Uniform Securities Agent State Law Flashcards

An investment adviser representative (IAR) who provides investment advice to clients must be registered in the state where:

Answer: The IAR has a place of business or where clients are located

An IAR must be registered in states where they maintain a place of business or where they have clients who receive investment advice.

Under the USA, which of the following is an example of a 'sale' of a security?

Answer: The exchange of a stock option for its underlying shares upon exercise

The exercise of a stock option constitutes a sale because value is exchanged between parties for the underlying security.

Under the Uniform Securities Act, a broker-dealer's registration may be suspended if the firm fails to:

Answer: Maintain the minimum net capital required by the administrator

Failure to maintain minimum required net capital is grounds for suspension or revocation of a broker-dealer's registration under the USA.

A 'blind pool' offering is BEST characterized as:

Answer: An investment where the specific assets to be acquired have not yet been identified

A blind pool is a form of investment where proceeds are raised before the specific investments to be made have been identified, creating additional risk for investors.

Which of the following statements about the 'consent to service of process' required under the USA is TRUE?

Answer: It allows the administrator to receive legal process on behalf of a registrant

The consent to service of process appoints the state administrator as the registrant's attorney for receiving legal documents, ensuring the administrator can serve process on out-of-state parties.

An agent learns that a major pharmaceutical company is about to announce FDA approval of a blockbuster drug. Before the announcement is made public, the agent purchases shares for personal accounts. This is an example of:

Answer: Insider trading, because material non-public information was used for personal gain

Using material non-public information to trade securities for personal gain constitutes insider trading, which is prohibited under both federal and state securities laws.

Under the USA, the statute of limitations for a civil action based on a securities violation is:

Answer: 2 years from discovery or 3 years from the violation, whichever comes first

The USA provides a statute of limitations of 2 years from discovery of the violation or 3 years from the date of the violation, whichever expires first.