Uniform Securities Agent State Law Flashcards

Under the Uniform Securities Act, which of the following persons would qualify for the 'broker-dealer' exclusion from the definition of 'investment adviser'?

Answer: A broker-dealer that provides incidental investment advice while charging only commissions

Broker-dealers are excluded from the investment adviser definition if their advice is solely incidental to their brokerage business and they receive no special compensation for it.

A state administrator issues a cease and desist order against a broker-dealer. The firm must:

Answer: Comply with the order but may request a hearing within a specified timeframe

A cease and desist order is effective when issued, but the recipient has the right to request a hearing before the administrator within the time period specified in the order.

An investment adviser charges a performance fee based on a percentage of capital gains in a client's account. Under the USA, this type of fee arrangement is:

Answer: Permitted only for clients meeting specific net worth or assets under management thresholds

Performance-based fees are permitted only for clients with sufficient net worth or assets under management (qualified clients), to protect less sophisticated investors from unfavorable incentive structures.

Which of the following BEST describes 'painting the tape' as a prohibited manipulative practice under the USA?

Answer: Conducting a series of transactions that create the appearance of active trading without real change in ownership

Painting the tape involves executing transactions among related parties to create the false impression of active trading, thereby manipulating the security's perceived market activity.

Under the USA, when an investment adviser has discretionary authority over a client's account, the adviser must:

Answer: Act in the client's best interest and document the basis for each discretionary decision

An investment adviser with discretionary authority must exercise that authority in the client's best interest and maintain records justifying each discretionary decision as part of their fiduciary duty.

A registration statement filed under the Uniform Securities Act must contain which of the following?

Answer: A description of the securities being offered and the issuer's financial condition

A registration statement must include a description of the securities, the issuer's business and financial condition, and other material information necessary for investors to make informed decisions.

Under the USA, which of the following persons is EXCLUDED from the definition of 'agent'?

Answer: An officer of a corporation who effects transactions in the company's own securities during an exempt offering

Officers, directors, or employees of an issuer are excluded from the 'agent' definition when they effect transactions in the issuer's own securities during certain exempt transactions.