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Question 1 of 10
1. Question
Under which rule or act are all partners, directors, officers, and employees of every member of a national securities exchange required to be fingerprinted?
Correct
Under Rule 17(f)(2) of the Securities Exchange Act of 1934, all partners, directors, officers, and employees of every member of a national securities exchange, broker, dealer, registered transfer agent, and registered clearing agency are required to be fingerprinted. The fingerprints are submitted to the United States Attorney General to be processed and maintained on file.
Incorrect
Under Rule 17(f)(2) of the Securities Exchange Act of 1934, all partners, directors, officers, and employees of every member of a national securities exchange, broker, dealer, registered transfer agent, and registered clearing agency are required to be fingerprinted. The fingerprints are submitted to the United States Attorney General to be processed and maintained on file.
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Question 2 of 10
2. Question
What are the expectations to Rule 17(f)(2) of the Securities Exchange Act of 1934?
Correct
There are some exceptions to this rule such as employees who are not engaged in the sale of securities, employees who do not have regular access or do not regularly process securities or cash, and employees who do not have direct supervisory responsibility for employees with the responsibilities previously described.
Incorrect
There are some exceptions to this rule such as employees who are not engaged in the sale of securities, employees who do not have regular access or do not regularly process securities or cash, and employees who do not have direct supervisory responsibility for employees with the responsibilities previously described.
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Question 3 of 10
3. Question
What is the importance of fingerprinting all partners, directors, officers, and employees of every member of a national securities exchange, broker, dealer, registered transfer agent, and registered clearing agency?
Correct
The importance of this requirement lies in the ability that it provides for the United States government and regulatory organizations to identify members’ employees and to help prevent fraudulent activity.
Incorrect
The importance of this requirement lies in the ability that it provides for the United States government and regulatory organizations to identify members’ employees and to help prevent fraudulent activity.
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Question 4 of 10
4. Question
What is one example of an untrue statement of material fact?
Correct
One example of an untrue statement of material fact is in the case of the qualifications of portfolio managers and company management.
Assume that an investment company has stated in its sales literature that all of its portfolio managers have earned the CFA charter. In fact, several of the managers have passed the exams but have not yet been granted the charter. This would lead potential investors to believe that the portfolio managers are more qualified than they actually might be.Incorrect
One example of an untrue statement of material fact is in the case of the qualifications of portfolio managers and company management.
Assume that an investment company has stated in its sales literature that all of its portfolio managers have earned the CFA charter. In fact, several of the managers have passed the exams but have not yet been granted the charter. This would lead potential investors to believe that the portfolio managers are more qualified than they actually might be. -
Question 5 of 10
5. Question
How does FINRA enforce rules and laws?
Correct
FINRA enforces rules and laws through its ability to bar individuals from association with member firms, to suspend brokers from association with member firms, and to levy fines and order restitution in cases of significant financial loss as a result of fraud or unethical sales practices.
Incorrect
FINRA enforces rules and laws through its ability to bar individuals from association with member firms, to suspend brokers from association with member firms, and to levy fines and order restitution in cases of significant financial loss as a result of fraud or unethical sales practices.
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Question 6 of 10
6. Question
The Investment Advisers Act was largely the result of…
Correct
The Act was largely the result of the stock market crash in 1929, which wiped out the savings of millions. As a result, the government felt the need to regulate the advice, counsel, and analyses provided to investors by investment advisers.
Incorrect
The Act was largely the result of the stock market crash in 1929, which wiped out the savings of millions. As a result, the government felt the need to regulate the advice, counsel, and analyses provided to investors by investment advisers.
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Question 7 of 10
7. Question
Which of the following was the result of stock market crash in 1929?
Correct
The Investment Advisers Act of 1940 was largely the result of the stock market crash in 1929, which wiped out the savings of millions. As a result, the government felt the need to regulate the advice, counsel, and analyses provided to investors by investment advisers.
Incorrect
The Investment Advisers Act of 1940 was largely the result of the stock market crash in 1929, which wiped out the savings of millions. As a result, the government felt the need to regulate the advice, counsel, and analyses provided to investors by investment advisers.
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Question 8 of 10
8. Question
Which of the following statements is true regarding the definition of investment adviser under the Investment Advisers Act of 1940?
Correct
Under the Investment Advisers Act of 1940, “investment adviser” is defined as “any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.”
Incorrect
Under the Investment Advisers Act of 1940, “investment adviser” is defined as “any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.”
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Question 9 of 10
9. Question
What is the result of the low sophistication of the customer, under the Investment Advisers’ Act?
Correct
The Investment Advisers’ Act is less concerned with the protection of sophisticated private investors and venture capital firms than with investment advice that is provided to less sophisticated investors without the resources to conduct the same level of due diligence for themselves. Scrutiny under the act increases with the size of the transaction, the complexity of the security, and the lower the sophistication of the customer.
Incorrect
The Investment Advisers’ Act is less concerned with the protection of sophisticated private investors and venture capital firms than with investment advice that is provided to less sophisticated investors without the resources to conduct the same level of due diligence for themselves. Scrutiny under the act increases with the size of the transaction, the complexity of the security, and the lower the sophistication of the customer.
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Question 10 of 10
10. Question
Which of the following statement is true regarding The Securities Act of 1933?
Correct
The Securities Act of 1933 was designed with two objectives in mind: (i) that investors are provided with all relevant information about any securities that are offered for sale and (ii) to prohibit fraudulent activities throughout the marketing and sale of securities. More specifically, the act requires securities to be registered with the Securities Exchange Commission. Some of the information that must be provided for the registration includes a description of the issuer’s business, a description of the security being marketed, information regarding the issuer’s management team, and certified financial statements of the issuer. Additionally, the act prohibits issuers, brokers, dealers, and other parties involved in the marketing and sale of securities from misrepresenting the features of the security or the financial status of the issuing company.
Incorrect
The Securities Act of 1933 was designed with two objectives in mind: (i) that investors are provided with all relevant information about any securities that are offered for sale and (ii) to prohibit fraudulent activities throughout the marketing and sale of securities. More specifically, the act requires securities to be registered with the Securities Exchange Commission. Some of the information that must be provided for the registration includes a description of the issuer’s business, a description of the security being marketed, information regarding the issuer’s management team, and certified financial statements of the issuer. Additionally, the act prohibits issuers, brokers, dealers, and other parties involved in the marketing and sale of securities from misrepresenting the features of the security or the financial status of the issuing company.