facts, Desi

Which of the following conditions is necessary for an act involving securities fraud to be considered criminal and subject to criminal penalties?

Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to market, GetErDone Broker-Dealers is part of the selling group, which handles the sale of the stock to the public. In this scenario, which party is the broker?

Bob Gogetter is an agent with CanDo Broker-Dealers. One of Bob's clients is out of the country and cannot be contacted. The client holds some stock in a company that just released some information that should make its stock price soar. Bob knows that this client would probably want to increase his holdings, so Bob opens a margin account for his client and borrows the money to buy shares. As it happened, the stock price did soar, and Bob's Client earned a sizeable profit. Is Bob in violation of any securities acts?

Which of the following statements regarding an investment adviser representative who has an office in the state is true?

You had the misfortune of working as a registered agent for an unscrupulous broker- Dealer. You weren't privy to any of it, but apparently, your broker-dealer was guilty of some fraudulent activities and has had his license revoked. In this instance,

Noah Scruples is a registered representative with CanDo Broker-Dealers. A client calls and wants Noah to purchase shares of a mutual fund the client has read about. CanDo is not authorized by this particular fund to effect purchases or sales of the fund shares. Can Noah execute the order anyway?

Which of the following trades is illegal?

Assuming there is not a stop order or a proceeding pending, under the registration by coordination process a security's registration with the state becomes effective:

Which of the following securities would be exempt from state registration requirements, according to the Uniform Securities Act? I. a municipal bond issued by the Canadian province of Nova Scotia II. a bond issued by the county of Cork, Ireland III. a bond issued by Nationwide Insurance Company

Most individual state securities laws today are based on:

Broker-dealer Small & Associates has received a complaint about one of its agents, Mr. Ari Gaunt. Small & Associates is required to

The Administrator may not introduce a stop order to deny, revoke, or suspend the effective registration of a security based on facts that were disclosed during the registration process unless he does so within

Which of the following statements would not be in violation of NASAA rules regarding the Sale of investment company shares? I. "Investing your money in shares of this money market mutual fund is identical to putting your money in a savings account at a bank, except the money market fund provides a higher return." II. "Our U.S. government bond fund is invested only in government bonds issued by the U.S. government and is, therefore, a risk-free investment." III. "You are investing $22,000 in this fund today. The fund has a 5% load at this investment level, but if you sign a letter of intent to invest another $3,000 within the next 13 months, your load will be reduced to 4%. If something comes up and you can't invest the extra $3,000 within 13 months, you will only need to pay the difference in the two loads."

Which of the following would not appear on a trade confirmation?