Series 63 - Ch. 1: Overview

what’s the main purpose of the Uniform Securities Act?

gives states a model for their blue sky laws

who regulates/enforces the Uniform Securities Act?

the state administrator

Who is responsible for updating the USA?

NASAA, North American Securities Administrator’s Association

National Securities Market Improvement Act (NSMIA) main purpose is to…

reduce duplication of federal and state regulation / preventing state laws from ever being MORE strict than federal laws

Also, what did NSMIA define?

Federally Covered Securities

Federally Covered Securities

nationally recognized. Exempt from state regulation under NSMIA

Federally Covered Advisors

advisors with significant amount of assets under management. Exempt from state regulation

what can a person be? (6)

1. individual

2. corporation

3. partnerships

4. Unincorporated organization

5. Government / gov subdivision

6. trusts (as a legal entity)

Who can never be a “person”? (3)

1. minors

2. decapitated/incompetent

3. deceased

what is a considered to be a “State”? (2)

1. States

2. Territories (DC, Puerto Rico, Guam, American Samoa, US Virgin Islands

a ___ executes transactions for commissions while a __ gives investment advice

BD, IA

who must a BD register with?

1. State admin

2. FINRA

3. SEC

who must an IA register with?

State admin OR SEC

when must an IA register with a state?

when they have an office OR 5+ retail clients

Agents/Registered reps must register with…

State admin and FINRA

IARs must register with…

state admin

ABC test - and who’s it for?

IAs

Advice

Business

Compensation

when does a BD get paid?

for conducting a transaction for commission

“effecting” securities transactions =

selling

A broker-dealer is:

A. A person that engages in offering investment advice for compensation

B. A person that regularly executes securities transactions for the accounts of others or for its own account

C. An individual who represents an issuer and is paid commissions for soliciting investors in a state

D. An individual who effects securities transactions on behalf of a brokerdealer and receives a markup or markdown as compensation

B

Lucy and Jim work for a newly formed company that’s in the process of conducting its initial public offering (IPO) of stock. Jim is a director and is currently soliciting commitments from public investors for which he will earn compensation based on the number of investors who agree to purchase the securities. Once the shares are publicly traded, part of the regular duties of Lucy, the Director of Human Resources, will be to administer a plan that permits company employees to purchase registered common shares of the company. Who’s required to register as an agent of the issuer?

 

 

A. Only Lucy

B. Only Jim

C. Both Lucy and Jim

D. Neither Lucy nor Jim

B

Things that an IAR does (4)

1. recommendations

2. manages portfolios/accounts

3. sales

4. supervises employees who do these things

Which of the following activities is NOT performed by a person who’s defined as an investment adviser representative?

A. Supervising other IARs

B. Providing investment advice regarding securities

C. Executing securities transactions on behalf of the adviser’s customers

D. Soliciting the sale of investment advisory services

C

A federal covered IA is required to register with the SEC under which federal law?

Investment Advisors Act of 1940

Which org is responsible for updating the USA?

NASAA

A non-clerical individual who represents an issuer in effecting securities transactions that involve the issuer's securities with the public is referred to as an:

Agent of an issuer

Which law’s purpose is to enact and enforce rules for trading in the secondary market?

Securities Exchange Act of 1934

Which law removed some duplication of regulations that applied to IA's and securities?

NSMIA of 1996

An individual who works for a corporation that sells other issuer's securities to investors is defined as a…

Agent of a BD

Which federal law was created to prevent fraud in the sale of new issues?

The Securities Act of 1933

Which law requires BDs to register with the SEC?

Securities Exchange Act of 1934

Which act was created to eliminate the duplication of state and federal regulation of financial markets and certain professionals

NSMIA of 1996

remember: USA is to provide a model for states, NSMIA removes duplication

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