Under the guidelines of the Bank Secrecy Act (BSA), the Treasury Department now requires broker-dealers to obtain and keep certain information relating to clients that make or receive funds transfers that involve
A. $3,000 or more.
B. $10,000 or more.
C. $5,000 or more.
D. $100,000 or more.
Trevor is currently a registered agent in the state of Connecticut where he has been employed by Connect and Company, a broker-dealer that is registered in Connecticut and has subsidiary operations in Massachusetts, New Jersey, and New York. Trevor has moved to Massachusetts and is now associated with one of Connect's subsidiaries, a broker-dealer registered in the state. Trevor has applied to the Administrator of Massachusetts for registration as an agent.
Can Trevor execute purchases and sales for clients while his registration is still pending?
A. No. Until he is informed by the Administrator of Massachusetts that his application has been accepted, Trevor may not affect any securities transactions in Massachusetts.
B. Yes. Because Trevor is a registered agent in another state and is affiliated with a broker- dealer that is registered in the state of Massachusetts, he is not restricted from executing trades.
C. Yes. Trevor can execute trades for new clients he solicits, but only for sixty days while his registration is pending.
D. It depends. Trevor can execute some purchases and sales, but only for clients that he already had who may have recently relocated to Massachusetts and only for sixty days while his registration is pending.
Which of the following is not one of the criteria for a security to be eligible for registration by notification?
A. The issuer must have preferred stockholders as well as common stockholders.
B. The issuer must have a net worth of $4 million, or its net income before tax for at least two of the
C. The issuer must never have defaulted on any bond or long-term lease obligation.
D. If the security to be issued is an equity interest in the firm, its offer price has to be at least $5 a
Under the Uniform Securities Act, which of the following does not need to be included when filing to register a security issue with the state?
A. a copy of the firm's articles of incorporation and bylaws, or the equivalent
B. copies of the underwriter agreements
C. a copy of any indenture applying to the security being registered
D. All of the above documents must be included when filing to register a security with the state.
It has come to the attention of the Administrator of the state that Samuel Shyster provided false information on his application to become a registered investment adviser with the state. Prior to revoking Samuel's license, the Administrator will provide Samuel with which of the following?
I. prior notice
II. an opportunity to fill out a new registration statement
III. an opportunity for a hearing
IV.
a written statement regarding the facts and the legal consequences
A.
I, II, III, and IV
B.
I, II, and III
C.
I, III, and IV
D.
I, II, and IV
Which of the following are accurate statements regarding the minimum financial requirements for investment advisers according to the NASAA Model Rules?
I. Any investment adviser who has discretionary authority over a client's assets, but who does not have actual custody of client funds or securities, is required to maintain a minimum net worth of $10,000 at all times.
II. An investment adviser who requires that a fee of more than $500 from his clients be paid six months or more in advance must maintain a positive net worth at all times.
III.
Only an investment adviser who has actual custody of client assets is subject to a minimum net worth requirement, which the NASAA Model Rules specifies is $10,000.
A.
I only
B.
I and II only
C.
II and III only
D.
III only
A broker-dealer cannot legally be
A. a partnership.
B. an individual.
C. a sole-proprietorship.
D. A broker-dealer can be any of the above.
Which of the following would not be found in a tombstone advertisement?
A. the price at which the security will be offered
B. the names of the underwriters
C. the name of the issuer
D. the interest rate and time to maturity of a bond issue
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.
Joe Treader is the owner of a small, state-registered investment advisory firm that is on the verge of becoming insolvent. One of his clients who has become like a mother to him is aware of his financial difficulties and has offered to sell off some of the assets that he manages for her and loan him the money to get him through this period of economic uncertainty until he is able to get on his feet again.
Can Joe take her up on her offer?
A. Yes. Based on the facts presented, it is an unsolicited offer and, as such, Joe can (and should) accept it.
B. Yes, but only if Joe draws up a formal loan agreement with a fair interest rate, based on the going market rates, stated in the agreement as well as a firm date for principal repayment.
C. No. As the client's investment adviser, he has a fiduciary relationship with the client. Entering a loan agreement with this client could lead to conflicts of interest.
D. Both A and B are true.
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