Series 65 Exam Prep Study Guide

These flashcards cover key concepts and terms relevant to the Series 65 Exam, offering definitions and important notes from the study guide.

Securities Act of 1933

Also known as the 'Paper Act', it requires full disclosure before the sale of new securities.

Securities Exchange Act of 1934

Known as the 'People Act', this law governs the trading of existing securities and created the SEC.

Howey Test

A test to determine if an investment is a security based on investment of money, in a common enterprise, with expectation of profit from efforts of others.

Issuer

Any person or entity issuing securities to the public.

Underwriter

Buys securities from the issuer with the intent to resell them, distinct from a retail broker.

Prospectus

An official disclosure document required for a public offering, which can include TV/radio ads.

Tombstone Ad

An announcement of an offering that does not constitute a prospectus and cannot be used to sell.

Cooling-Off Period

A minimum 20-day timeframe after registration is filed with the SEC where no sales or offers can occur.

Exempt Securities

Certain securities, including U.S. government and municipal securities, that do not require registration under the Securities Act of 1933.

Accredited Investor

An individual with an income of $200,000/year for the past two years or a net worth over $1 million, excluding their primary residence.

Liabilities under the Securities Act of 1933

Includes defenses such as due diligence and defines the statute of limitations for claims.

Administrator

State securities regulator who enforces blue-sky laws and has various powers including issuing cease and desist orders.

Agent

An individual who represents a broker-dealer or issuer in securities transactions.

Investment Adviser

A person or entity that provides advice about securities for compensation.

Discretionary Authority

The authority to make trades on behalf of a client without prior approval for each trade.

Custody Rules

Regulations specifying what constitutes custody of client assets, including holding cash or securities.

Fiduciary Duty

The obligation of an investment adviser to act in the best interests of their clients.

Prohibited Practices

Practices such as churning, unsuitable recommendations, and front-running that are not permissible under the law.