A broker-dealer is participating in an initial public offering of a security that will be listed on
Nasdaq. Which of the following documents is the broker-dealer required to deliver to a
client who purchases the securities in the aftermarket immediately after the completion of
the offering?
A. A final prospectus.
B. A research report.
C. A list of all of the broker-dealers involved in the offering.
D. There's no requirement for additional documentation. - ANSWER A
A client who purchases securities as part of an offering must receive either a final prospectus
or a preliminary prospectus along with an additional document from the broker-dealer that
executes the transaction. The final prospectus must be provided for a certain period after
the completion of the offering (i.e., in the aftermarket). For an IPO, if the securities will be
immediately listed on the NYSE or Nasdaq, the aftermarket prospectus requirement lasts for
25 days. For an IPO of a security that will be quoted in an over-the-counter market (e.g., on
the Pink Open Market), the prospectus delivery requirement lasts for 90 days; however, it
only lasts for 40 days for a subsequent (follow-on) offering of these securities.
An agent opens a new account for a client and enters a market order to buy 200 shares of
XYZ. At the end of the day, the agent turns in a new account form and a copy of the order
ticket for approval by the supervisor. Under the Uniform Securities Act, which of the
following statements is TRUE?
A. Account approval is required prior to executing an order
B. This is normal business practice since trades do not need to be approved until the close of
business
C. The agent must obtain prior approval for every order
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,D. New clients must pay for their first transaction by the close of business - ANSWER A
Prior approval from a supervisor is not required for every order. However, a supervisor must
approve every new account before the first trade in that account is executed
Under the USA, which of the following transactions would NOT be considered exempt?
A. A transaction by an executor of an estate
B. A transaction by a trustee that is involved in a bankruptcy proceeding
C. An unsolicited issuer transaction effected through a registered broker-dealer
D. An offer to an investment company - ANSWER C
Under the Uniform Securities Act, any offer to an investment company or other institutional
investor, a transaction by an executor of an estate, or a trustee involved in a bankruptcy,
would be defined as an exempt transaction. An unsolicited nonissuer transaction may qualify
as an exempted transaction.
The members of NASAA include Administrators from:
I. All 50 states
II. The District of Columbia
III. Puerto Rico
IV. The U.S. Virgin Islands
A. I, II, III, and IV
B. I only
C. I and II only
D. I, II, and III only - ANSWER A
2
,The members of the North American Securities Administrators Association (NASAA) include
Administrators from all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico, and
the U.S. Virgin Islands.
An individual is dually registered with her broker-dealer as both an agent and IAR. Recently,
she moved and updated her legal name. Regarding the updating of the individual's uniform
forms, which of the following statements is TRUE?
A. Form U4 and Form ADV must be re-filed with the CRD and IARD within 30 days.
B. Form ADV Part II must be updated in the IARD at the fiscal year-end of the individual's
employer.
C. Form U5 must be updated in the CRD within 60 days.
D. Form U4 must be updated in the CRD and IARD within 30 days. - ANSWER D
Material changes to a registration (e.g., name change) must be updated promptly (i.e.,
within 30 days). Both agents and IARs register using Form U4; however, agents file with the
Central Registration Depository (CRD) and IARs file with the Investment Adviser Registration
Depository (IARD). Form ADV is used for the registration of an advisory firm, not its
employees. Form U5 is filed when a person leaves the industry and is no longer registered.
A Canadian broker-dealer has many clients who vacation frequently in the United States. In
order to continue doing business with these customers while they are in the United States,
the broker-dealer must file all the following material with the Administrator, EXCEPT:
A. Consent to Service of Process
B. Proof of membership in a self-regulatory organization
C. A Form B/D
D. A copy of current registration filed in Canada - ANSWER C
A Canadian broker-dealer may continue to do business with any clients in the United States
with whom it has a bona fide preexisting relationship and who are here temporarily—not
permanent residents of the United States. According to the Uniform Securities Act, the
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, broker-dealer must be registered properly in Canada and must file the following documents
with the Administrator: a Consent to Service of Process, a copy of the registration document
filed with its Canadian regulator at the provincial level, and proof that it is regulated by a
self-regulatory entity, such as an exchange.
The Canadian broker-dealer may act only in a limited capacity in the states. Generally, it
must restrict its activities to existing clients temporarily in the state and to certain
institutions.
According to the Uniform Securities Act, when does a broker-dealer's registration expire?
A. When the broker-dealer notifies the Administrator that it no longer has an office in the
state.
B. One year from the effective date.
C. When the Administrator declares it to be no longer effective.
D. On December 31. - ANSWER D
Under the Uniform Securities Act, all registrations of securities professionals expire annually
on December 31. Thereafter, they must be renewed by the firm. Only securities registrations
remain in effect for one year from the effective date.
A broker-dealer may need to file all of the following material with the Administrator, EXCEPT:
A. A form letter distributed to an adviser's current clients explaining the benefits of a
variable annuity
B. The sales literature for an issue that will be sold within the Administrator's state only
C. The marketing materials for a new issue of municipal bonds
D. The prospectus for an oil and gas limited partnership - ANSWER C
Generally, the Administrator may require the filing of "any prospectus, pamphlet, circular,
form letter, advertisement or other sales literature or advertising communication" intended
for distribution to investors or prospective investors. However, the Administrator may not
4
Nasdaq. Which of the following documents is the broker-dealer required to deliver to a
client who purchases the securities in the aftermarket immediately after the completion of
the offering?
A. A final prospectus.
B. A research report.
C. A list of all of the broker-dealers involved in the offering.
D. There's no requirement for additional documentation. - ANSWER A
A client who purchases securities as part of an offering must receive either a final prospectus
or a preliminary prospectus along with an additional document from the broker-dealer that
executes the transaction. The final prospectus must be provided for a certain period after
the completion of the offering (i.e., in the aftermarket). For an IPO, if the securities will be
immediately listed on the NYSE or Nasdaq, the aftermarket prospectus requirement lasts for
25 days. For an IPO of a security that will be quoted in an over-the-counter market (e.g., on
the Pink Open Market), the prospectus delivery requirement lasts for 90 days; however, it
only lasts for 40 days for a subsequent (follow-on) offering of these securities.
An agent opens a new account for a client and enters a market order to buy 200 shares of
XYZ. At the end of the day, the agent turns in a new account form and a copy of the order
ticket for approval by the supervisor. Under the Uniform Securities Act, which of the
following statements is TRUE?
A. Account approval is required prior to executing an order
B. This is normal business practice since trades do not need to be approved until the close of
business
C. The agent must obtain prior approval for every order
1
,D. New clients must pay for their first transaction by the close of business - ANSWER A
Prior approval from a supervisor is not required for every order. However, a supervisor must
approve every new account before the first trade in that account is executed
Under the USA, which of the following transactions would NOT be considered exempt?
A. A transaction by an executor of an estate
B. A transaction by a trustee that is involved in a bankruptcy proceeding
C. An unsolicited issuer transaction effected through a registered broker-dealer
D. An offer to an investment company - ANSWER C
Under the Uniform Securities Act, any offer to an investment company or other institutional
investor, a transaction by an executor of an estate, or a trustee involved in a bankruptcy,
would be defined as an exempt transaction. An unsolicited nonissuer transaction may qualify
as an exempted transaction.
The members of NASAA include Administrators from:
I. All 50 states
II. The District of Columbia
III. Puerto Rico
IV. The U.S. Virgin Islands
A. I, II, III, and IV
B. I only
C. I and II only
D. I, II, and III only - ANSWER A
2
,The members of the North American Securities Administrators Association (NASAA) include
Administrators from all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico, and
the U.S. Virgin Islands.
An individual is dually registered with her broker-dealer as both an agent and IAR. Recently,
she moved and updated her legal name. Regarding the updating of the individual's uniform
forms, which of the following statements is TRUE?
A. Form U4 and Form ADV must be re-filed with the CRD and IARD within 30 days.
B. Form ADV Part II must be updated in the IARD at the fiscal year-end of the individual's
employer.
C. Form U5 must be updated in the CRD within 60 days.
D. Form U4 must be updated in the CRD and IARD within 30 days. - ANSWER D
Material changes to a registration (e.g., name change) must be updated promptly (i.e.,
within 30 days). Both agents and IARs register using Form U4; however, agents file with the
Central Registration Depository (CRD) and IARs file with the Investment Adviser Registration
Depository (IARD). Form ADV is used for the registration of an advisory firm, not its
employees. Form U5 is filed when a person leaves the industry and is no longer registered.
A Canadian broker-dealer has many clients who vacation frequently in the United States. In
order to continue doing business with these customers while they are in the United States,
the broker-dealer must file all the following material with the Administrator, EXCEPT:
A. Consent to Service of Process
B. Proof of membership in a self-regulatory organization
C. A Form B/D
D. A copy of current registration filed in Canada - ANSWER C
A Canadian broker-dealer may continue to do business with any clients in the United States
with whom it has a bona fide preexisting relationship and who are here temporarily—not
permanent residents of the United States. According to the Uniform Securities Act, the
3
, broker-dealer must be registered properly in Canada and must file the following documents
with the Administrator: a Consent to Service of Process, a copy of the registration document
filed with its Canadian regulator at the provincial level, and proof that it is regulated by a
self-regulatory entity, such as an exchange.
The Canadian broker-dealer may act only in a limited capacity in the states. Generally, it
must restrict its activities to existing clients temporarily in the state and to certain
institutions.
According to the Uniform Securities Act, when does a broker-dealer's registration expire?
A. When the broker-dealer notifies the Administrator that it no longer has an office in the
state.
B. One year from the effective date.
C. When the Administrator declares it to be no longer effective.
D. On December 31. - ANSWER D
Under the Uniform Securities Act, all registrations of securities professionals expire annually
on December 31. Thereafter, they must be renewed by the firm. Only securities registrations
remain in effect for one year from the effective date.
A broker-dealer may need to file all of the following material with the Administrator, EXCEPT:
A. A form letter distributed to an adviser's current clients explaining the benefits of a
variable annuity
B. The sales literature for an issue that will be sold within the Administrator's state only
C. The marketing materials for a new issue of municipal bonds
D. The prospectus for an oil and gas limited partnership - ANSWER C
Generally, the Administrator may require the filing of "any prospectus, pamphlet, circular,
form letter, advertisement or other sales literature or advertising communication" intended
for distribution to investors or prospective investors. However, the Administrator may not
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