DEFINITIONS (Chapter 1)
This term describes any individual or legal entity under the Uniform Securities Act.
What is a person?
This registration expires annually on December 31 under the USA.
What is agent registration?
This registration method coordinates state registration with the SEC.
What is registration by coordination?
This legal standard applies to all securities and transactions.
What is antifraud?
This NASAA rule prohibits dishonest or unethical business practices by advisers.
What is the NASAA Model Rule on Unethical Business Practices?
Which of the following is NOT a security under the USA?
A. Variable annuity
B. Certificate of interest in oil and gas
C. Fixed annuity
D. Investment contract
What is a fixed annuity?
A broker-dealer registration becomes effective automatically after:
A. 7 days
B. 15 days
C. 30 days
D. Upon approval
What is 30 days?
Which offering requires registration by qualification?
A. NYSE IPO
B. Mutual fund
C. Intrastate corporate offering
D. Federal covered security
What is an intrastate corporate offering?
Which is NOT fraud under the USA?
A. Omission of material fact
B. False statement
C. Failure to recommend
D. Scheme to defraud
What is failure to recommend?
Which activity is prohibited for an investment adviser under NASAA rules?
A. Borrowing from a client without disclosure
B. Lending to a client with written agreement
C. Selling securities at market price
D. Charging performance-based fees
What is borrowing from a client without disclosure?
This individual gives advice about securities for compensation as a business.
What is an investment adviser?
This method registers securities when there is no SEC filing.
What is registration by qualification?
This registration does NOT imply approval or endorsement.
What is state registration?
This order may immediately halt illegal activity.
What is a cease-and-desist order?
This NASAA rule requires advisers to adopt written supervisory procedures.
What is the compliance and supervision requirement?
Which professional is excluded from the definition of an investment adviser when advice is incidental?
A. Lawyer
B. Accountant
C. Engineer
D. All of the above
What is all of the above?
Which registration automatically covers partners, officers, and directors?
A. Agent
B. Broker-dealer
C. Security
D. IAR
What is broker-dealer registration?
Once effective, a registration statement may generally be amended only to change:
A. Management
B. Business model
C. Offering amount
D. Risk disclosures
What is the offering amount?
Which exemption may be revoked by rule or order?
A. None
B. All
C. Certain exemptions
D. Federal exemptions
What are certain exemptions?
Which of the following would MOST LIKELY be considered unethical conduct?
A. Advertising performance without net-of-fee disclosure
B. Maintaining required books and records
C. Disclosing conflicts in writing
D. Using a compliant brochure
What is advertising performance without net-of-fee disclosure?
This type of stock gift is treated as a sale because the donor avoids future liability.
What is assessable stock?
This filing allows states to assert jurisdiction over an adviser.
What is a Consent to Service of Process?
This method applies to federal covered securities.
What is notice filing?
This does NOT remove antifraud liability.
What is an exemption?
This NASAA rule addresses safeguarding client data and privacy.
What is the Information Security and Privacy Rule?
Which security is federally covered?
A. Intrastate municipal bond
B. NASDAQ-listed stock
C. Nonprofit corporate bond
D. Guaranteed subsidiary bond
What is a NASDAQ-listed stock?
An IAR must be registered in a state if they have more than how many retail clients in 12 months?
A. 3
B. 5
C. 6
D. 10
What is 5?
Which security is NOT exempt?
A. Common carrier bonds
B. Bank debentures
C. OTC equity options
D. U.S. Treasuries
What are OTC equity options?
Which transaction is NOT exempt?
A. Fiduciary transaction
B. Isolated non-issuer transaction
C. Private placement to 10 persons
D. Blank-check resale
What is a blank-check resale?
Under NASAA rules, custody of client funds requires:
A. Annual audited financials
B. Written client consent only
C. Surprise examination
D. SEC registration
What is a surprise examination?
This adviser is registered with the SEC and therefore exempt from state registration.
What is a Federal Covered Adviser?
This standard requires notification to the Administrator when employment ends.
What is promptly?
This registration method is most burdensome at the state level.
What is registration by qualification?
This party may take administrative action in the public interest.
What is the Administrator?
This plan is required to address death, disability, or incapacity of an adviser.
What is a business continuity and succession plan?
An offer is considered made in a state if it:
A. Originates there
B. Is directed there
C. Is accepted there
D. All of the above
What is all of the above?
Which person is NOT required to register as an IAR?
A. Solicitor for advisory fees
B. Portfolio manager
C. Clerical employee
D. Supervisor of IARs
What is a clerical employee?
Registration assures legality of sale but not:
A. Disclosure
B. Accuracy
C. Filing
D. Delivery
What is accuracy?
Which situation does NOT justify administrative action?
A. Insolvent firm
B. Material omission
C. Minority shareholder with no control
D. President with violations
What is a minority shareholder with no control?
Which practice is PERMITTED under NASAA?
A. Sharing in client profits without disclosure
B. Performance advertising with proper disclosures
C. Borrowing client funds informally
D. Recommending unsuitable securities
What is performance advertising with proper disclosures?
This security is excluded from the definition of a security and therefore advice on it does not require registration.
What is a fixed annuity?
This filing is required of Federal Covered Advisers instead of registration.
What is a notice filing?
This party may require prospectus delivery but may not guarantee truthfulness.
What is the Administrator?
This type of exemption never eliminates fraud liability.
What is any exemption?
This NASAA rule applies specifically to broker-dealers and agents regarding lending.
What is the borrowing and lending restriction rule?
This four-part test determines whether an arrangement is an investment contract.
What is the Howey Test?
This factor alone does NOT trigger state IA registration.
What is having fewer than 6 retail clients and no place of business?
This is the only post-effective amendment generally permitted under the USA.
What is an increase or decrease in the amount offered?
This phrase best summarizes antifraud under the USA.
What is “exempt does not mean immune”?
This phrase best summarizes NASAA’s ethical standard.
What is acting in the client’s best interest?