Uniform Securities Agent State Law Flashcards

Under the Uniform Securities Act, which of the following securities is typically exempt from registration requirements?

Answer: Municipal bonds issued by a city government

Municipal bonds issued by governmental entities are exempt from state registration requirements under the USA.

A broker-dealer registered in State A wishes to conduct business with clients in State B without registering there. Under the USA, this is permissible only if the broker-dealer:

Answer: Has no more than 5 non-institutional clients in State B in any 12-month period

The de minimis exemption allows a broker-dealer with no office in a state to conduct business with up to 5 non-institutional clients in that state within a 12-month period without registering.

Which statement about an investment adviser's fiduciary duty is CORRECT under the Uniform Securities Act?

Answer: The adviser must always place the client's interests above its own

Investment advisers owe a fiduciary duty to all clients, which requires placing the client's interests above the adviser's own interests at all times.

An agent who is registered in State X moves to State Y and begins working for a different broker-dealer. Under the USA, the agent must:

Answer: Register in State Y before conducting securities business there

Registration is state-specific and employer-specific, so an agent must register in the new state and under the new broker-dealer before conducting business.

Under the USA, which of the following would be considered a 'fraudulent' practice in connection with the offer or sale of securities?

Answer: Omitting a material fact that would likely influence a buyer's decision

Omitting a material fact in connection with the offer or sale of securities constitutes fraud under the Uniform Securities Act.

A client instructs her agent to sell all securities in her account immediately regardless of price. The agent executes the trades but the prices obtained are unfavorable. Under the USA, the agent:

Answer: Has no liability because the client gave specific discretionary authority

When a client provides specific, unsolicited instructions to execute trades, the agent who follows those instructions is generally not liable for resulting losses.

Under the Uniform Securities Act, a securities registration by qualification becomes effective:

Answer: When the administrator issues an order declaring it effective

Registration by qualification becomes effective when the administrator issues an order granting effectiveness, giving the state maximum control over the process.