Mixed Deck — All Series 66 – Uniform Combined State Law Exam Topics Flashcards
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Read the first 20 Mixed Deck — All Series 66 – Uniform Combined State Law Exam Topics flashcards as text
Under the Uniform Securities Act, which of the following is TRUE about options contracts?
Answer: Options on securities are considered securities and are subject to the USA
Options on securities are considered securities under the Uniform Securities Act and are subject to its provisions.
A client says, "Buy 500 shares of XYZ today, but use your judgment on the price and timing." Is written discretionary authority required?
Answer: No, because discretion limited to time and price for that day is not considered discretionary authority
Time-and-price discretion on a client-specified security and quantity is not considered discretionary authority.
Which of the following best describes the Howey Test used to determine whether an instrument is a security?
Answer: An investment of money in a common enterprise with profits expected solely from the efforts of others
The Howey Test defines an investment contract (and thus a security) as an investment of money in a common enterprise with profits expected from others' efforts.
Which of the following is a required disclosure on Form U4?
Answer: Felony convictions and certain pleas
Form U4 requires disclosure of criminal history, regulatory actions, customer complaints and financial matters such as bankruptcies.
The administrator may deny or revoke a broker-dealer's registration if the applicant has been convicted of a felony within the past:
Answer: 10 years
The Act allows action for any felony conviction within the past 10 years, or a securities-related misdemeanor at any time.
Which of the following may the Administrator do during an investigation?
Answer: Issue subpoenas, administer oaths, and compel production of records
The Administrator may subpoena witnesses, take evidence, and require production of records.
A registrant was convicted within the past ten years of a felony or a securities-related misdemeanor. What may the Administrator do?
Answer: Deny, suspend, or revoke registration if in the public interest
A recent felony or securities misdemeanor conviction is a ground for adverse action if it is in the public interest.
Who is generally responsible for criminal prosecution of willful violations of the Uniform Securities Act?
Answer: The state attorney general or appropriate prosecuting attorney
The Administrator may refer evidence of criminal violations to the attorney general or a prosecutor, who brings the case.
In a customer dispute where the claim exceeds $100,000, how many arbitrators will generally hear the case under FINRA rules, absent party agreement otherwise?
Answer: Three
FINRA Rule 12401 provides for a three-arbitrator panel when claims exceed $100,000.
In an action for civil enforcement, the Administrator may ask a court to grant which of the following?
Answer: An injunction, an asset freeze, or a receiver
The Administrator may seek injunctions, asset freezes, receiverships, and similar relief in court.
A contract directs the client to use only one specified broker for all transactions. What must the adviser disclose?
Answer: That the arrangement may prevent obtaining best execution
Directed brokerage may cost clients best execution, which must be disclosed.
Under FINRA simplified arbitration, claims of what amount or less are decided by a single arbitrator, typically on the papers?
Answer: $50,000
FINRA Rule 12800 applies simplified procedures to claims of $50,000 or less, exclusive of interest and expenses.
Which of the following can the Administrator do without first conducting a hearing?
Answer: Issue a temporary summary order pending a hearing
Only temporary summary orders may issue before a hearing; final actions require notice and an opportunity to be heard.
When disposing of old client records, a firm must:
Answer: Use reasonable measures such as shredding or secure erasure to protect customer information
Privacy safeguard rules require reasonable measures to protect customer information when disposing of it.
Before making a public offering, an open-end investment company must have a minimum net worth of:
Answer: $100,000
The Investment Company Act of 1940 requires $100,000 net worth before a public offering.
An IAR receives verbal discretionary authority from a client and places the first discretionary trade. Under the NASAA model rule, when must written authorization be obtained?
Answer: Within 10 business days after the first discretionary order
IAs may exercise verbal discretion if written authorization is obtained within 10 business days of the first discretionary transaction.
Under the USA, which of the following is an example of a 'covered security' that preempts state registration?
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.
During an examination, an administrator asks an adviser for the general ledger. Which statement is correct?
Answer: The adviser must make the books and records available for examination
Registered advisers' records are subject to reasonable periodic, special, or other examination by the administrator.
A state-registered adviser requires clients to prepay more than $1,200 in fees six or more months in advance. What is typically required?
Answer: Disclosure of financial condition, such as a balance sheet
Large long-term prepayments trigger financial disclosure or balance sheet requirements to protect clients.
What is the PRIMARY objective of ethics & professional responsibility in the Series 66 - Uniform Combined State Law field?
Answer: To ensure adherence to established standards and protect stakeholders
The primary objective of compliance and regulatory frameworks is to ensure adherence to standards that protect stakeholders.
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