SERIES 66- EXAMFX- Laws, Regulations, and Guidelines,
including Prohibition on Unethical Business Practices
Administrators require that investment advisers provide full disclosure to clients at
least 48 hours prior to entering into an advisory contract. This disclosure document
is usually referred to as: Correct Answer: An Investment Advisory Brochure
- The Investment Advisory Brochure is intended to provide the prospective client
all material information concerning the advisory contract.
An estate executor wants to establish an account to deposit assets from a deceased's
estate and earn some returns while the estate is settled. What is true when opening
this account? Correct Answer: The account is opened in the name of the estate
- An estate is a person an may open an account with a broker/dealer with proper
executor authorities.
Unless renewed, registrations expire: Correct Answer: Each December 31st
- Most states have annual expirations on December 31st, regardless of filing date.
Which of the following persons is NOT required to file a Consent to Service of
Process with the state administrator?
A. Investment adviser
B. Broker/dealer
C. Investment adviser representative
D. Agent for an issuer Correct Answer: D. Agent for an issuer
- Agents, broker/dealers, IAs and IARs are all required to file Consent to Service
of Process with the state administrator. Issuer agents who are exempt from
registration are not required to do so.
Which statement concerning an agent with multiple registrations is NOT true?
A. The agent must submit separate registrations through each employing
broker/dealer
B. Both broker/dealers must agree to the dual registration
,C. Some states allow multiple registrations when the firms are under common
control
D. An agent may be employed by two broker/dealers only if they are located in
separate states Correct Answer: D. An agent may be employed by two
broker/dealers only if they are located in separate states
- Some state administrators may prohibit multiple registrations unless the
broker/dealers are affiliated.
Under the Uniform Securities Act, the best definition of "guaranteed" is: Correct
Answer: A security backed by a specific entity that guarantees payment of
principal and interest or dividends when due
An agent might already be registered with the state but in order for registration to
be effective the agent needs to: Correct Answer: Become associated with a
registered broker/dealer or an issuer
- An agent's registration is in effect only while the agent has an association with a
registered broker/dealer or issuer.
What are the two statements that are true regarding soft dollars? Correct Answer:
1. Soft dollar relationships must be revised regularly
and
2. Soft dollar expenditures are provided in exchange for potential securities
transactions
Some broker/dealers that have no place of business in the state can be exempt from
registration. Which of the following does NOT qualify for this exemption?
A. A broker/dealer licensed in the state where it maintains a place of business and
makes offers only to existing customers who are not residents of that state
B. A broker/dealer that has a customer who moves to a state where the
broker/dealer is not registered, but the client chooses to continue the brokerage
arrangement
C. A broker/dealer that only had 2 customers during the previous 12-month period
D. A broker/dealer that transacts business only with other broker/dealers, issuers,
institutional buyers. or financial institutions Correct Answer: B. A broker/dealer
that has a customer who moves to a state where the broker/dealer is not registered,
but the client chooses to continue the brokerage arrangement
, - Broker/dealers who have a customer who moves to a state where the
broker/dealer is not registered and has no place of business are exempt from
registration only if the customer does not conduct any further transactions with the
same broker/dealer.
An agent who is registered in Illinois works for a broker/dealer that is registered in
all 50 states. One of her Ilinois clients owns a vacation home in Wisconsin and
invites the agent to Wisconsin for a summer vacation. A Wisconsin neighbor meets
the agent and wants the agent to handle his investments. Under what circumstances
may the agent transact business with this neighbor? Correct Answer: The agent
must file for registration in Wisconsin prior to doing business with the neighbor in
Wisconsin
- Because the agent is not registered in Wisconsin, she cannot solicit new business
there. The agent must file for agent registration in Wisconsin before she may
conduct business there.
An investment adviser wants to name a successor firm to fill an unexpired portion
of a yearly registration. The application is submitted, and the registration is
granted. Shortly thereafter, the administrator learns that the successor firm was not
in existence at the time of the application. Which of the following will most likely
happen?
A. Charges will be filed against the successor firm
B. The registration of both the investment adviser and the successor firm will be
revoked
C. The successor adviser will need to file a new independent registration
D. Nothing, This is legal Correct Answer: D. Nothing, This is legal
- If a broker/dealer or investment adviser wants to name a successor firm to fill an
unexpired portion of yearly registration, a new application is required, but no
additional fees are due. It is not required that the successor firm be in existence at
the time of the application.
An investment adviser must:
1. Be registered in each state
2. Be registered to receive compensation for advice
3. Provide advice, analysis, or reports concerning securities in the regular course of
business
including Prohibition on Unethical Business Practices
Administrators require that investment advisers provide full disclosure to clients at
least 48 hours prior to entering into an advisory contract. This disclosure document
is usually referred to as: Correct Answer: An Investment Advisory Brochure
- The Investment Advisory Brochure is intended to provide the prospective client
all material information concerning the advisory contract.
An estate executor wants to establish an account to deposit assets from a deceased's
estate and earn some returns while the estate is settled. What is true when opening
this account? Correct Answer: The account is opened in the name of the estate
- An estate is a person an may open an account with a broker/dealer with proper
executor authorities.
Unless renewed, registrations expire: Correct Answer: Each December 31st
- Most states have annual expirations on December 31st, regardless of filing date.
Which of the following persons is NOT required to file a Consent to Service of
Process with the state administrator?
A. Investment adviser
B. Broker/dealer
C. Investment adviser representative
D. Agent for an issuer Correct Answer: D. Agent for an issuer
- Agents, broker/dealers, IAs and IARs are all required to file Consent to Service
of Process with the state administrator. Issuer agents who are exempt from
registration are not required to do so.
Which statement concerning an agent with multiple registrations is NOT true?
A. The agent must submit separate registrations through each employing
broker/dealer
B. Both broker/dealers must agree to the dual registration
,C. Some states allow multiple registrations when the firms are under common
control
D. An agent may be employed by two broker/dealers only if they are located in
separate states Correct Answer: D. An agent may be employed by two
broker/dealers only if they are located in separate states
- Some state administrators may prohibit multiple registrations unless the
broker/dealers are affiliated.
Under the Uniform Securities Act, the best definition of "guaranteed" is: Correct
Answer: A security backed by a specific entity that guarantees payment of
principal and interest or dividends when due
An agent might already be registered with the state but in order for registration to
be effective the agent needs to: Correct Answer: Become associated with a
registered broker/dealer or an issuer
- An agent's registration is in effect only while the agent has an association with a
registered broker/dealer or issuer.
What are the two statements that are true regarding soft dollars? Correct Answer:
1. Soft dollar relationships must be revised regularly
and
2. Soft dollar expenditures are provided in exchange for potential securities
transactions
Some broker/dealers that have no place of business in the state can be exempt from
registration. Which of the following does NOT qualify for this exemption?
A. A broker/dealer licensed in the state where it maintains a place of business and
makes offers only to existing customers who are not residents of that state
B. A broker/dealer that has a customer who moves to a state where the
broker/dealer is not registered, but the client chooses to continue the brokerage
arrangement
C. A broker/dealer that only had 2 customers during the previous 12-month period
D. A broker/dealer that transacts business only with other broker/dealers, issuers,
institutional buyers. or financial institutions Correct Answer: B. A broker/dealer
that has a customer who moves to a state where the broker/dealer is not registered,
but the client chooses to continue the brokerage arrangement
, - Broker/dealers who have a customer who moves to a state where the
broker/dealer is not registered and has no place of business are exempt from
registration only if the customer does not conduct any further transactions with the
same broker/dealer.
An agent who is registered in Illinois works for a broker/dealer that is registered in
all 50 states. One of her Ilinois clients owns a vacation home in Wisconsin and
invites the agent to Wisconsin for a summer vacation. A Wisconsin neighbor meets
the agent and wants the agent to handle his investments. Under what circumstances
may the agent transact business with this neighbor? Correct Answer: The agent
must file for registration in Wisconsin prior to doing business with the neighbor in
Wisconsin
- Because the agent is not registered in Wisconsin, she cannot solicit new business
there. The agent must file for agent registration in Wisconsin before she may
conduct business there.
An investment adviser wants to name a successor firm to fill an unexpired portion
of a yearly registration. The application is submitted, and the registration is
granted. Shortly thereafter, the administrator learns that the successor firm was not
in existence at the time of the application. Which of the following will most likely
happen?
A. Charges will be filed against the successor firm
B. The registration of both the investment adviser and the successor firm will be
revoked
C. The successor adviser will need to file a new independent registration
D. Nothing, This is legal Correct Answer: D. Nothing, This is legal
- If a broker/dealer or investment adviser wants to name a successor firm to fill an
unexpired portion of yearly registration, a new application is required, but no
additional fees are due. It is not required that the successor firm be in existence at
the time of the application.
An investment adviser must:
1. Be registered in each state
2. Be registered to receive compensation for advice
3. Provide advice, analysis, or reports concerning securities in the regular course of
business
