- The Administrator may by order deny, suspend, or revoke any registration of an agent, broker/dealer or investment adviser if he finds that it is in the public interest and that any of the following exist EXCEPT:
A. A willful violation of the Uniform Securities Act
B. Conviction, within the past 10 years, of any misdemeanor involving a security or a felony
C. The lack of experience
D. The filing of a misleading application for registration
2. Under the Uniform Securities Act, none of the following resident persons have to register as broker/dealers in this state EXCEPT:
A. Issuers
B. Investment advisers
C. B/Ds dealing only with issuers, other B/Ds, or financial institutions
D. Agents
3. If it is in the public interest, an Investment Adviser may be denied registration for all of the following reasons EXCEPT:
A. Conviction of a felony seven years ago
B. Failure to post a required surety bond or its equivalent in cash or securities
C. Conviction of a misdemeanor involving the securities business six years ago
D. Lack of experience
4. An investment adviser who has custody of client funds or securities shall maintain at all time either a surety bond or a minimum net worth of:
A. $35,000
B. $50,000
C. $10,000
D. $25,000
5. Under the Uniform Securities Act, newly issued stock of a company whose existing stock is already trading on the New York Stock Exchange:
A. Must be registered in all states where sales are made
B. Must be registered in the state of New York only
C. Need not be registered with the Securities and Exchange Commission (SEC)
D. Is exempt from registration in this state
6. All of the following would be considered to be violations of the NASAA Statement of Policy on Unethical Business Practices of broker/dealers and agents EXCEPT:
A. any contract with a customer for the purchase or sale of such security
B. Engaging in the practice of lending to or borrowing money or securities from a customer
C. Entering into a transaction with or for a customer at a price not reasonably related to the current market price of the security
D. Securing from a customer a properly executed margin agreement promptly after the initial transaction in the account
7. Under the Uniform Securities Act, if an agent, broker/dealer and adviser all conspire to defraud the public, which of the following are in violation:
A. The agent only
B. The broker/dealer only
C. The broker/dealer and the adviser
D. All three parties are in violation
8. Under the Uniform Securities Act, it is unlawful for a security to be sold in this state unless:
- It is registered with the Administrator
- It is exempt from registration
- It is sold in an exempt transaction
- It is registered with the SEC
A.1 only
B.1 and 2
C. 1, 2, and 3
D. 1, 2, 3, and 4
9. According to the NASAA Statement of Policy on Dishonest or Unethical Business Practices of broker/dealers and agents, when is the latest time a final prospectus must be furnished to a customer purchasing securities in an offering:
A. With the confirmation
B. On the settlement date
C. Prior to the sale
D. At the time of sale
10. Your customer lives in state X, but is visiting state Y. You are registered as an agent only in state X, but your broker/dealer is registered in states X and Z, but not state Y. While your customer is on vacation in state Y, you recommend that he buy a particular stock. Your actions are:
A. Lawful
B. Unlawful, since neither you nor your broker/dealer are registered in state Y
C. A violation of law only in state Y
D. A violation of law only in state X
11. Under the Uniform Securities Act, all of the following may be considered to be securities EXCEPT:
A. The sale of condominiums with mandatory rental pool participation
B. Endowment contracts
C. Pre-organization certificates
D. Interests in oil and gas drilling programs
12. An agent represents a broker/dealer firm registered only in state ‘A’. In order for the agent to sell securities to residents of state ‘B’:
A. Both the agent and his broker/dealer would have to register in state ‘B’
B. Neither the agent or broker/dealer would have to register in state ‘B’ as long as the securities or transactions are exempt
C. The agent would have to register in state ‘B’
D. The agent’s broker/dealer would have to register in state ‘B’
13. Under the Uniform Securities Act, sharing profits in a joint account with your customer is:
- A prohibited practice
- Permitted with the written consent of client
- Permitted if proportionate to the funds you invested
- Permitted with the written consent of your broker/dealer
A. 3 only
B. 2, 3, and 4
C. 1 only
D. 2 and 4
14. You work as an agent for broker/dealer firm ‘A’, but you would like to engage in a securities transaction on behalf of broker/dealer firm ‘B’ without recording the transaction on the regular books and records of firm ‘A’. Under the Statement of Policy, this transaction:
A. Is permitted as long as it was unsolicited
B. Is not permitted
C. Is permitted if authorized in writing by broker/dealer firm ‘A’ prior to execution
D. Is not permitted unless the transaction is exempt
15. Under the Uniform Securities Act, all of the following are prohibited practices EXCEPT:
A. Soliciting orders for unregistered non-exempt securities
B. Exercising discretionary authority in a customer’s account
C. Representing that the Administrator approves your abilities
D. Guaranteeing customers a profit, a specific result or guaranteeing against losses
16. The Administrator may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of any securities registration statement if the order is in the public interest, and that any of the following exist EXCEPT:
A. The offering is being made on terms which are unfair or inequitable
B. The offering would operate as a fraud on purchasers
C. The offering has not been registered with the SEC
D. The offering would be made with unreasonable underwriter’s compensation
17. Under the Uniform Securities Act, all of the following are true about the offer or sale of pre-organization certificates in an exempt transaction EXCEPT:
A. No money may be accepted from a subscriber
B. They are considered to be private placements
C. The number of subscribers may not exceed ten
D. No commissions may be paid for their solicitation
18. Under the Uniform Securities Act, all of the following would be considered to be unsuitable recommendations EXCEPT:
A. Failing to sufficiently describe the important risks concerning a transaction
B. Recommending transactions without regard to a customer’s investment objectives
C. Inducing transactions which are excessive in view of the customer’s resources
D. Making recommendations on the basis of material inside information which has not been made public
19. Which of the following is a valid reason for the Administrator to issue a stop order concerning the registration of a new security in this state by qualification:
A. Lack of prior corporate earnings
B. The stock does not trade on a recognized securities exchange
C. The issuer has not coordinated registration with the SEC
D. Undisclosed prior bankruptcy of a corporate officer
20. Under the Uniform Securities Act, which of the following is considered to be a non-exempt security:
A. Securities issued by non-profit or charitable organizations
B. Securities issued by issuers whose stock already trades on the NASDAQ National Market System
C. Securities issued or guaranteed by a U.S. bank
D. Variable products issued by a U.S. based insurance company
21. Under the Uniform Securities Act, the anti-fraud rules apply to:
A. The sale of non-exempt securities
B. The sale of exempt securities
C. The sale of securities in an exempt transaction
D. All of the above
22. Under the Uniform Securities Act, all of the following are prohibited practices EXCEPT:
A. Commingling customers’ funds with the agent’s own funds
B. Deliberately failing to follow a customer’s instructions
C. Sharing in profits and losses in customer accounts
D. Borrowing money or securities from a customer
23. An agent cold calling from Arizona to Florida happens to reach a New York resident staying at a Miami hotel. If the agent engages in a prohibited practice relating to this solicitation, which states have jurisdiction:
A. Arizona, Florida and New York
B. Arizona and Florida
C. Arizona only
D. Florida Only
24. The Administrator could make an order to revoke the exemptions for all of the following EXCEPT:
A. Securities issued by non-profit religious or charitable organizations
B. Municipal bonds issued by the state
C. New securities of issuers whose existing stock already trades on the American stock exchange
D. New securities being offered in a private placement
25. A wealthy client has an investment objective of “income”. Since you have discretionary authority over this account, you elect to purchase $25,000 worth of non-interest-bearing bonds on behalf of the client. You may be guilty of:
A. Making an unsuitable trade
B. Making an unauthorized trade
C. Effecting transactions without the customer’s authority to do so
D. Deliberately failing to follow a customer’s instructions
26. Under the Uniform Securities Act, if a corporation sells securities advice for a fee plus sells securities for a commission, it must register as:
A. A broker/dealer
B. An agent and an investment adviser representative
C. An investment adviser
D. Both a broker/dealer and an investment adviser
27. Under the Uniform Securities Act, what is the definition of a ‘non-issuer’ transaction:
A. All the proceeds benefit the issuer
B. The transaction does not benefit the issuer
C. All transactions are made by the issuer
D. Transactions are made in the primary market
28. Under the Uniform Securities Act, mixing customers’ funds with the agent’s own funds is a prohibited practice known as:
A. Commingling
B. Churning
C. Inter-positioning
D. Discretion
29. If John, a welder, sells his IBM stock directly to his brother Jim, who is a teacher, all of the following are true EXCEPT:
A. This is known as an isolated non-issuer transaction
B. John in making an offer to sell, so would have to register as an agent
C. This is an exempt transaction
D. Both brothers are exempt from registration as an agent
30. Under the Uniform Securities Act, all of the following are prohibited EXCEPT:
A. Soliciting orders for registered non-exempt securities
B. Failing to bring a customer’s written complaint to the attention of your broker/dealer
C. Failure to describe the important risks concerning the transaction
D. Promising to perform certain services for a customer without being qualified to do so
31. A husband calls you and states that his wife cannot afford to pay for a recent stock trade she made with you. He wants you to sell the stock before it settles. What can you do:
A. Cancel the trade entirely
B. Loan her enough money to cover the transaction
C. Nothing, since you cannot take orders from anyone other than your customer
D. Sell the stock and use the proceeds to cover the purchase price
32. Under the Uniform Securities Act, a promissory note is exempt from registration if it:
- Has 9 months or less to maturity
- Is in denominations of at least $50,000
- Is issued by a federally chartered bank
- Receives a rating in one of the 3 highest rating categories
A. 1, 2, and 4
B. 1, 2, 3, and 4
C. 1 only
D. 2 and 4
33. When a broker/dealer firm advises a customer that they can purchase a security for the customer ‘at the market’, this means that:
A. The firm controls the market in that security
B. The firm is the only market maker in that security
C. The security is being sold in the primary market
D. There are other market makers besides the firm in that security
34. Under the Uniform Securities Act, ‘non-exempt’ securities:
A. Are exempt from the advertising filing requirements
B. Must be registered in this state
C. Are exempt from the anti-fraud rules
D. Must be registered with the Securities and Exchange Commission (SEC)
35. Under the Uniform Securities Act, an investment adviser who is not a resident of this state does not have to register here if during any period of 12 consecutive months he does not direct business communications to the public in this state in any manner to more than _______ clients:
A. Six
B. Ten
C. Three
D. Five
36. Under the Uniform Securities Act, if you sell securities on behalf of a bank holding company for a commission, you must register as a:
A. Agent
B. Issuer
C. None of the above
D. Broker/dealer
37. Under the Uniform Securities Act, all of the following are true about unsolicited non-issuer transactions EXCEPT:
A. The customer must sign a form acknowledging such sale was unsolicited
B. They are subject to the anti-fraud requirements of the Act
C. They are considered to be exempt transactions
D. They are considered to be exempt securities
38. Under the Uniform Securities Act, which of the following is not a prohibited agent activity:
A. Making a trade based on a rumor, as long as the rumor is disclosed to the client
B. Make a trade based on information provided by a corporate officer before such information has been made public
C. Advising a customer to sell the stock you sold him because it might go down in value, when in fact it already down 3 points
D. Selling a client a registered non-exempt security
39. Under the Uniform Securities Act, an agent may transact securities on behalf of:
A. Two broker/dealers
B. Only one broker/dealer
C. An unlimited number of broker/dealers
D. Two broker/dealers, as long as they sell different types of securities
40. An agent of a broker/dealer sells securities directly to an investment company. Which of the following is true:
A. The securities sold are exempt from registration
B. The broker/dealer is exempt from registration
C. This is an exempt transaction
D. The agent is exempt from registration
41. Under the Uniform Securities Act, a gift of assessable stock is considered to be:
A. An offer
B. A sale
C. An offer and a sale
D. Neither an offer or a sale
42. Under the Uniform Securities Act, the Administrator may do all of the following EXCEPT:
A. Conduct examinations of records both within and without this state
B. Issue stop orders suspending or denying a securities registration
C. Administer federal securities laws for the protection of customers in this state
D. Issue subpoenas compelling persons to testify and/or produce records
43. If an investment advisory firm is reorganized, the successor firm may be registered for the unexpired term of the original firm. The successor firm must pay a fee of:
A. A pro rata amount for the time remaining
B. One half of the annual fee
C. The full annual fee
D. No fee is due
44. A resident of Minnesota reads an offer to sell securities in the New York Times while his connecting flight is delayed at the airport in Chicago. If this offer is fraudulent, which states have jurisdiction:
A. Minnesota only
B. New York only
C. Illinois and Minnesota
D. Illinois, Minnesota and New York
45. Under the Uniform Securities Act, an issuer who has been in business at least 36 months and has net pre-tax income from operations for at least 2 of the 3 preceding fiscal years may register their new securities for sale in this state by:
A. Justification
B. Coordination
C. Filing
D. Qualification
46. If an agent declines to offer a security for sale to a customer, but instead offers to buy the security from the customer the agent has:
A. Made a sale
B. Made an offer
C. Made a purchase
D. Has not made an offer
47. Under the Uniform Securities Act, securities issued by all of the following are exempt from registration EXCEPT:
A. State chartered and/or national banks
B. Recognized foreign governments
C. Credit unions
D. Corporations listed on the Montreal, Canada stock exchange
48. Under the Uniform Securities Act, the term ‘investment adviser’ includes which of the following persons:
A. Investment adviser representative (IAR)
B. Financial planners
C. Federal covered advisers
D. Publishers of bona fide financial publications of general and regular circulation
49. You sold 1,000 shares of stock to the treasurer of a small corporation last week. He calls you today and tells you that he will lose his job unless you can resell the stock for at least break even. What can you do:
A. Guarantee that the stock will not go below break even
B. Guarantee that the stock will be profitable in the long run
C. Sell the stock at its current market price
D. Tell him you will make up the loss if the stock goes down
50. Under the Uniform Securities Act, all of the following are considered to involve an “offer” or “sale” EXCEPT:
A. A stock dividend if nothing of value is given by the stockholder
B. A security given as a bonus with any purchase of another security
C. A gift of assessable stock
D. A warrant or right to subscribe to another security of the same issuer
51. Under the Uniform Securities Act, the Administrator may do all of the following EXCEPT:
A. Refer possible criminal violations to the district attorney or attorney general for prosecution
B. Permit civil lawsuits to be filed within 3 years of the sale, or 2 years of the discovery of the violation, whichever occurs first
C. Issue a cease and desist order only after a hearing, directing any person to cease and desist from any further illegal activity
D. Require the filing of all sales literature and advertising, unless the security or transaction is exempt
52. Under the Uniform Securities Act, all of the following would be considered to be misleading or untrue statements EXCEPT:
A. Advising a customer that a security registered with the Administrator is not approved
B. Inaccurate market quotations
C. Telling customers that exchange listing of a security is pending, without knowing that to be true
D. Inaccurate statements as to the amount of commission to be charged
53. Under the Uniform Securities Act, if there is no rule against it, an investment advisor who has custody of client funds or securities must:
A. Do nothing, since there is no rule against it
B. Notify the Administrator that they have custody
C. Invest such funds or securities in a diversified manner
D. Have written discretionary authority over the account
54. Under the Uniform Securities Act, registration as an agent, broker/dealer or investment adviser becomes effective:
A. At noon on the 30th day, or sooner at the discretion of the Administrator
B. Simultaneously with registration with the SEC
C. Immediately upon passing the required examination
D. At the discretion of the Administrator
55. Under the Uniform Securities Act, when does the registration of a security registered by qualification become effective:
A. The same day that it is filed
B. No later than 30 days after filing, unless a stop order has been issued
C. Whenever the Administrator so orders
D. Simultaneously with the SEC registration
56. Under the Uniform Securities Act, a person employed by an investment adviser who renders advice regarding securities, manages client portfolios, solicits advisory services or supervises employees who perform any of the foregoing would have to register as an:
A. Agent
B. Investment adviser
C. Broker/dealer
D. Investment adviser representative
57. Under the Uniform Securities Act, if a broker/dealer accepts an order from an unregistered agent, which of the following are true:
A. No violation has occurred if the security is also unregistered
B. No violation has occurred if the security is exempt
C. The unregistered agent is in violation, but the B/D is not
D. Both the broker/dealer and the agent are in violation of the USA
58. All of the following would be violations of the NASAA Statement of Policy on Dishonest or Unethical Business Practices of broker/dealers and agents EXCEPT:
A. Executing a transaction on behalf of a customer without authorization to do so
B. Exercising discretionary power for a customer’s account relating to the amount and/or type of security purchased without first obtaining written discretionary authority from the customer
C. Executing any transaction in a margin account without securing from the customer a properly executed written margin agreement promptly after the initial transaction in the account
D. Failing to furnish to a customer purchasing securities in an offering, at or prior to the time of sale, a final prospectus
59. A person who offers or sells a security in violation of the Uniform Securities Act may be civilly liable to the person purchasing such security for all of the following EXCEPT:
A. Interest from the date of purchase, less any income the purchaser received
B. The consideration the purchaser paid for the security
C. Attorney fees
D. Imprisonment and/or fines for each violation
60. All of the following would be considered to be market manipulation EXCEPT:
A. Commingling a customer’s fully paid securities with those owned by the broker/dealer firm
B. Effecting transactions in a security that involves no change in beneficial ownership
C. Entering orders for the purchase or sale of any security for the purpose of creating a false or misleading appearance of active trading
D. Effecting transactions in a security for the purpose of raising or depressing the price so as to induce the purchase or sale of such security by others