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Series 65 > USA - Registration / Licensing > Flashcards

USA - Registration / Licensing Flashcards

1
Q

the Act requires that any ____, ____, _____, and ______ be registered in the state unless there is an exemption

A

BDs, agents, IAs, or IARs`

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2
Q

NSMIA was enacted to eliminate _______

A

duplicate fed and state registrations

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3
Q

“Persons” are ______

A

legal entities

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4
Q

Persons can issue and trade securities, and can be ____ or ____

A

human or non-human

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5
Q

Persons can be:

A
  • individuals
  • corporations
  • partnerships
  • business trusts
  • estates
  • trusts
  • associations
  • joint stock companies or joint ventures
  • governments and political subdivisions of governments
  • unincorporated organizations and any other legal or commercial entity
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6
Q

The “issuer” for a trust is the person _______

A

performing the functions of manager of depositor under the trust agreement

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7
Q

The “issuer” for equipment trusts is _______

A

is the person to whom the equipment is to be leased or conditionally sold (which is the corporation)

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8
Q

For fractional interests in O&G programs, or mining titles or leases, there is no _____

A

issuer (this makes them have to register through qualification - more stringent to detect fraud)

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9
Q

When an issuer sells or redeems securities, it is termed a _______

A

issuer transaction

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10
Q

A “non-issuer” is someone who is ______ as an issuer under the act

A

not defined

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11
Q

In a “non-issuer” transaction, the proceeds from the sale of the securities goes to _____

A

someone other than the issuer (a secondary transaction)

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12
Q

Firms with no ______ in the state that only deal with ______ are not required to register

A

with no office in the state than only deal with institutional clients are not required to register

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13
Q

Institutional buyers are:

A
  • banks
  • S&Ls
  • trust companies
  • insurance companies
  • investment companies
  • pension and profit sharing plans
  • anyone else so designated by the state administrator
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14
Q

A broker-dealer is a person who:

A
  • engages in the business of effecting securities transactions for the accounts of others
  • engages in the business of trading for his own account
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15
Q

M&A advisors and finders are also considered _____

A

broker-dealers

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16
Q

Persons that are NOT considered BDs are:

A
  • agents
  • depository institutions
  • issuers
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17
Q

Firms that trade ______ with ________ with no place of business in the state are exempt

A

exclusively with professional investors (issuers, other BDs, institutional buyers)

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18
Q

BDs are not required to register in the state where their existing customers are _____

A

vacationing (30 days or less)

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19
Q

For Canadian BDs with clients visiting the US, they can stay in the US no longer than _____ and must intend to go back to Canada in order for them to not have to register in the US

A

6 months

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20
Q

An agent is a person who represents a ______ or _____

A

an issuer or a BD

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21
Q

Is there a requirement saying that you must earn a commission to be considered an agent?

A

NO

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22
Q

The names of the officers of the company that will act as agents are included on the ______ (Form ____)

A

included on the BD registration (Form BD)

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23
Q

The only exclusions from the definition of an agent are those representing _____

A

issuers

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24
Q

The four exclusions for individuals who represent issuers are:

A
  • sales of specified exempt securities (but not all exempt securities)
  • exempt transactions
  • sales of specified covered securities (but not all covered securities)
  • sales of securities to employees of that issuer if no remuneration is paid
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25
Q

The “exempt” securities in regards to an agent of an issuer not having to register in the state are:

A
  • US gov’t
  • Foreign gov’t
  • Muni gov’t
  • Canadian gov’t
  • Bank and Savings institutions
  • Trust companies
  • Promissory notes that will mature in 9 months or less that are rated in top 3 categories in amounts at least of $50,000 (ie commercial paper)
  • securities issued in connection with savings, pension, profit sharing plans, and ESOP plans
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26
Q

The “exempt” transactions in regards to an agent of an issuer not having to register in the state are:

A
  • isolated transactions with someone other than the issuer – NOT repeated or successive trades by the same person
  • transactions between issuers and underwriters
  • transactions with financial or institutional investors
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27
Q

“Covered” securities that exempt an agent of an issuer from registering are:

A
  • federal private placements (Reg D)
  • Sales to qualified purchasers (natural persons or family owned companies with at least $5m in investments; pre-existing trusts for the persons listed above as qualified purchasers (but cannot be formed to buy securities); any other person with at least $25m of discretionary investments)
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28
Q

Employees of an _____ who effect trades only for the _____ employees are excluded from registration requirements, as long as no comp is involved

A

employees of an issuer who effect trades only for the issuer’s employees are excluded

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29
Q

An investment adviser is someone who:

A
  • engages in the business of advising others, directly or indirectly, as to the value of securities, investing, buying/selling securities
  • issues or circulates analyses or reports concerning securities on a regular basis
  • provides investment advisory services to others in a financial planning context
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30
Q

Persons that are excluded from the definition of investment advisers are:

A
  • IARs
  • depository institutions
  • professionals
  • BDs
  • publishers of newsletters that do NOT give advice based on specific investment situations
  • federal covered advisers
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31
Q

A federal covered adviser must register with the _____ but not with the state

A

SEC

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32
Q

If NOT a federal covered adviser, must register with the ____ and not with the SEC

A

state

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33
Q

Federal investment advisers are those who ________, or adviser to _____

A

have more than $100m in AUM or are advisers to registered investment companies

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34
Q

A federal covered adviser can choose state or SEC registration if they have between ___ and ___ in AUM

A

$100 and $110m in AUM

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35
Q

A federal covered adviser does not need to de-register unless its AUM falls beneath _____

A

$90m

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36
Q

Mid-size advisers that are not required to register in the state must register with the ____

A

SEC ($25m or more in AUM)

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37
Q

Mid-size advisers with registration in 15 or more states can opt to be ____

A

SEC-registered

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38
Q

A federal covered adviser is also anyone who is NOT an ______ under the investment adviser act of 1940

A

NOT defined as an investment adviser

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39
Q

Excluded from the definition of an investment adviser are:

A
  • banks or bank holding companies
  • professionals
  • BDs and their RRs
  • publishers of bona fide newspapers, magazines, or financial publications of a general and regular circulation
  • any person who advises solely about US gov’t guaranteed obligations
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40
Q

An IAR is anyone employed by an IA that:

A
  • makes recommendations or renders advice
  • managers accounts or portfolios of clients
  • determines which recommendations or advice regarding securities should be given
  • solicits, offers, or negotiates for the sale of investment advisory services
  • supervises employees performing any of these tasks
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41
Q

States still have jurisdiction over IARs who are employed by a _____

A

federally covered adviser

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42
Q

Agents cannot be affiliated with more than ______ at one time in most states

A

cannot be affiliated with more than one BD at one time in most states

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43
Q

When an agent begins or terminates employment with a BD or issuer, the agent, as well as the employer, must _____

A

promptly notify the State administrator

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44
Q

Canadian BDs are _____ from registration (not _______)

A

EXEMPT (not EXCLUDED)

45
Q

Agents associated with excluded or exempt BDs are considered _______

A

exempt

46
Q

Federal covered advisers have to file ______ in each state they conduct business in

A

file notice

47
Q

IAs who have no office in the state who only deal with the following clients are EXEMPT from registration:

A
  • other IAs or fed covered advisers
  • BDs
  • banks, trust companies, and S&Ls
  • insurance companies
  • investment companies
  • Employee benefit plans with over $1m in assets
  • gov’t agencies
  • anyone designated by the administrator
48
Q

Advisers with no place of business in the state, and with no more than ____ within a ____ period are EXEMPT

A

5 clients over a 12 month period

49
Q

If the IAR of a federal covered IA is physically present in the state, then they must ______

A

register in the state

50
Q

If the IAR of a fed covered IA is not physically present in the state but the IA files notice in the state, the IAR ____

A

must register (if they solicit business there)

51
Q

Solicitors (referral generators) for IAs must be _____

A

registered in the state, even if they are not employees of the IA

52
Q

If an IAR begins or terminates employment with an IA, the ____ must promptly notify the state

A

the IA

53
Q

If an agent of a BD begins or terminates employment, _______ must notify the state

A

BOTH the agent and BD

54
Q

When an IAR of a fed covered IA begins or terminates employment, the _______ gives prompt notice to the state

A

IAR

55
Q

The Consent to Service of Process is only filed with ______

A

initial applications - no need for renewal

56
Q

Fed covered advisers file form _____ in the state to give notice

A

file form ADV

57
Q

There is an initial ________ for registration of each BD, Agent, IA, and IAR

A

initial registration fee

58
Q

Each licensed person must pay an annual _______ (there are no _____ fees)

A

pay an annual fee, there are no pro-rated fees

59
Q

Registration becomes effective in ______

A

30 days from filing

60
Q

There is no additional filing fee for ______

A

successor firms

61
Q

Registration expires _____ unless renewed

A

Dec 31st

62
Q

_______ registration satisfies the state requirements (have to inform the state admin)

A

CRD registration

63
Q

The IARD system handles registration of both _____ and _____ IAs, as well as notice requirements for _____, and registration from IARs

A

state and federal covered IAs, as well as notice filings for fed covered advisers and registration of IARs

64
Q

For fed covered IAs, registration with the SEC and with each state expires ______

A

annually on Dec 31st

65
Q

The annual form ADV updating amendment is filed within ______ of fiscal year end

A

90 days

66
Q

Form ADV updating amendment is required for _____

A

both state and fed IAs

67
Q

An amendment for any material change is required to be filed within ______ of the occurrence

A

30 days

68
Q

For individual agents/IARs, renewal is done by updating the _____ within _____ of year end

A

U4 within 30 days

69
Q

If terminated, a form ____ must be filed within ______ of termination

A

form U5 within 30 days of termination

70
Q

For disciplinary action, a form ____ must be filed ______ (no later than ____ after action has been taken)

A

U6, promptly but no later than 30 days after action is taken

71
Q

Any allegations of felony by a customer are filed using _____

A

form U6

72
Q

Registration standards for BDs include:

A
  • min dollar amounts of net capital
  • surety bond coverage
  • passing qualification exams
73
Q

Registration standards for IAs include:

A
  • min net worth amount
  • surety bond coverage
  • passing exams
74
Q

Surety bonds are only required for IAs that ______

A

take custody of customer assets

75
Q

There are higher net worth and bonding requirements for IAs that _____ or _____

A

take custody of assets or exercise discretion

76
Q

The net worth requirement for IAs only applies to ______

A

the state of principal business

77
Q

Net worth for an IA =

A

= all assets - all liabilities - intangibles (also deduct personal property if IA is an individual)

78
Q

All IAs and BDs must also submit a ______ to prove net worth/net capital requirements

A

balance sheet

79
Q

If an IA or BD fails to meet financial standards, must notify the state ______

A

next business day

80
Q

Registration for an agent includes:

A
  • surety bond coverage (if has custody or discretion)

- passing exams

81
Q

Registration for an IAR includes

A
  • passing exams
82
Q

Record keeping requirements for BDs are ____ for correspondence, _____ for trade confirmations, _____ for customer account statements

A

3 years, 3 years, 6 years

83
Q

For fed covered advisers, all records kept for _____

A

5 years

84
Q

State registered IAs must keep records of:

A
  • journal entries
  • general ledger and trial balances
  • order ticket copies
  • copies of canceled checks, bank statements, and bank recons
  • originals of all written communications
  • list of discretionary accounts
  • copy of each POA
  • copy of each advisory agreement
  • copy of each notice, circular, ad, etc. sent to 2 or more customers
  • record of each securities transactions except for transactions in US gov’t securities
85
Q

Advertising is considered a communication sent to _____

A

more than one person

86
Q

If recommendation does not include a reason, a separate _____ must be retained documenting reasons for recommendation

A

a separate memo

87
Q

Customer accounts must be posted no later than _____ after the end of the _____ in which the trade occurs

A

10 business days after end of the quarter

88
Q

A _____ of electronic storage must be kept ______; cannot be _____

A

a copy must be kept at a separate location; cannot be erasable or rewritable

89
Q

Record keeping rules of the ______ must be kept by IAs with multiple locations (does NOT apply to _____)

A

record keeping requirements of the principal state of business - does NOT apply to BDs

90
Q

IAs that take custody of customer assets must keep records for _____ in the principal office of _____ and ____

A

5 years in the principal office of client purchase and sale history, current client securities positions

91
Q

Permanent records must be kept for _____ after firm is closed

A

3 years

92
Q

For revoking/suspending license, a hearing will be set down within ____ of written request

A

15 days

93
Q

Registration is not fully effective until _____ with no legal action

A

1 year

94
Q

Do unincorporated businesses and joint ventures count as “persons”?

A

YES

95
Q

Does a minor count as a “person”?

A

NO

96
Q

Is there a defined “issuer” for O&G programs?

A

NO

97
Q

The USA does or does not set min capital standards to be considered an institutional buyer?

A

DOES NOT - basically whoever the state admin decides is one

98
Q

If a BD meets the de minimus rules for a state, does that make them EXEMPT or EXCLUDED?

A

EXEMPT

99
Q

Can a BD also register as an IA?

A

YES, if they offer advisory products

100
Q

Are trusts EXCLUDED from the definition of an IA?

A

YES

101
Q

Are commodity futures considered to be securities?

A

NO

102
Q

If a BD buys out another BD, is there an additional filing fee?

A

NO (same goes for IAs)

103
Q

For material changes to a BDs registration forms, when must they notify the state?

A

PROMPTLY

104
Q

Is there a minimum experience standard for registration?

A

NO - you satisfy this by passing the exams

105
Q

Net capital requirements for BDs are set under the ______ act

A

1934 securities exchange act

106
Q

A group email or a research report are considered ______

A

sales literature

107
Q

Records that must be maintained in the principal office of a state-registered IA are _____ and _____

A

customer purchases and sales and customer securities positions

108
Q

If an agent withdraws their registration, it does not become effective until ____

A

30 days

Series 65 (10 decks)

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