An existing customer of a broker-dealer registered in State A is vacationing in State B. Can
the broker-dealer solicit the customer? - ANSWER The broker-dealer may solicit the
customer in State B without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is available), the
broker-dealer must be registered in that state. One of the exemptions available, however,
covers the instance where an existing customer of a registered broker-dealer is vacationing
in another state. That customer may be contacted while on vacation in the other state
without the broker-dealer being required to register in that state.
Which of the following is/are defined as either a "sale" or an "offer to sell" common stock of
an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III. The sale of a bond with
detachable warrants to buy the common stock of that issuer
IV. The gift of the common stock to an employee of the issuer - ANSWER I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or disposition of a security
or interest in a security for value. The definition of an "offer to sell" is every attempt or offer
to dispose of or solicitation of an offer to buy a security. In addition, the sale or offer of a
security that includes rights or warrants to buy another security is considered to be an offer
or sale of the other security. The gift of a security is not considered to be a sale unless the
security is assessable. Common stock is non-assessable; therefore, it is simply a gift, not a
sale.
An applicant's registration can be denied by the Administrator if that individual was
convicted within the past ___________ of any misdemeanor involving a security or any
aspect of the securities business or any felony. - ANSWER 10 years
1
, An applicant's registration can be denied if he or she was convicted of a misdemeanor
involving securities or any felony within the past 10 years.
It is prohibited for an investment adviser to be compensated only on the basis of
__________ achieved. It is allowable for the adviser to receive a percentage of all assets
under management (even if this value includes capital gains) or for a fixed fee arrangement
to be established. - ANSWER capital gains
Securities that are sold through a private placement _________. - ANSWER are
unregistered
Securities sold through a private placement are unregistered and are an exempt transaction.
Under Uniform State Law, a private placement is defined as an offer to no more than 10
persons in a 12 month period.
The Administrator is NOT empowered to __________. - ANSWER Issue injunctions
The Administrator can issue subpoenas even to persons outside the Administrator's state. It
is also possible for the Administrator to conduct investigations to determine if any securities
laws have been broken and to hold hearings. It is not possible, however, for the
Administrator to issue an injunction against the alleged violator. The Administrator may only
petition the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which of the following? I.
A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by stockholders -
ANSWER I only
To be considered to be a sale, there must be some consideration or exchange of value. Sales
do not include bona fide pledges of securities as collateral for loans, stock dividends,
2
the broker-dealer solicit the customer? - ANSWER The broker-dealer may solicit the
customer in State B without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is available), the
broker-dealer must be registered in that state. One of the exemptions available, however,
covers the instance where an existing customer of a registered broker-dealer is vacationing
in another state. That customer may be contacted while on vacation in the other state
without the broker-dealer being required to register in that state.
Which of the following is/are defined as either a "sale" or an "offer to sell" common stock of
an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III. The sale of a bond with
detachable warrants to buy the common stock of that issuer
IV. The gift of the common stock to an employee of the issuer - ANSWER I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or disposition of a security
or interest in a security for value. The definition of an "offer to sell" is every attempt or offer
to dispose of or solicitation of an offer to buy a security. In addition, the sale or offer of a
security that includes rights or warrants to buy another security is considered to be an offer
or sale of the other security. The gift of a security is not considered to be a sale unless the
security is assessable. Common stock is non-assessable; therefore, it is simply a gift, not a
sale.
An applicant's registration can be denied by the Administrator if that individual was
convicted within the past ___________ of any misdemeanor involving a security or any
aspect of the securities business or any felony. - ANSWER 10 years
1
, An applicant's registration can be denied if he or she was convicted of a misdemeanor
involving securities or any felony within the past 10 years.
It is prohibited for an investment adviser to be compensated only on the basis of
__________ achieved. It is allowable for the adviser to receive a percentage of all assets
under management (even if this value includes capital gains) or for a fixed fee arrangement
to be established. - ANSWER capital gains
Securities that are sold through a private placement _________. - ANSWER are
unregistered
Securities sold through a private placement are unregistered and are an exempt transaction.
Under Uniform State Law, a private placement is defined as an offer to no more than 10
persons in a 12 month period.
The Administrator is NOT empowered to __________. - ANSWER Issue injunctions
The Administrator can issue subpoenas even to persons outside the Administrator's state. It
is also possible for the Administrator to conduct investigations to determine if any securities
laws have been broken and to hold hearings. It is not possible, however, for the
Administrator to issue an injunction against the alleged violator. The Administrator may only
petition the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which of the following? I.
A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by stockholders -
ANSWER I only
To be considered to be a sale, there must be some consideration or exchange of value. Sales
do not include bona fide pledges of securities as collateral for loans, stock dividends,
2
