Which of the following statements is TRUE concerning the posting of bonds by a broker-
dealer?
A. There is no bond requirement if the broker-dealer does not have custody or discretionary
authority
B. There is no bond requirement if the broker-dealer is registered in another state
C. The bond may be waived if the broker-dealer has been in business for at least 10 years
D. The Administrator may not waive the bond requirement for any broker-dealer -
ANSWER A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
Not every broker-dealer maintains custody of client assets. Some, for example, employ
clearing firms to take care of this responsibility.
The Administrator may require broker-dealers to post bonds if they have custody of, or
discretionary authority over, client funds or securities.
The bond is waived if the broker-dealer's net capital exceeds a specified amount. The
Administrator may determine this amount. (75577)
A company is conducting an IPO. Its shares will be listed on Nasdaq. For how long does a
broker-dealer that is part of the selling group need to make the prospectus available to
investors?
A. 25 days
B. 10 days
1
,C. 90 days
D. 40 days - ANSWER A. 25 days
All investors who purchase new issues must receive prospectuses, which may be made
available electronically. This obligation to provide a prospectus continues for 25 days after
the effective date for securities that will be listed on a national exchange or Nasdaq, which is
the situation described in the question.
A firm that sells a new issue in the aftermarket shortly after it begins trading may also be
required to give prospectuses to its customers.
For secondary offerings of securities that will trade over-the-counter (securities that are not
eligible to be listed on Nasdaq or other exchanges), this obligation lasts for 40 days.
It is 90 days if the offering is an IPO. (89653)
Which of the following actions would violate the NASAA Statement of Policy on Dishonest
and Unethical Business Practices of Broker-Dealers and Agents?
A. A broker-dealer states that it will charge extra for certain transactions
B. An agent opens a joint account with a client with the written permission of her employer
C. An agent creates a marketing brochure for distribution to clients that includes only the
positive facts from the prospectus
D. A broker-dealer executes a transaction in a margin account shortly before the client's
signed margin account agreement arrives in the mail - ANSWER C. An agent creates a
marketing brochure for distribution to clients that includes only the positive facts from the
prospectus
A marketing brochure that contained only the positive facts from the prospectus and none
of the negative ones (risk factors) would be considered misleading and deceptive.
2
,A broker-dealer may execute an initial transaction in a margin account as long as a properly
executed (signed) written margin agreement is obtained promptly afterward.
A broker-dealer may charge a client a higher-than-normal commission under certain
circumstances, such as when a security is particularly difficult to obtain, as long as this is
disclosed to the client.
An agent may open a joint account with a client as long as she has the written permission of
both the broker-dealer and the client. (75690)
According to the Uniform Securities Act, which of the following statements is/are NOT TRUE
concerning a broker-dealer or investment adviser filing an application for registration as a
successor firm?
I. The successor firm must be in existence prior to the filing of the application for registration
II. The successor firm's registration will be effective for the unexpired portion of the year
III. The successor firm must submit a filing fee with the application for registration
A. III only
B. I and II only
C. I and III only
D. II only - ANSWER C. I and III only
When you encounter a question that is asking you to find a statement that is NOT TRUE, the
question is asking you to identify the statement that is FALSE. Since this is a Roman Numeral
style question, it is possible that there are more than one FALSE statement. In this question,
there are two.
If a registered broker-dealer's or investment adviser's ownership structure is changed (from
a partnership to a corporation, for example), or is bought or sold by another person, it is
permitted to file an application for registration as a successor firm.
3
, According to the Act, this can be accomplished whether or not the successor firm was in
existence prior to the filing and is effective for the unexpired portion of the year.
A filing fee is not required when the application is submitted. (89545)
Under the USA, which of the following transactions would NOT be considered exempt?
A. A transaction by an executor of an estate
B. An unsolicited issuer transaction effected through a registered broker-dealer
C. A transaction by a trustee that is involved in a bankruptcy proceeding
D. An offer to an investment company - ANSWER B. An unsolicited issuer transaction
effected through a registered broker-dealer
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 non-issuer transaction may qualify as an exempted transaction. (62648)
According to the Uniform Securities Act, an entity can avoid meeting the definition of a
broker-dealer if it:
I. Has no office in the state
II. Only deals with institutional clients
III. Does not hold customer funds or securities
A. I and II only
B. II and III only
4
dealer?
A. There is no bond requirement if the broker-dealer does not have custody or discretionary
authority
B. There is no bond requirement if the broker-dealer is registered in another state
C. The bond may be waived if the broker-dealer has been in business for at least 10 years
D. The Administrator may not waive the bond requirement for any broker-dealer -
ANSWER A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
Not every broker-dealer maintains custody of client assets. Some, for example, employ
clearing firms to take care of this responsibility.
The Administrator may require broker-dealers to post bonds if they have custody of, or
discretionary authority over, client funds or securities.
The bond is waived if the broker-dealer's net capital exceeds a specified amount. The
Administrator may determine this amount. (75577)
A company is conducting an IPO. Its shares will be listed on Nasdaq. For how long does a
broker-dealer that is part of the selling group need to make the prospectus available to
investors?
A. 25 days
B. 10 days
1
,C. 90 days
D. 40 days - ANSWER A. 25 days
All investors who purchase new issues must receive prospectuses, which may be made
available electronically. This obligation to provide a prospectus continues for 25 days after
the effective date for securities that will be listed on a national exchange or Nasdaq, which is
the situation described in the question.
A firm that sells a new issue in the aftermarket shortly after it begins trading may also be
required to give prospectuses to its customers.
For secondary offerings of securities that will trade over-the-counter (securities that are not
eligible to be listed on Nasdaq or other exchanges), this obligation lasts for 40 days.
It is 90 days if the offering is an IPO. (89653)
Which of the following actions would violate the NASAA Statement of Policy on Dishonest
and Unethical Business Practices of Broker-Dealers and Agents?
A. A broker-dealer states that it will charge extra for certain transactions
B. An agent opens a joint account with a client with the written permission of her employer
C. An agent creates a marketing brochure for distribution to clients that includes only the
positive facts from the prospectus
D. A broker-dealer executes a transaction in a margin account shortly before the client's
signed margin account agreement arrives in the mail - ANSWER C. An agent creates a
marketing brochure for distribution to clients that includes only the positive facts from the
prospectus
A marketing brochure that contained only the positive facts from the prospectus and none
of the negative ones (risk factors) would be considered misleading and deceptive.
2
,A broker-dealer may execute an initial transaction in a margin account as long as a properly
executed (signed) written margin agreement is obtained promptly afterward.
A broker-dealer may charge a client a higher-than-normal commission under certain
circumstances, such as when a security is particularly difficult to obtain, as long as this is
disclosed to the client.
An agent may open a joint account with a client as long as she has the written permission of
both the broker-dealer and the client. (75690)
According to the Uniform Securities Act, which of the following statements is/are NOT TRUE
concerning a broker-dealer or investment adviser filing an application for registration as a
successor firm?
I. The successor firm must be in existence prior to the filing of the application for registration
II. The successor firm's registration will be effective for the unexpired portion of the year
III. The successor firm must submit a filing fee with the application for registration
A. III only
B. I and II only
C. I and III only
D. II only - ANSWER C. I and III only
When you encounter a question that is asking you to find a statement that is NOT TRUE, the
question is asking you to identify the statement that is FALSE. Since this is a Roman Numeral
style question, it is possible that there are more than one FALSE statement. In this question,
there are two.
If a registered broker-dealer's or investment adviser's ownership structure is changed (from
a partnership to a corporation, for example), or is bought or sold by another person, it is
permitted to file an application for registration as a successor firm.
3
, According to the Act, this can be accomplished whether or not the successor firm was in
existence prior to the filing and is effective for the unexpired portion of the year.
A filing fee is not required when the application is submitted. (89545)
Under the USA, which of the following transactions would NOT be considered exempt?
A. A transaction by an executor of an estate
B. An unsolicited issuer transaction effected through a registered broker-dealer
C. A transaction by a trustee that is involved in a bankruptcy proceeding
D. An offer to an investment company - ANSWER B. An unsolicited issuer transaction
effected through a registered broker-dealer
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 non-issuer transaction may qualify as an exempted transaction. (62648)
According to the Uniform Securities Act, an entity can avoid meeting the definition of a
broker-dealer if it:
I. Has no office in the state
II. Only deals with institutional clients
III. Does not hold customer funds or securities
A. I and II only
B. II and III only
4
