Series 65 – Uniform Investment Adviser Law Exam Uniform Securities Act and State Regulations 2 — Questions and Answers
Question 1: What is a 'registration by coordination' under the Uniform Securities Act?
- A method where a security registered with the SEC can be simultaneously registered at the state level by coordinating with the federal filing (Correct answer)
- A process where multiple states jointly register a single adviser
- A procedure allowing broker-dealers to operate in multiple states with one registration
- A method of registering only after receiving approval from every state where the security will be sold
Correct answer: A method where a security registered with the SEC can be simultaneously registered at the state level by coordinating with the federal filing
Registration by coordination allows issuers filing a registration statement with the SEC to use that same filing to coordinate state registration, becoming effective at the same time as the federal registration.
Question 2: What is a 'registration by qualification' under the Uniform Securities Act?
- Registration for advisers who have passed state licensing exams
- A stand-alone state registration method for securities not registered with the SEC, requiring full disclosure to state regulators (Correct answer)
- A fast-track registration for securities with a long operating history
- A registration method used only by exempt securities
Correct answer: A stand-alone state registration method for securities not registered with the SEC, requiring full disclosure to state regulators
Registration by qualification is used for securities that are not registered federally; the issuer must provide full disclosure to and obtain approval from state securities regulators.
Question 3: Under the Uniform Securities Act, how long does a securities registration remain effective?
- Indefinitely unless revoked
- One year, until December 31 of the year of registration (Correct answer)
- Two years from the date of effectiveness
- Until all registered shares are sold
Correct answer: One year, until December 31 of the year of registration
Under the Uniform Securities Act, a securities registration is effective for one year and expires on December 31 of the year it was granted.
Question 4: Which of the following would require an investment adviser to register with the state rather than the SEC?
- An adviser with $150 million AUM
- An adviser with $90 million AUM and no institutional clients (Correct answer)
- An adviser advising only registered investment companies
- An adviser with 25 or more institutional clients
Correct answer: An adviser with $90 million AUM and no institutional clients
An adviser with less than $100 million in AUM (and not subject to mandatory SEC registration) must register with the appropriate state securities regulator.
Question 5: What is a 'solicitor' in the context of investment adviser regulations?
- An attorney who represents an investment adviser in regulatory proceedings
- A person who refers clients to an investment adviser for compensation (Correct answer)
- A person who solicits securities sales for a broker-dealer
- A compliance officer who solicits adviser registrations
Correct answer: A person who refers clients to an investment adviser for compensation
A solicitor is an individual or firm paid to refer prospective clients to an investment adviser; this arrangement requires a written agreement and disclosure to clients.
Question 6: What must an investment adviser do before charging an advisory fee more than six months in advance?
- File a special form with the SEC
- Obtain written consent and be prepared to refund the pro-rated unearned portion if the contract is terminated (Correct answer)
- Obtain a surety bond equal to the total prepaid fees
- Register the prepayment arrangement with the state
Correct answer: Obtain written consent and be prepared to refund the pro-rated unearned portion if the contract is terminated
If an adviser collects fees more than six months in advance, the client must provide written consent and the adviser must refund the unearned, pro-rated portion if the contract is terminated.
Series 65 – Uniform Investment Adviser Law Exam Uniform Securities Act and State Regulations 2
What is a 'registration by coordination' under the Uniform Securities Act?