Series 66 – Uniform Combined State Law Exam Securities & Investment Products 2 — Questions and Answers
Question 1: Which of the following is TRUE about registration by qualification under the Uniform Securities Act?
- It requires a concurrent SEC registration
- It is available only to foreign issuers
- It is the most comprehensive form of state registration and can stand alone without SEC registration (Correct answer)
- It automatically qualifies the security for listing on a national exchange
Correct answer: It is the most comprehensive form of state registration and can stand alone without SEC registration
Registration by qualification is a full state-level registration that does not depend on SEC registration and is used when other methods are unavailable.
Question 2: Under the USA, which of the following is an example of a 'covered security' that preempts state registration?
- A penny stock sold over-the-counter
- A security listed on the NYSE (Correct answer)
- A promissory note issued by a private company
- A real estate limited partnership interest
Correct answer: A security listed on the NYSE
Securities listed on national exchanges like the NYSE are 'covered securities' under NSMIA and preempt state registration requirements.
Question 3: A variable annuity contract is considered a security and must be sold by a person registered as which of the following?
- Only an insurance agent
- A registered representative or investment adviser representative (Correct answer)
- Only a CPA
- Any person with a Series 7 license regardless of state registration
Correct answer: A registered representative or investment adviser representative
Variable annuities are securities and must be sold by individuals holding appropriate securities licenses, such as a registered representative.
Question 4: Under the Uniform Securities Act, which of the following would be considered an 'offer to sell' a security?
- A tombstone advertisement that contains only basic factual information
- A gift of assessable securities (Correct answer)
- A preliminary prospectus distributed before the registration effective date
- A bond redemption at maturity at face value
Correct answer: A gift of assessable securities
A gift of assessable securities (which can impose future obligations on the recipient) is considered an offer to sell under the USA.
Question 5: Which of the following is TRUE about exempt securities under the Uniform Securities Act?
- Exempt securities may never be the subject of anti-fraud provisions
- The exemption applies only to the registration requirement, not to anti-fraud rules (Correct answer)
- Exempt securities can be sold by unregistered broker-dealers
- States cannot enforce any rules regarding exempt securities
Correct answer: The exemption applies only to the registration requirement, not to anti-fraud rules
An exemption from registration does not exempt a security from anti-fraud provisions, which apply to all securities transactions.
Question 6: Under the Uniform Securities Act, securities sold in a Regulation D private placement are typically treated as which type of transaction?
- Exempt transaction (Correct answer)
- Covered security
- Registered transaction
- Non-exempt transaction requiring full qualification
Correct answer: Exempt transaction
Regulation D private placements qualify as exempt transactions under the USA, relieving the issuer of state registration requirements.
Series 66 – Uniform Combined State Law Exam Securities & Investment Products 2
Which of the following is TRUE about registration by qualification under the Uniform Securities Act?