Term
| What are Federal Covered Advisor AUM guidelines. |
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Definition
| $100M may; $110M must; fall below $90M must withdraw. |
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Term
| What are "limited registration" requirements for canadian BD and Agents? |
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Definition
| 1. application with appropriate Canadian authority; 2. filing of a consent to service of process; 3. registration in good standing; 4. must be a member of a SRO or Canadian stock exchange. Renewal applications must be filed annually by December 1 (note NOT 31st). |
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Term
| What exemptions may an administrator revoke or deny by order: |
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Definition
| 1. exempt transactions; 2. exchange listed securities; 3. non-profit org issues; 4. employee benefit plans issued by investment contracts. |
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Term
| Satisfying State Registration through Notice Filing. |
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Definition
| 1. Filing or notice filing: in biz 36 months; must have 500 or more persons holding security; net worth of $4M or net worth of $2M and net pre-tax income for 2 of three previous fiscal years. |
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Term
| What are some exempt transactions? |
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Definition
1. Isolated non-issuer transactions (any secondary market trade)
2.
3. |
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Term
| Pre-organization subscription transactions must have what characteristics in order to be qualified as exempt? |
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Definition
1. no commissions
2. 10 or less subscribers
Payments made after security is registered
3. advertising is ok |
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Term
| What are some exempt transactions? |
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Definition
1. Non-issuer transactions that are unsolicited;
2. Fiduciary transactions
3. Bonda fide pledges
4. Transactions with financial institutions - likeBD purchasing stock for its own account
5. Private placements sold to not more than 10 persons other than institutional investors during a 12 month period.
6. mortgage bond transactions organized as a unit
7. Pre-organization subscription transactions used by fledgling companies intending to incorporate in order to acquire more capital.
8. Rights and warrants if no commission is paid |
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Term
| Non-issuer transactions by a registered agent at registered broker-dealer may be exempt if the issuer of the security being traded is engaged in business and IS NOT: |
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Definition
1. Not blank check, blind pool or shell company
2. in the organizational state
3. in bankruptcy or receivorship
4. The security is senior in rank to the common stock of issuer and has been oustanding for three years without default. |
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Term
| It is unlawful to sell a security unless: |
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Definition
| 1. Security is registered; 2. exempt; or, federally covered. Does NOT require coordination with FINRA, MSRB, or NASAA. |
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Term
| What is the threshold for a private fund no longer being private and being subject to the SEC Act of 1934 reporting requirements? |
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Definition
| 500 or more investors and more than $10m in assets. |
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Term
| When a Broker Dealer or Investment Advisory Firm initially files, how long is it active? |
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Definition
| Active for the remainder of the year until Dec. 31st, then renewed annually (not necessarly by Dec. 31). AGENTS must renew by Dec. 31 each year. |
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Term
| Satisfying State Registration through notice if federally covered. |
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Definition
| Administrator may require signed consent to service of process; fees; federal docs prio to initial filing; value report; fees. Example: Mutual funds or Reg A+ |
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Term
| Explain AGENT surety bond and other related requirements when they have discretion or custody over client accounts. |
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Definition
| Agents with discretionary authority may be required to surety bonding; qualification exams; and agents are NOT subject to minimum capital requirements. |
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Term
| If a transaction or security is not exempt, where does it have to register? |
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Definition
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Term
| Final prospectus mus be received by purchaser when? |
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Definition
| At time of purchase but no later. |
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Term
| What is automatic registration of certain personnel? |
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Definition
| Auto registrations occur for partners, officers, directors of similar functions - but they may still have to qualify and take tests because firm statements already contain qualification and business histories of these executives. |
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Term
| Who is excluded from federal covered advisor registration requirement? |
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Definition
| Bank and bank holding companies; LATE; Ias who give advice in US Gov Securities only; publishers of general advice |
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Term
| What type of banking companies are not exampt according to USA? |
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Definition
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Term
| Explain BD surety bond and other related requirements when they have discretion or custody over client accounts. |
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Definition
| BDs may have to have: minimum capital requirements subject to limits of 1934 ACT; may have to have a surety bond as requested by state administrator; may be subject to examination fo books; however, NO state can set rules in excess of SEC requirements per the 1934 ACT. They have to mirror the act. |
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Term
| True or false: a fixed annuity is not subject of anti-fraud provisions. |
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Definition
| Believe it or not true because it's not a security. |
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Term
| Who has to report if you are terminated. |
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Definition
| Both BD and you the agent. |
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Term
| Agents of BDs must renew their registrations when? |
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Definition
| By Dec. 31 of each year. Broker-Dealers must renew annually |
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Term
| Do corporate bonds have to register? |
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Definition
| Corporate bonds would be required to register if the corporation is not qualified for an exemption. |
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Term
| If an IA acts as a broker dealer and an investment advisor, what must it do? |
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Definition
| Disclose to client that it is acting in both capacities. |
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Term
| When is it ok for a Canadian BD or Agent to sell a security to a client in the US |
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Definition
| Either vacationing or only have a self-directed tax advantaged plan in canada. |
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Term
| Explain basic exemption limitations and what they are exempt from. |
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Definition
| Exempt securities and transactions are only exempt from registration requirements and filing of advertising and sales literature, NOT anti-fraud provisions. |
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Term
| True or False? Federal covered advisors are not subject to the requirements of the Investment Advisers Act of 1940. |
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Definition
| False. Federal covered advisors are subject to the requirements of the Investment Advisers Act of 1940. |
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Term
| Explain limited registration of Canadian BDs and Agents. |
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Definition
| File application with Canadian authority; file of a consent to service of process. Registration in good standing; must be members of an SRO or exchange in Canada. Renewal apps must be filed annually by Dec. 1. |
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Term
| When a BD or IA firm first files how long is it active? |
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Definition
| For the remainder of the year until Dec. 31 then renewed annually. |
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Term
| What fund issuers are excluded from the definition of an investment company under Dodd Frank and don't have to register with the SEC and are exempt from reporting under SEC act of 34? |
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Definition
HPV!!!
1. Hedge funds
2. Private equity funds
3. Venture Capital funds |
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Term
| Who has minium capital requirements when registering when you have custody and discretion and who does not? |
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Definition
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Term
| What is excluded from definition of an Investment Advisory firm? |
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Definition
| IARs; Banks Banks Banks Banks; Savings; Trust Companies; Investment Companies even if they charge an advisory fee for their services. |
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Term
| When does a federal-covered advisor have to file notice with a state? |
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Definition
| If a federal covered advisor has 6 or more clients in a state they would file a notice filing. |
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Term
| When are publishers excluded? |
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Definition
| If advice is general about securities and it does not respond to specific questions from readers. |
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Term
| It is unlawful to transact business in a state for an IA or IAR unless…. |
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Definition
| If it has no place of business in state and all clients are institutional; or, IA or IAR does not direct any business communications in a state (including advertising) to no more than five retail clients. If you get to six retail clients -- you will have to register. Remember institutional investors and officers of the investment advisor are not included in the count when determining if the IA has six or more clients. (unless you are a federally covered - then just notice) |
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Term
| Satisfying State Registration through coordination. |
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Definition
| If registration statement filed and pending with SEC. Duplicate copies of registration are filed with states. |
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Term
| When is registration required for interest in limited partnerships/intrastate offerings? |
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Definition
| If there are more than 10 investors. |
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Term
| When would BDs and Agents be excluded? |
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Definition
| If they are only getting commissions and getting no extra compensation. |
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Term
| These professions are generally excluded.Hint: LATE. |
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Definition
| Lawyers, Accountants, Teachers, Engineers. |
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Term
| What are bonding requirements for IARs? |
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Definition
| Left to state administrator discretion, including the amount. Administrator may prohibit custody of funds. IARs have no minimum capital requirements. |
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Term
| Can a Canadian BD transact business for a client who is visiting the US? |
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Definition
| May engage in a transaction as long as the client relationship was established prior to being in the USA. |
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Term
| Do minimum captial requirements apply to both individual and firm? |
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Definition
| Minimum capital requirements apply to firms not individuals. |
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Term
| Explain rules that IAs with discretion or custody have. |
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Definition
| Minimum capital requirements; surety bonds; examination of books. |
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Term
| Can private funds advertise? |
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Definition
| No, but they can direct market to potential investors. |
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Term
| Can an agent lawfully offer to sell securities that are pending in an underwriting. |
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Definition
| No. Only if effective. Not if pending. |
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Term
| When an IAR terminates who reports and when. |
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Definition
| Promptly and depends on type of firm. If state, IA must notifiy; if federal covered, the IAR is responsible. |
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Term
| When do you report changes of material fact and to whom? |
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Definition
| Promptly to the administrator. |
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Term
| What does IAR NOT include? |
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Definition
| Provide advice on fixed securities or fixed life - these are not considered securities. |
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Term
| What are characteristics of an IAR? |
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Definition
| Provides advice; solicits business. Casey. Especially since he supervises us. |
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Term
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Definition
| Remember, agents and IARs are not subject to custody req. |
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Term
| What form is completed when an Agent or IAR is terminated? |
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Definition
| Termination of agents and IARs is reporte on form U-5. |
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Term
| Changes of material fact (i.e., company address, ownership, registrations, etc.) are reported to whom? |
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Definition
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Term
| What kind of securities does a buyer of securities in a private placement receive? |
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Definition
| Those would be unregistered securities. |
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Term
| Can a Canadian BD transact business for a client who has relocated to the US? |
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Definition
| Transactions are limited to those in a self-directed retirement plan in Canada. |
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Term
| Registration does not mean approval or qualification. |
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Definition
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Term
| What form do you report terminations? |
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Definition
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Term
| How does the exclusion list for IAs differ from the USA exclusion list? |
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Definition
| Under USA, an advisor must regsiter to give advice on US gov securities; under the Act of 40, you do not need to be registered and can be excluded from the definition. |
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Term
| How many clients will a BD have to have before a BD or agent of a BD has to register? |
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Definition
| Unlike IARs, BDs must register if they have even just one client in a state. There is no threshold. If you have a single client in a state as a BD you have to register. |
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Term
| You must know this list of exempt securities under USA. What are they? |
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Definition
| US Government securities and agency issues; municipal securities; general or revenue bonds; securities guaranteed by Canadian government (but not Canadian companies including insurance companies); securities issued by US Banks/Trust; federal savings and loan; credit unions; insurance companies; stock exchange listed in United States; promissory notes; non-profit issues; public utility companies; common carrier - like railroad; investment contracts; |
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Term
| What does the USA say about IARs regarding bonding requirements? |
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Definition
| USA is silent - left to state administrator |
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Term
| Satisfying State Registration through qualification. |
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Definition
| Used for new issues that will be state only and not federal. Must file registration and may be required to create prospectus. Becomes effective when administrator approved. |
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Term
| When an agent terminates, who is responsible for notification? |
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Definition
| When an agent begins or terminates employment. Both the agent and BD are responsible for notification. |
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Term
| When an IAR terminates, who is reponsible? |
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Definition
| When an IAR begins or terminates: If state IA, the IA is responsible; if a federal registered IA, then the IAR is responsible. |
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Term
| Whend does a coorinated registration become effective? |
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Definition
| When the federal becomes effective. |
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Term
| How long must surety bonds be kept in force? |
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Definition
| While in business and three years thereafter. |
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Term
| What are senior securities and can they be considered exempt? |
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Definition
| Yes - secured bonds, whether convertible or not; unsecured bonds; debentures; preferred stock. This is because the companies that are issuing them are already listed on exchange or NASDAQ. Issuers may be required to do a notice filing. |
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Term
| What is a promissory note and are they exempt from registration. |
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Definition
| Yes they are exempt. Commercial paper or bills if over $50k - they are an obligation to pay cash within 9 months and must be rated top three by a nationally recognized organization. Any bank can issue, and any corporation can issue, not just a federal bank. |
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Term
| Are federal covered advisors excluded? |
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Definition
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Term
| Are employee benefit plans excluded? |
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Definition
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Term
| What can you amend in a registration? |
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Definition
| You can only change the amount of securities being sold - but not price or compensation price. |
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