NASAA Series 63 — All Questions

A broker-dealer licensed in State A, where it has its only place of business, has an agent who telephones a long-standing client. The client lives in State A but is visiting State B for two weeks. Neither the firm nor the agent has a place of business or a registration in State B. The agent recommends a bond purchase and the client agrees. Under the Uniform Securities Act, which statement is correct?

• a.The agent must register in State B before making the call, because an offer is made in the state where it is received, wherever the client's home may be
• b.The agent may complete the trade only if the firm first files a consent to service of process in State B
• c.No registration in State B is required, because the client remains a resident of State A and is only temporarily present in State B✓
• d.The agent must register in State B, because the sale is accepted there when the client says yes while physically in the state

The Act's definition of broker-dealer excludes a firm that has no place of business in the state, is licensed in a state where it does maintain a place of business, and sells to an existing customer whose residence is not in the state. The client's residence, not where she happens to be on the day of the call, drives the analysis, so the call does not require registration in State B. It is true that an offer is made in the state where it is received, but that rule does not override the exclusion. No consent-to-service filing, notice fee or waiver is needed, and nothing requires the agent to postpone the order until the client is home.Uniform Securities Act (1956, as amended by NASAA) 401(c)(4)(B); 414(c)

Under the 1956 Uniform Securities Act, absent a denial order or pending proceeding, and unless the Administrator specifies an earlier date, an application for registration as a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective:

• a.At the close of business on the tenth day after the application is filed with the Administrator
• b.Immediately upon filing, as soon as the application and the fee are received by the Administrator
• c.Only when the Administrator issues a written order approving the application, with no automatic effective date
• d.At noon on the thirtieth day after a complete application is filed✓

The Act provides that, if no denial order is in effect and no proceeding is pending, registration becomes effective at noon of the thirtieth day after the application is filed, and the Administrator may by rule or order specify an earlier date. It does not become effective immediately on filing, and it does not wait for an affirmative approval order; passing the examination is a qualification the Administrator may impose but does not itself trigger effectiveness. The tenth-day rule is not in the Act.Uniform Securities Act

Under the Uniform Securities Act, a state-registered investment adviser maintains custody of client funds and securities. Regarding financial requirements, the Administrator may:

• a.Require a minimum net worth and a surety bond, though an adviser that meets the state's net worth standard may be excused from posting the bond✓
• b.Require a surety bond or a cash deposit in lieu of one, but never a minimum net worth or other financial requirement
• c.Require the adviser to insure client accounts against market losses, because custody makes the adviser a guarantor of performance
• d.Require nothing, because the Investment Advisers Act sets the only financial requirements an adviser may be held to

The Act lets the Administrator set minimum financial requirements for investment advisers, which may differ for those with custody or discretionary authority, and require bonds from advisers with custody, accepting a cash or securities deposit in lieu of a bond. No bond may be required of a registrant whose financial requirements exceed the amounts the Administrator requires, so an adviser meeting the net worth standard may be excused from the bond. The Administrator may set financial requirements as well as bonds, the Act does not make an adviser a guarantor against market loss, and federal law limits rather than replaces the states' authority.Uniform Securities Act

Under the 1956 Uniform Securities Act, unless renewed, the registration of a broker-dealer, agent, investment adviser, or investment adviser representative expires:

• a.On the last day of the registrant's fiscal year
• b.On December 31 of each year✓
• c.Only when the Administrator revokes it or the registrant stops doing business there
• d.On the anniversary of the original effective date

The Act provides that every registration or notice filing expires December 31 unless renewed. It does not follow the registrant's fiscal year, it does not run from the anniversary of the original effective date, and it does not continue indefinitely until revoked or abandoned; a registrant that stops doing business must withdraw rather than let the file lapse.Uniform Securities Act

An individual represents a state government, as issuer, in selling only the state's own general obligation bonds to the public. Under the Uniform Securities Act, this individual:

• a.Is excluded from the definition of agent because he represents an issuer in transactions in specified exempt securities✓
• b.Must register as an agent, because the exclusion applies only when no commission or other remuneration is paid for the sales
• c.Must register as an agent, because the exemption for government bonds covers the securities but not the person selling them
• d.Must register as a broker-dealer instead of an agent, because he sells directly to members of the public

The Act excludes from the definition of agent an individual who represents an issuer in effecting transactions in securities exempted under the Act, and securities issued by a state or its political subdivisions are exempt. The no-commission condition belongs to the separate exclusion for sales to an issuer's own employees, partners or directors, not to this one. Exemption of the securities does carry over to the person selling them for the issuer, and a natural person representing an issuer is never a broker-dealer.Uniform Securities Act

An unregistered individual, acting on behalf of a small private company, introduces investors to the company's offering and receives a percentage of every dollar the investors put in. The most likely conclusion under the Uniform Securities Act is that she:

• a.Is acting as an unregistered agent, because transaction-based compensation for effecting securities sales points squarely to agent status✓
• b.Is a broker-dealer, because a person paid a percentage of the amount invested is in the business of effecting transactions
• c.Is an investment adviser rather than an agent, because she recommends the company's offering to the investors she introduces
• d.Is exempt from registration, because she never held or handled any of the investors' funds

An agent is an individual who represents a broker-dealer or an issuer in effecting or attempting to effect sales, and she is doing that for the company. Commission-style pay is the clearest marker of that role, and it also defeats the private-placement exemption, which is lost when any commission is paid for soliciting buyers, so the agent exclusion for exempt transactions is unavailable. Never touching investor money creates no exemption. The broker-dealer definition expressly excludes agents and issuers, and she is paid for selling rather than for advice, so she is not an adviser either.Uniform Securities Act

An agent registered with one broker-dealer leaves that firm to join another registered broker-dealer. Under the Uniform Securities Act, his registration:

• a.Carries over to the new firm automatically for the rest of the calendar year, with no notice to the Administrator because he remains registered
• b.Stays effective only if the former firm consents in writing to the transfer, and the new firm alone notifies the Administrator within thirty days
• c.Lapses while he has no registered broker-dealer employer, and he and the firm must promptly notify the Administrator of the change✓
• d.Terminates permanently, so he must file a new application and pass the examination again before he may act for the new firm

An agent's registration is tied to a particular registered broker-dealer or issuer and is not effective during any period when he is not associated with one. When an agent begins or ends a connection with a firm, both the agent and the firm must promptly notify the Administrator. The registration does not move to the new firm on its own, it does not depend on the former firm's consent, and it is not permanently destroyed by leaving a firm.Uniform Securities Act (1956, as amended) 201(b)

Under the 1956 Uniform Securities Act, which of the following is NOT a 'person'?

• a.A minor child who has not yet reached the age of majority and holds securities through a custodian
• b.A professional corporation organized by licensed practitioners
• c.A trust created to hold family assets, in which the beneficiaries' interests are not evidenced by a security✓
• d.A municipality or other political subdivision of a government

The Act defines a person as an individual, corporation, partnership, association, joint-stock company, unincorporated organization, government or political subdivision, and a trust only where the interests of the beneficiaries are evidenced by a security. A family-asset trust whose beneficial interests are not securities falls outside the list. A minor is still an individual, and the Act contains no exclusion for minors. A professional corporation is a corporation, and a municipality is a political subdivision of a government.Uniform Securities Act (1956, as amended by NASAA) 401(j) 'person'

Under the Uniform Securities Act of 1956, which of the following is included in the term 'offer' or 'offer to sell'?

• a.A judicially approved transfer of securities in a reorganization
• b.A solicitation of an offer to buy a security for value✓
• c.A bona fide pledge of securities as collateral for a bank loan
• d.A stock dividend for which the shareholder gives up nothing of value

Section 401(k)(2) of the 1956 Act defines an offer to include every attempt to dispose of a security for value and any solicitation of an offer to buy a security for value. A bona fide pledge or loan of securities, a stock dividend for which the shareholder gives up nothing of value, and a transfer approved by a court in a reorganization are excluded from the definitions of sale and offer, so none of them is an offer.Uniform Securities Act (1956) §401(k)

A firm with an office in the state, for a fee, regularly issues written analyses and reports advising pension plans on the selection of securities and money managers. This firm is most likely:

• a.A broker-dealer, because it recommends securities to institutional clients that then place their orders through it
• b.Excluded as a bona fide publisher, because it issues written reports on a regular basis and charges a subscription-style fee
• c.An investment adviser, because it is in the business of issuing securities analyses for compensation✓
• d.Excluded, because the Act exempts any firm whose only clients are pension plans and other institutional investors

A person who, for compensation and as part of a regular business, issues analyses or reports concerning securities meets the investment adviser definition (USA §401(f)). The publisher exclusion covers only a bona fide publication of general, regular, and paid circulation, not reports tailored to particular plans. The institutional-clients exclusion is available only to a firm with no place of business in the state, which is why the stem gives this firm an office there. Giving advice does not make a firm a broker-dealer.USA (1956) §401(f)

Which of the following is EXCLUDED from the definition of 'investment adviser' under the 1956 Uniform Securities Act?

• a.A financial planner paid fees for plans recommending securities
• b.A pension consultant paid to recommend securities to plans
• c.A bank, savings institution, or trust company✓
• d.A portfolio manager who charges a percentage-of-assets fee

The 1956 Act excludes from the definition of investment adviser a bank, savings institution, or trust company; a lawyer, accountant, engineer, or teacher whose advice is solely incidental to the profession; a broker-dealer whose advice is solely incidental to its business and who receives no special compensation; and a bona fide publisher (USA §401(f)). Fee-based financial planners, pension consultants, and portfolio managers who charge percentage fees are investment advisers.USA (1956) §401(f)(1)

Under the 1956 Uniform Securities Act, for purposes of the institutional exceptions for firms with no place of business in the state, an employee benefit plan qualifies as an institutional client only if it:

• a.Has at least 100 participants in the plan
• b.Invests only in exchange-listed securities
• c.Is a governmental plan of any size
• d.Has assets of not less than $1 million✓

Under the 1956 Act's institutional exceptions, an employee benefit plan counts as an institutional buyer only if its assets are at least $1,000,000. The number of participants, a plan's investments, and its governmental status do not by themselves make it institutional.

Under the Uniform Securities Act of 2002, the Administrator may, by rule or order:

• a.Add new exemptions to the Act only after the legislature amends the statute to authorize each specific exemption
• b.Exempt persons or securities from the antifraud provisions whenever the public interest allows it
• c.Deny or revoke statutory exemptions by rule for a whole class of securities, but never create a new exemption of its own
• d.Exempt additional persons or securities from registration when consistent with the public interest and the protection of investors✓

Under the 2002 Act a rule or order may exempt a security, transaction or offer from the registration requirements (Sections 301 through 306 and 504), when the public interest and investor protection allow it. It does not wait for the legislature to amend the Act, it is not limited to narrowing or revoking exemptions, and it never reaches the antifraud provisions, which apply to exempt securities and exempt transactions alike.Uniform Securities Act (2002) §203

If an application for registration is materially incomplete or a denial proceeding is pending on the thirtieth day after filing, the registration:

• a.Becomes effective on day thirty anyway; the Administrator can only revoke it later
• b.Does not become effective until the application is complete and no proceeding is pending✓
• c.Becomes effective on the sixtieth day unless a denial order was entered earlier
• d.Is deemed denied on day thirty, and the applicant must refile and pay a second fee

Registration becomes effective at noon on the thirtieth day only if no denial order is in effect and no proceeding is pending under the denial provisions. A materially incomplete application is itself a ground for denial, and the Administrator may defer the effective date after an amendment. The registration is therefore not effective while a proceeding is pending, it is not effective automatically on day thirty anyway, there is no sixty-day default, and it is not deemed denied or subject to a second fee.Uniform Securities Act (1956) §202(a); §204(a)(2)(A)

An investment adviser based in Ohio has no office or other place of business in this state. During the preceding twelve months it advised four individual clients who live in this state and no institutional clients here. What is its registration status in this state?

• a.It must register here, because the limit for non-institutional clients of an out-of-state adviser is three in the preceding twelve months.
• b.It need not register here, because it has no place of business in the state and has had no more than five non-institutional clients in twelve months.✓
• c.It need only file a notice with the Administrator, because an adviser based in another state is automatically a federal covered adviser.
• d.It must register here, because any individual client residing in the state requires the adviser to be registered with the Administrator.

Section 201(c) lets an adviser with no place of business in the state operate unregistered if its only clients there are institutions or it had no more than five other clients in the preceding twelve months. Four individual clients is within that limit. Federal covered adviser status depends on SEC registration rather than on where the adviser is located, and the adviser stays subject to the antifraud provisions of Section 102.Uniform Securities Act §201(c)

A Texas investment adviser with no office in this state advised seven individual clients living here during the past twelve months and has no institutional clients in this state. May it keep advising them without registering here?

• a.No, seven exceeds the limit of five non-institutional clients, so the adviser must register in this state before it advises any further clients here.✓
• b.Yes, an adviser with no place of business in the state is exempt from registration here regardless of the number of clients it serves.
• c.Yes, because the five-client limit is counted per calendar year, and this adviser has not yet reached that count in the current year.
• d.No, but the adviser may satisfy the Act by obtaining each client's signed consent to being advised by an unregistered adviser.

The de minimis exemption in Section 201(c) is lost once an out-of-state adviser whose clients are not all institutional has had more than five other clients in the preceding twelve-month period. That period is rolling, not a calendar year. Having no place of business here helps only up to the limit, and no client consent can stand in for registration.Uniform Securities Act §201(c)

In State K, a corporation's treasurer sells newly issued shares of the corporation to its own employees under a stock purchase plan and receives no commission or other pay for soliciting them. Is the treasurer an agent who must register?

• a.Yes, because only individuals who sell securities already exempt from registration fall outside the definition of agent, and these shares are not exempt.
• b.No, representing an issuer in sales to its own employees with no pay for soliciting takes an individual outside the agent definition.✓
• c.Yes, any individual who represents an issuer in effecting sales of that issuer's own securities must be registered as an agent in this state.
• d.No, but only after the treasurer files a written notice with the Administrator thirty days before starting to sell to employees.

Section 401(b) excludes from the term agent an individual who represents an issuer in effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid for soliciting anyone in the state. The treasurer fits that exclusion. The thirty-day notice belongs to a different provision, the exemption for employee benefit plan securities, and does not condition this exclusion.Uniform Securities Act §401(b)

Dana is a registered agent of Broker-Dealer A. She resigns and joins Broker-Dealer B, which is also registered in the same state. Who must promptly notify the Administrator of the change?

• a.Dana, Broker-Dealer A, and Broker-Dealer B must each give the Administrator prompt notice of the change in her employment.✓
• b.Broker-Dealer A and Broker-Dealer B must notify the Administrator, while Dana has no filing duty because the firms are the registrants.
• c.Only Broker-Dealer B must notify the Administrator, because the new employer registers her with its own firm.
• d.Only Dana must notify the Administrator, because an agent's registration belongs to the individual, not an employer.

Section 201(b) requires the agent and the broker-dealer or issuer to notify the Administrator promptly when an agent begins or ends a connection with a firm. When an agent changes firms, that means the agent, the old firm and the new firm all have the duty. Leaving any one of the three out leaves the Administrator's records incomplete.Uniform Securities Act §201(b)

Marcus's employment with a registered broker-dealer ended on March 1, and he has not yet joined another firm. On March 15 a friend asks him to place an order to buy stock for her. What is the status of his registration?

• a.It is not effective while he has no employing broker-dealer, so he may not take the order until he is associated with a registered firm.✓
• b.It stays effective for thirty days after termination, so he may take the order at any time up to March 31.
• c.It stays effective until December 31, so he may take the order and have a new employer ratify the trade once he is hired.
• d.It remains effective for unsolicited orders from people he already knows, because those orders fall within an exemption available to agents.

Under Section 201(b), an agent's registration is not effective during any period when the agent is not associated with a particular registered broker-dealer or issuer. The Act gives no grace period, and the December 31 expiration is unrelated. An unsolicited-order exemption protects the transaction from the securities registration requirement but does not give an unassociated agent authority to act.Uniform Securities Act §201(b)

A broker-dealer and its agents last renewed their registrations in February of this year. When will those registrations expire if they are not renewed again?

• a.On the anniversary of the February renewal, because each registration lasts one year from the date it became effective.
• b.On December 31 of next year, because a registration renewed early in the year is carried through the following calendar year.
• c.On December 31 of this year, since every registration expires on that date unless it has been renewed.✓
• d.On the date the firm's next annual financial report is due, because renewal is tied to the firm's reporting cycle.

Section 201(e) provides that every registration or notice filing expires on December 31 unless renewed, which matches the annual renewal cycle of the Central Registration Depository. The one-year-from-effectiveness rule belongs to registered securities in Section 305(i), not to firms and individuals. The date of the last renewal does not change the expiration date.Uniform Securities Act §201(e)

An applicant files a complete application for registration as a broker-dealer on March 1. No denial order is in effect, no proceeding is pending, and the Administrator has not set an earlier date. When does the registration become effective?

• a.At noon on the thirtieth day after the application was filed, unless the Administrator accelerates the date or defers it by order.✓
• b.At noon on the fifteenth day after the application was filed, because that is the period allowed for the Administrator's review.
• c.On the first business day after the filing, because a complete application is registered as soon as it is received.
• d.On the day the Administrator issues a written approval, because no registration takes effect without an affirmative order.

Section 202(a) makes registration effective at noon of the thirtieth day after an application is filed if no denial order is in effect and no Section 204 proceeding is pending. The Administrator may specify an earlier date or defer the date until noon of the thirtieth day after an amendment. The wait for an affirmative order applies to registration of securities by qualification, not to dealers.Uniform Securities Act §202(a)

A registered agent files an application to withdraw her registration, and no revocation or suspension proceeding is pending or begun. When does the withdrawal take effect?

• a.Sixty days after receipt, because that period gives the Administrator time to investigate the agent.
• b.Immediately on receipt, because an agent may stop being registered whenever she chooses, subject only to a later proceeding.
• c.On the next December 31, because a registration can end only at the annual expiration date and not before.
• d.Thirty days after the Administrator receives the application, or sooner if the Administrator allows a shorter period.✓

Under Section 204(e), withdrawal becomes effective thirty days after the Administrator receives the application, or sooner if the Administrator so determines, unless a proceeding is pending or is instituted within those thirty days. In that case the Administrator's order sets the time and conditions. Neither immediate withdrawal nor waiting until year end is provided.Uniform Securities Act §204(e)

Forty days ago Lena's withdrawal as an agent took effect automatically. The Administrator has now learned that she willfully violated the Act before she withdrew. May the Administrator still act against her registration?

• a.No, once a withdrawal has taken effect the Administrator has no further authority over the former registrant for any violation.
• b.Yes, but only if the proceeding began within the thirty days that followed the filing of her withdrawal application.
• c.Yes, a revocation or suspension proceeding may begin within one year after the withdrawal became effective.✓
• d.Yes, but only through a criminal referral, because a withdrawn registrant is no longer subject to administrative orders.

Section 204(e) lets the Administrator begin a revocation or suspension proceeding for a willful violation within one year after an automatic withdrawal becomes effective, and enter the order as of the last date registration was effective. Withdrawal does not shield earlier conduct. The thirty-day period governs only whether withdrawal becomes effective automatically, and an administrative order does not depend on a criminal referral.Uniform Securities Act §204(e)

The Administrator summarily suspends a broker-dealer's registration pending a hearing and notifies the firm of the order. The firm promptly sends a written request for a hearing. Within what time must the matter be set down for hearing?

• a.Within five business days after the summary suspension order was first entered by the Administrator.
• b.Within fifteen days after the Administrator receives the firm's written hearing request.✓
• c.Within sixty days after the order, the same period that applies to a court petition for judicial review.
• d.Within thirty days after the Administrator receives the firm's written request for a hearing.

Section 204(c) provides that after a summary suspension the registrant is told that the order has been entered, the reasons for it, and that within fifteen days after receipt of a written request the matter will be set down for hearing. If no hearing is requested or ordered, the suspension stays in effect until modified or vacated. Sixty days is the period for seeking court review of a final order under Section 411.Uniform Securities Act §204(c)

An applicant for agent registration was convicted of a securities-related misdemeanor eleven years ago and of a felony unrelated to securities nine years ago. Which statement about the Administrator's authority to deny registration is correct?

• a.Only the misdemeanor can support denial, because the Act lists convictions tied to securities and no other crimes.
• b.Both convictions can support denial, because a conviction involving a security, like any felony, never ages out of the Administrator's reach.
• c.The felony falls within the ten-year period and can support denial if denial is in the public interest, but the older misdemeanor cannot.✓
• d.Neither conviction can support denial, because a felony counts only when it is connected to the securities business.

Section 204(a)(2)(C) allows action if, in the public interest, the applicant has been convicted within the past ten years of any misdemeanor involving a security or any aspect of the securities business, or of any felony. The felony counts even though it is unrelated to securities. The misdemeanor is eleven years old and outside the look-back period.Uniform Securities Act §204(a)(2)(C)

A New Jersey broker-dealer has no office in this state. In the past year it has effected transactions here only with banks, insurance companies, and other broker-dealers. Must it register as a broker-dealer in this state?

• a.Yes, any firm that effects a securities transaction with a buyer located in this state must be registered with the Administrator here.
• b.No, a firm with no place of business here that deals only with institutions and broker-dealers falls outside the definition.✓
• c.Yes, but it may satisfy the Act by a simple notice filing, since every customer it has in this state is an institutional buyer.
• d.No, but only if at least one of the institutional customers it deals with here is itself a broker-dealer registered in this state.

Section 401(c)(4) excludes from the broker-dealer definition a person with no place of business in the state who effects transactions here exclusively with issuers, other broker-dealers, or banks, insurers, investment companies and similar institutional buyers. Because the New Jersey firm falls outside the definition, the registration requirement never applies to it. The antifraud provisions still reach its conduct.Uniform Securities Act §401(c)

A certified public accountant prepares a client's tax returns and, solely as an incidental part of that engagement, remarks that a municipal bond fund is tax-efficient. She charges only her usual accounting fee. How is she treated under the Act?

• a.She is an investment adviser, because anyone who gives advice about securities for compensation of any kind must register in this state.
• b.She is not an investment adviser, because an accountant whose securities advice is solely incidental to accounting practice is excluded.✓
• c.She is an investment adviser, because the professional exclusion covers lawyers and engineers but does not extend to certified public accountants.
• d.She is an investment adviser unless she obtains a waiver from the Administrator for each separate client she advises in this way.

Section 401(f) excludes a lawyer, accountant, engineer or teacher whose performance of advisory services is solely incidental to the practice of the profession. The CPA's remark is incidental to her tax work, and she receives no special compensation for it. Compensation alone does not make someone an investment adviser, and no per-client waiver is needed for an excluded person.Uniform Securities Act §401(f)

An investment adviser registered with the SEC under the Investment Advisers Act of 1940 wants to advise clients in State Q, where it has no state registration. Which requirement applies to the adviser in State Q?

• a.It must post the bond or minimum capital the Administrator sets for state-registered advisers, because the state keeps full authority over the firm.
• b.It needs no filing of any kind, because an SEC-registered adviser is completely exempt from the state securities laws.
• c.It must register as an investment adviser in State Q and pass the state examination, because the SEC does not preempt state licensing.
• d.It must make a notice filing with the Administrator, consisting of the SEC documents the Administrator requires, and pay the fee.✓

A federal covered adviser is registered with the SEC, so a state may not require it to register. Section 202(b) lets the Administrator require the filing of documents submitted to the SEC, and Section 202(c)(3) allows a notice filing fee. The adviser remains subject to the state antifraud provisions, and its investment adviser representatives who have a place of business in the state must register.Uniform Securities Act §202(b)

A Canadian broker-dealer registered in Ontario, with no office in this state, wants to execute orders for a long-time Canadian client who has temporarily moved here for the winter. Which course is open to the firm?

• a.It may trade for the client without registering, because a client's citizenship decides which country's securities law governs the trade.
• b.It may register only if it also opens a physical office in this state, because the limited provision requires a local presence.
• c.It may trade for the client if the client signs a waiver, because the Administrator cannot regulate dealings with a foreign national.
• d.It may register under the limited Canadian provision, because the client was its customer in Canada before entering the United States.✓

Section 201-A allows a Canadian broker-dealer with no office or physical presence in the state to register on a limited basis and deal with a Canadian who is temporarily resident here and was its client before entering the United States. It must file a consent to service of process, be in good standing at home, belong to a Canadian self-regulatory organization, and tell clients it is not subject to the full requirements of the Act. A client's waiver of the Act is void.Uniform Securities Act §201-A

A registered investment adviser filed a document with the Administrator, and one of its officers has since been convicted of a felony, which makes information in that filing materially inaccurate. What must the adviser do?

• a.It must file a correcting amendment only if the Administrator first sends a written request asking it to do so.
• b.It must promptly file a correcting amendment, because material inaccuracies in a filed document must be corrected.✓
• c.It must report the conviction to the SEC alone, because corrections to state filings are made through the federal system.
• d.It may wait and report the conviction on the next annual renewal, because renewal is the only time updates are required.

Section 203(d) requires a registrant to file a correcting amendment promptly when information in a document filed with the Administrator is or becomes inaccurate or incomplete in any material respect. The duty arises without a request and does not wait for renewal. A willful failure to keep filings current can itself be a ground for action against the registration.Uniform Securities Act §203(d)

An agent made unsuitable recommendations to several customers. The Administrator finds that the broker-dealer had no written supervisory procedures and never reviewed the agent's trades. What basis does the Administrator have to act against the broker-dealer's own registration?

• a.The broker-dealer failed reasonably to supervise its agents, which supports an order if the Administrator finds that the order is in the public interest.✓
• b.The broker-dealer's lack of net capital, because the supervisory ground applies only to firms that fail to meet financial requirements.
• c.None, because an agent's misconduct can never be used against the registration of the broker-dealer that employs the agent.
• d.A criminal referral only, because supervision failures are not grounds for administrative orders against a firm's registration.

Section 204(a)(2)(J) makes it a ground for action that a broker-dealer failed reasonably to supervise its agents or employees to assure compliance with the Act, and Section 204(a)(1) adds the requirement of a public interest finding. Proof of the agent's own violation is not a prerequisite. The ground has nothing to do with net capital, which is addressed separately.Uniform Securities Act §204(a)(2)(J)

An agent leaves Broker-Dealer X on March 1 and does not join another registered firm until April 15. During that gap, the agent's registration is:

• a.Effective through December 31, because it belongs to the individual and runs by calendar year
• b.Cancelled outright, so the agent must retake the examination before joining any new firm
• c.Effective for 30 days, then it lapses unless the agent files a fresh application
• d.Not effective, because it is tied to association with one particular registered firm✓

An agent's registration is not effective during any period when the agent is not associated with a particular registered broker-dealer or issuer. December 31 is only the renewal date, so the registration does not carry the agent through the gap on its own. The Act contains no 30-day grace window. Nothing cancels the registration or forces a new examination merely because of the gap; the agent and the new firm notify the administrator when the association begins.Uniform Securities Act (1956) §201(b)

Agent Lee moves from Firm A to Firm B, and both firms are registered in the state. Who must promptly notify the administrator of the change?

• a.Lee, Firm A, and Firm B, since each must report the end or start of the association✓
• b.Firm A alone, since only the firm that is losing the agent carries the duty to report the change
• c.Lee alone, since a registration follows the individual and neither firm has to report anything
• d.Firm B alone, since the hiring firm must file before the agent makes any sales on its behalf

When an agent begins or ends a connection with a broker-dealer or issuer, the agent and the broker-dealer or issuer must each promptly notify the administrator, so all three persons report on a move between firms. Leaving the duty to only the old firm, only the agent, or only the new firm omits parties the Act names.Uniform Securities Act (1956) §201(b)

A registered broker-dealer's president also takes customer orders. Which statement about the president's own registration as an agent is correct?

• a.The president is exempt, since an officer of a registered firm is outside the definition of agent
• b.The firm's registration automatically registers the president, so no separate agent application is needed✓
• c.The president must first pass the agent examination, since a firm's filing covers no one who sells
• d.The president must file a separate agent application, since officers receive no coverage from the firm's filing

Registration of a broker-dealer automatically constitutes registration of any agent who is a partner, officer, or director. An officer is an agent only if he otherwise comes within the definition, and a president who takes customer orders does, so the president is an agent but is covered by the firm's filing. The president is therefore neither required to file separately nor outside the definition of agent.Uniform Securities Act (1956) §202(a); §401(b)

Agent Dana files a complete application on June 1. No denial order or proceeding is pending, and the administrator sets no earlier date. When does the registration become effective?

• a.At noon on June 15, the fifteenth day after filing, which matches the hearing period after a summary order
• b.Only when the administrator signs a written order that grants the application for registration
• c.At 12:01 a.m. on June 2, the day after the administrator receives the complete application
• d.At noon on the thirtieth day after filing, which here is July 1, unless the administrator orders earlier✓

If no denial order is in effect and no proceeding is pending, a registration application becomes effective at noon of the thirtieth day after filing, unless the administrator sets an earlier date or defers it. The fifteen-day figure belongs to hearing requests after a summary order, not to effectiveness. Registration is not effective the next day, and no affirmative order is needed; an order is how a security registered by qualification becomes effective, not a person's registration.Uniform Securities Act (1956) §202(a)

Agent Kim's registration became effective on March 10. If it is not renewed, when does it expire?

• a.March 9 of the next year, one year after the date it became effective
• b.December 31 of the following year, so a spring registration gets a full extra year
• c.June 30 of the same year, the midpoint of the annual registration cycle
• d.December 31 of the same year, the fixed expiration for all registrations✓

Every registration or notice filing expires on December 31 unless renewed, whatever the month in which it became effective. An expiration one year after the effective date, at mid-year, or at the end of the following year has no basis in the section.Uniform Securities Act (1956) §201(e)

For the past 12 months an adviser with no office in the state has advised 5 individuals who live there and 3 insurance companies located there. The adviser:

• a.Must register, since the adviser has eight clients in the state and the limit counts every client served
• b.Must register, since clients who are individuals defeat the exemption whatever their number may be
• c.Must register, since the exemption protects only advisers whose entire client list is made up of institutions
• d.Needs no registration, since insurers do not count and no more than five other clients exist✓

An adviser with no place of business in the state is exempt if, during the preceding twelve months, it has had no more than five clients other than the listed institutions, and insurance companies are among those institutions. Five individuals is within the limit, so counting all eight clients is wrong. The exemption is not limited to purely institutional client lists, and individuals do not defeat it so long as they stay within five.Uniform Securities Act (1956) §201(c)

An adviser with no place of business in the state serves only three state-resident clients: a bank, an insurance company, and an employee benefit plan with $2,000,000 in assets. Registration in the state is:

• a.Required, since only investment companies and other advisers qualify as exempt institutional clients
• b.Required, since the exemption applies only to advisers with five or fewer clients in the state
• c.Required, since any adviser paid for advice must register before it accepts a first institutional client
• d.Not required, since every client in the state belongs to a listed institutional class✓

An adviser with no place of business in the state need not register there if its only clients in the state are listed institutions, which include banks, insurance companies, and employee benefit plans with assets of at least $1,000,000. The five-client test is a separate alternative, the institutional list is longer than investment companies and advisers, and payment for advice alone does not force registration.Uniform Securities Act (1956) §201(c)

A federal covered adviser (registered with the SEC) has a place of business in the state. What may the state require of the firm itself?

• a.A full state registration with its own examination and a state review of its Form ADV
• b.A notice filing of its SEC documents and a notice filing fee, not a state registration✓
• c.A state registration that takes effect on the thirtieth day after filing and must be renewed each year
• d.Nothing at all, since an SEC-registered adviser is beyond the reach of state authority, even antifraud

A federal covered adviser files with the administrator the documents it filed with the SEC and pays a notice filing fee; it is not registered by the state. States still keep antifraud authority over these advisers, so the claim of no authority fails. Thirty-day effectiveness describes registration, which does not apply to the firm, although its representatives with a place of business in the state must register.Uniform Securities Act (1956) §202(b); §202(c)(3)

A state-registered adviser employs a representative who gives investment advice to clients in the state. Which statement is correct?

• a.Only a representative who manages discretionary accounts must register, not one who only recommends securities
• b.The representative registers separately, and it stays effective after leaving the adviser until December 31
• c.The representative needs no registration, since the adviser's registration covers every employee who advises clients
• d.The representative must be registered, and that registration is ineffective while unemployed by a registered adviser✓

An adviser required to be registered may employ an investment adviser representative only if that person is registered, and the registration is not effective during any period when the person is not employed by a registered adviser. The firm's registration automatically covers only partners, officers, and directors, not ordinary employees. The definition reaches anyone who recommends or advises, not only discretionary managers.Uniform Securities Act (1956) §201(d); §401(g)

After the administrator summarily suspends an agent's registration pending a proceeding, the Act says that within 15 days after receipt of a written request, the matter will be:

• a.Set down for hearing, and the suspension lapses on its own if no hearing has begun within thirty days
• b.Decided by the administrator on the written file alone, with no hearing unless a court orders one to be held
• c.Set down for hearing, and without a request or order for one the suspension stays in effect until modified or vacated✓
• d.Reviewed by a court, which must approve the suspension within fifteen days or the order becomes void

A summary order carries notice of the reasons and of the right to a hearing within fifteen days after a written request. If no hearing is requested or ordered, the order remains in effect until modified or vacated. The Act does not substitute a paper decision, does not make the suspension lapse after thirty days, and does not route the order to a court for approval.Uniform Securities Act (1956) §204(c)

A broker-dealer applies to withdraw its registration on June 1, and no revocation or suspension proceeding is pending or begun within the next 30 days. What follows?

• a.The withdrawal takes effect 30 days after receipt, and any later proceeding is then barred for all time
• b.The withdrawal takes effect immediately on filing, and the administrator loses all authority over the firm
• c.The withdrawal takes effect 30 days after receipt, and the administrator may proceed within one year✓
• d.The withdrawal takes effect after 90 days, and the administrator may proceed within two years

Withdrawal becomes effective thirty days after the application is received unless a proceeding is pending or begun within that period. Even after it takes effect, the administrator may institute a revocation or suspension proceeding within one year and make the order effective as of the last day of registration. Immediate effect, a permanent bar, and the ninety-day and two-year figures are all not in the section.Uniform Securities Act (1956) §204(e)

An applicant for broker-dealer registration has a clean record and has passed the required examination, but has never worked in the securities business. May the administrator deny registration solely for lack of experience?

• a.Yes, because at least two years of securities experience are required of every broker-dealer applicant
• b.No, because an order may not rest on lack of experience alone if the applicant is qualified✓
• c.No, but only if the applicant also posts a bond equal to the net capital the administrator requires
• d.Yes, because qualification is judged on experience alone, and an examination result carries no weight

The administrator may not enter an order solely on lack of experience if the applicant is qualified by training or knowledge or both. The Act sets no minimum number of years, and examinations are an accepted measure of qualification. A bond may be required of some registrants under other provisions, but it is not a condition that rescues an applicant from a lack-of-experience denial.Uniform Securities Act (1956) §204(b)(3)

Agent Roy was convicted of a securities-related misdemeanor 8 years ago and, separately, of an unrelated felony 12 years ago. Under §204(a)(2)(C), which conviction supports denying registration?

• a.Only the misdemeanor, since the conviction must fall within ten years and the felony does not✓
• b.Only the felony, since felonies carry no time limit while misdemeanors age out after five years
• c.Both, since any felony or any securities misdemeanor can be used, whatever the age of the conviction
• d.Neither, since the administrator may act only on a conviction within the past three years

A ground for action exists if the person has been convicted, within the past ten years, of a misdemeanor involving a security or of any felony. The eight-year-old securities misdemeanor is inside that period and the twelve-year-old felony is outside it. The time limit applies to felonies too, it is ten years rather than five or three, and age is not ignored.Uniform Securities Act (1956) §204(a)(2)(C)

Assuming no other exclusion applies, which of the following must register as an investment adviser?

• a.A lawyer who gives securities advice solely incidental to the practice of law, and charges a fee for it
• b.A publisher of a bona fide financial newsletter whose content is not tailored to each reader's situation
• c.A broker-dealer's agent whose advice is solely incidental to brokerage, with no special compensation
• d.A financial planner who, as part of a regular business, is paid to advise clients on buying and selling securities✓

Investment adviser includes financial planners and others who, for compensation and as part of a business, advise on securities. The definition excludes a lawyer, accountant, engineer, or teacher whose advice is solely incidental to the profession, the publisher of a bona fide publication that is not tailored to each client's situation, and a broker-dealer or agent whose advice is solely incidental to brokerage without special compensation.Uniform Securities Act (1956) §401(f)

A New York dealer has no place of business in State A and effects transactions there only with other broker-dealers and banks. In State A the dealer:

• a.Falls outside the definition, having no state office and dealing only with listed institutions✓
• b.Must register, since any dealer that solicits a state resident must register there first
• c.Must register, since banks are excluded from the definition but other broker-dealers are not excluded
• d.Must register unless it has fewer than ten customers in State A in any twelve-month period of time

The definition of broker-dealer excludes a person with no place of business in the state who deals there exclusively with issuers, other broker-dealers, banks, and similar institutions. The ten-customer idea comes from a different test, the private-offering exemption for transactions, and has no role in the definition.Uniform Securities Act (1956) §401(c)

An employee of a private company sells company stock to existing employees and receives no commission or other remuneration for soliciting anyone. Is the employee an agent?

• a.Yes, unless the stock has also been registered by qualification in the state, in which case the exclusion applies
• b.Yes, since any individual who represents an issuer in selling its own stock is an agent, whatever the buyers
• c.No, since dealing only with existing employees, partners, or directors without remuneration is excluded from the definition✓
• d.No, since an employee of an issuer is excluded once the stock itself has been registered in the state

Agent does not include an individual who represents an issuer in transactions with existing employees, partners, or directors if no commission or other remuneration is paid for soliciting. Representing an issuer is not enough alone to make someone an agent. Registration of the stock does not decide the point; a registered security sold by an issuer's employee generally does fall within the definition.Uniform Securities Act (1956) §401(b)

An applicant's registration application is complete but the filing fee is deficient. The administrator may enter which order, and when must it be vacated?

• a.A revocation order, vacated only after a hearing and written findings
• b.A bar from employment, vacated only when the next renewal fee is paid
• c.A suspension of up to 30 days, vacated automatically when the period ends
• d.A denial order only, vacated once the fee deficiency has been corrected✓

For failure to pay the proper filing fee the administrator may enter only a denial order, and must vacate it when the deficiency is corrected. Revocation, a timed suspension, and a bar from employment are not available for this ground.Uniform Securities Act (1956) §204(a)(2)(K)

An agent resigns from Broker-Dealer Alpha on March 1 and is hired by Broker-Dealer Beta on June 15. How should her state registration be described for the period between those two dates?

• a.Effective for 30 days after March 1, as with a withdrawal application, and then suspended until Beta files its notice of her hiring
• b.Effective through the next December 31 renewal date, since it was issued to her as an individual rather than to Alpha as her employer
• c.Not effective, because an agent's registration runs only while she is associated with a particular registered broker-dealer or issuer✓
• d.Effective until the Administrator enters a cancellation order after a finding that she has ceased doing business as an agent

An agent's registration is not effective during any period when she is not associated with a specific registered broker-dealer or issuer, so she cannot transact business during the gap. It does not run to the year-end as a personal licence would. The 30-day period belongs to withdrawal applications, and no cancellation order is needed for the registration to be ineffective.Uniform Securities Act (1956, as amended by NASAA) §201(b)

A broker-dealer files its application for state registration on June 10. No denial order is in effect, no proceeding is pending, and the Administrator has not set an earlier date. When does the registration become effective?

• a.Only when the Administrator enters an order granting it, as with a security registered by qualification
• b.At noon on July 10, the thirtieth day after filing, since no order or proceeding has delayed it✓
• c.At noon on July 9, because the thirty days are counted beginning with the day of filing
• d.At noon on June 25, the fifteenth day after filing, the period for a hearing on a summary order

Absent a denial order or pending proceeding, registration takes effect at noon of the thirtieth day after filing; June 10 plus 30 days is July 10. The 15-day figure applies to hearings after a summary order, not to effectiveness. The count starts the day after filing, and no affirmative order is needed, unlike registration by qualification of a security.Uniform Securities Act (1956, as amended by NASAA) §202(a)