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Question 1 of 10
1. Question
Which of the following statements are included in the Establishing rules?
I. The Administrator may create rules, modify existing rules, or withdraw rules
II. The Administrator must publish all of the rules (and any modifications or withdrawals) that it issues
III. The rules that the Administrator issues must be inconsistent with the provisions of the Uniform Securities Act
IV. The rules enacted by the Administrator apply to allCorrect
Establishing rules
The Uniform Securities Act gives the Administrator the power to establish rules to promote the implementation of the Act. These rules include the following:
• The Administrator may create rules, modify existing rules, or withdraw rules.
• The Administrator must publish all of the rules (and any modifications or withdrawals) that it issues.
• The rules that the Administrator issues must be consistent with the provisions of the Uniform Securities Act.
• The rules enacted by the Administrator apply to all.
• The Administrator’s rules do not amend the provisions of the Uniform Securities Act, but carry equal force in the state over which the Administrator has jurisdiction.Incorrect
Establishing rules
The Uniform Securities Act gives the Administrator the power to establish rules to promote the implementation of the Act. These rules include the following:
• The Administrator may create rules, modify existing rules, or withdraw rules.
• The Administrator must publish all of the rules (and any modifications or withdrawals) that it issues.
• The rules that the Administrator issues must be consistent with the provisions of the Uniform Securities Act.
• The rules enacted by the Administrator apply to all.
• The Administrator’s rules do not amend the provisions of the Uniform Securities Act, but carry equal force in the state over which the Administrator has jurisdiction. -
Question 2 of 10
2. Question
Which of the following statements is true regarding power to issue cease-and-desist orders?
I. One of the powers of the Administrator is the ability to prevent an anticipated violation of the Uniform Securities Act
II. If the Administrator has found that a violation is about to occur, it may not issue a cease-and-desist order
III. The Administrator is required to hold a hearing prior to issuing such an order
IV. A cease-and-desist order prohibits a specific party from engaging in a particular activityCorrect
Power to issue cease-and-desist orders
One of the powers of the Administrator is the ability to prevent an anticipated violation of the Uniform Securities Act. If the Administrator has found that a violation is about to occur, it may issue a cease-and-desist order. The Administrator is not required to hold a hearing prior to issuing such an order. A cease-and-desist order prohibits a specific party from engaging in a particular activity. The Administrator’s power to issue cease-and-desist orders enables the Administrator to proactively protect investors instead of merely reacting after the violation has already occurred. Although the Administrator does not have the authority to enforce a cease-and-desist order, if a party ignores the Administrator’s cease- and-desist order, the Administrator may petition a court to issue an injunction against the party.Incorrect
Power to issue cease-and-desist orders
One of the powers of the Administrator is the ability to prevent an anticipated violation of the Uniform Securities Act. If the Administrator has found that a violation is about to occur, it may issue a cease-and-desist order. The Administrator is not required to hold a hearing prior to issuing such an order. A cease-and-desist order prohibits a specific party from engaging in a particular activity. The Administrator’s power to issue cease-and-desist orders enables the Administrator to proactively protect investors instead of merely reacting after the violation has already occurred. Although the Administrator does not have the authority to enforce a cease-and-desist order, if a party ignores the Administrator’s cease- and-desist order, the Administrator may petition a court to issue an injunction against the party. -
Question 3 of 10
3. Question
Which of the following statements is true regarding canceling and withdrawing registration?
I. In addition to the power to deny, suspend, or revoke a party’s registration, Administrators also have the power to cancel registration
II. A canceled registration is not grounds for a future denial, suspension, or revocation of registration and does not carry a penalty
III. An Administrator may cancel a party’s registration if the Administrator determines that the registrant has continued to exist or is conducting business in the state
IV. If a party requests the withdrawal of its registration, the withdrawal will become effective thirty days after the application for withdrawal is receivedCorrect
Canceling and withdrawing registration
In addition to the power to deny, suspend, or revoke a party’s registration, Administrators also have the power to cancel registration. A canceled registration is not grounds for a future denial, suspension, or revocation of registration and does not carry a penalty. An Administrator may cancel a party’s registration if the Administrator determines that the registrant has ceased to exist (is no longer considered to be a legal person) or is no longer conducting business in the state. A registered party also has the option of withdrawing its own registration without penalty as long as the Administrator has not already initiated a proceeding to suspend or revoke the registration. A withdrawn registration will not prevent the party from obtaining registration in the future. If a party requests the withdrawal of its registration, the withdrawal will become effective thirty days after the application for withdrawal is received.Incorrect
Canceling and withdrawing registration
In addition to the power to deny, suspend, or revoke a party’s registration, Administrators also have the power to cancel registration. A canceled registration is not grounds for a future denial, suspension, or revocation of registration and does not carry a penalty. An Administrator may cancel a party’s registration if the Administrator determines that the registrant has ceased to exist (is no longer considered to be a legal person) or is no longer conducting business in the state. A registered party also has the option of withdrawing its own registration without penalty as long as the Administrator has not already initiated a proceeding to suspend or revoke the registration. A withdrawn registration will not prevent the party from obtaining registration in the future. If a party requests the withdrawal of its registration, the withdrawal will become effective thirty days after the application for withdrawal is received. -
Question 4 of 10
4. Question
Which of the following statements is true regarding fraud and associated criminal penalties?
I. Fraudulent securities transactions may result in criminal charges
II. For fraud to occur, it is enough for a person to provide misleading or false information during a securities transaction
III. The activity is not considered fraudulent unless the person deliberately acted in a manner designed to mislead
IV. For example, assume that an agent informed a client that a merger was likely to occur and would probably lead to a decrease in the value of a particular investment in the near futureCorrect
Fraud and associated criminal penalties
Fraudulent securities transactions may result in criminal charges. For fraud to occur, it is not enough for a person to provide misleading or false information during a securities transaction. The activity is not considered fraudulent unless the person deliberately acted in a manner designed to mislead. For example, assume that an agent informed a client that a merger was likely to occur and would probably lead to an increase in the value of a particular investment in the near future. Additionally, assume that the agent was aware that there were significant hurdles that might prevent the merger from occurring, but the agent withheld this information from the client in order to promote the sale. Withholding this information is fraudulent behavior.Incorrect
Fraud and associated criminal penalties
Fraudulent securities transactions may result in criminal charges. For fraud to occur, it is not enough for a person to provide misleading or false information during a securities transaction. The activity is not considered fraudulent unless the person deliberately acted in a manner designed to mislead. For example, assume that an agent informed a client that a merger was likely to occur and would probably lead to an increase in the value of a particular investment in the near future. Additionally, assume that the agent was aware that there were significant hurdles that might prevent the merger from occurring, but the agent withheld this information from the client in order to promote the sale. Withholding this information is fraudulent behavior. -
Question 5 of 10
5. Question
Which of the following statements is true regarding civil penalties for violators of Uniform Securities Act?
I. An investor may initiate civil proceedings if the investor is the victim of a security transaction that violates the provisions of the Uniform Securities Act or the implementing rules or orders of the Administrator
II. A lawsuit may be withdrawn if the investor purchased securities that were not sold in accordance with the Uniform Securities Act or from an unregistered agent
III. An investor has no right to sue if he or she is the victim of fraud
IV. The investor must initiate proceedings within two years of the investor’s discovery of the violationCorrect
Civil penalties for violators of Uniform Securities Act
An investor may initiate civil proceedings if the investor is the victim of a security transaction that violates the provisions of the Uniform Securities Act or the implementing rules or orders of the Administrator. A lawsuit may be filed if the investor purchased securities that were not sold in accordance with the Uniform Securities Act or from an unregistered agent. An investor also has the right to sue if he or she is the victim of fraud. In order to file such a lawsuit, the investor must initiate proceedings within two years of the investor’s discovery of the violation, or within three years from the date that the investor purchased the security or received the advice the advice at issue, whichever is earlier.Incorrect
Civil penalties for violators of Uniform Securities Act
An investor may initiate civil proceedings if the investor is the victim of a security transaction that violates the provisions of the Uniform Securities Act or the implementing rules or orders of the Administrator. A lawsuit may be filed if the investor purchased securities that were not sold in accordance with the Uniform Securities Act or from an unregistered agent. An investor also has the right to sue if he or she is the victim of fraud. In order to file such a lawsuit, the investor must initiate proceedings within two years of the investor’s discovery of the violation, or within three years from the date that the investor purchased the security or received the advice the advice at issue, whichever is earlier. -
Question 6 of 10
6. Question
Which of the following statements is true regarding interaction with federal rules and regulations?
Correct
Interaction with federal rules and regulations
In addition to knowing the provisions of the Uniform Securities Act, it is important to know the federal laws and regulations that interact with or complement the provisions of the Uniform Securities Act. The Series 63 Exam covers the provisions of the Uniform Securities Act. In many cases, the provisions of the Uniform Securities Act reference federal laws and regulations. As a result, it is important to be somewhat familiar with the federal laws and regulations applying to securities and securities transactions. These laws establish the requirements associated with the registration of certain securities and persons with the Securities and Exchange Commission (SEC) and establish provisions concerning acceptable business practices for security-related dealings.Incorrect
Interaction with federal rules and regulations
In addition to knowing the provisions of the Uniform Securities Act, it is important to know the federal laws and regulations that interact with or complement the provisions of the Uniform Securities Act. The Series 63 Exam covers the provisions of the Uniform Securities Act. In many cases, the provisions of the Uniform Securities Act reference federal laws and regulations. As a result, it is important to be somewhat familiar with the federal laws and regulations applying to securities and securities transactions. These laws establish the requirements associated with the registration of certain securities and persons with the Securities and Exchange Commission (SEC) and establish provisions concerning acceptable business practices for security-related dealings. -
Question 7 of 10
7. Question
Which of the following statements is true regarding timing for offering securities after registration with the SEC?
Correct
Timing for offering securities after registration with the SEC
Under the provisions of federal law, issuers that register a security with the Securities and Exchange Commission (SEC) may not begin sales for the security immediately following registration. Instead, issuers must wait for a period of at least twenty days before engaging in any sales activity for the recently registered security. During this waiting period, broker- dealers are permitted to canvas their clients to solicit indications of interest. An indication of interest is an indication that the client may be interested in investing in the security once it is available; however, no sales material (literature, cost information, etc.) may be provided to potential investors during the waiting period. Until the time that sales of the security may begin, no actual deals involving the security may be made or planned. Investors cannot be given the opportunity to purchase the security, or be made aware of the offering price of the security, until the date the security becomes available.Incorrect
Timing for offering securities after registration with the SEC
Under the provisions of federal law, issuers that register a security with the Securities and Exchange Commission (SEC) may not begin sales for the security immediately following registration. Instead, issuers must wait for a period of at least twenty days before engaging in any sales activity for the recently registered security. During this waiting period, broker- dealers are permitted to canvas their clients to solicit indications of interest. An indication of interest is an indication that the client may be interested in investing in the security once it is available; however, no sales material (literature, cost information, etc.) may be provided to potential investors during the waiting period. Until the time that sales of the security may begin, no actual deals involving the security may be made or planned. Investors cannot be given the opportunity to purchase the security, or be made aware of the offering price of the security, until the date the security becomes available. -
Question 8 of 10
8. Question
Which of the following statements is false regarding Securities Act of 1933 and the Securities Exchange Act of 1934?
Correct
Securities Act of 1933 and the Securities Exchange Act of 1934
The Securities Act of 1933 and the Securities Exchange Act of 1934 were enacted after the stock market crash of 1929. These pieces of legislation were designed to create accountability for the issuers of securities and to provide protection to the investing public. Together these acts established the standards requiring that certain securities, persons, exchanges, and associations be registered with the Securities and Exchange Commission (SEC), while others are exempt. These acts require that specific information be provided to the SEC and potential investors. For each security that must be registered, the issuer’s registration statement must include all of the information regarding the security that will be disclosed to potential investors in an understandable format. If material information is missing from the disclosure, or if the disclosure information is not readily understandable, the SEC will require the issuer to modify the disclosure information before the registration may become effective.Incorrect
Securities Act of 1933 and the Securities Exchange Act of 1934
The Securities Act of 1933 and the Securities Exchange Act of 1934 were enacted after the stock market crash of 1929. These pieces of legislation were designed to create accountability for the issuers of securities and to provide protection to the investing public. Together these acts established the standards requiring that certain securities, persons, exchanges, and associations be registered with the Securities and Exchange Commission (SEC), while others are exempt. These acts require that specific information be provided to the SEC and potential investors. For each security that must be registered, the issuer’s registration statement must include all of the information regarding the security that will be disclosed to potential investors in an understandable format. If material information is missing from the disclosure, or if the disclosure information is not readily understandable, the SEC will require the issuer to modify the disclosure information before the registration may become effective. -
Question 9 of 10
9. Question
Which of the following statements is true regarding SLUSA?
Correct
SLUSA
The Securities Litigation Uniform Standards Act of 1998 (SLUSA) is federal legislation that was adopted to provide more equality in regards to class action suits relating to securities transactions. The Securities Litigation Uniform Standards Act of 1998 gives federal courts the ability to assert jurisdiction over class actions suits involving securities fraud that have been filed in any given state and to preempt the state courts. This legislation was enacted to ensure federal courts would evaluate any class-action suit involving securities fraud using uniform federal laws regardless of the state in which the alleged fraud occurred. By requiring that class actions suits involving securities fraud be handled by federal courts in accordance with nationally applicable law, SLUSA helps to ensure that such cases will be handled consistently regardless of location.Incorrect
SLUSA
The Securities Litigation Uniform Standards Act of 1998 (SLUSA) is federal legislation that was adopted to provide more equality in regards to class action suits relating to securities transactions. The Securities Litigation Uniform Standards Act of 1998 gives federal courts the ability to assert jurisdiction over class actions suits involving securities fraud that have been filed in any given state and to preempt the state courts. This legislation was enacted to ensure federal courts would evaluate any class-action suit involving securities fraud using uniform federal laws regardless of the state in which the alleged fraud occurred. By requiring that class actions suits involving securities fraud be handled by federal courts in accordance with nationally applicable law, SLUSA helps to ensure that such cases will be handled consistently regardless of location. -
Question 10 of 10
10. Question
Which of the following statements is true regarding objectives of the Uniform Securities Act vs. the NSMIA of 1996?
Correct
Objectives of the Uniform Securities Act vs. the NSMIA of 1996
The National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the Uniform Securities Act. The goal of the Uniform Securities Act was to provide model legislation in an effort to promote the implementation of consistent security regulations across state lines. Congress drafted the National Securities Markets Improvements Act of 1996 (NSMIA). NSMIA was designed to eliminate the conflicts that existed between the many state regulations and the federal regulations, and to generate efficiency by establishing a clear division of responsibilities between the state regulators and the federal regulators. The NSMIA eliminated the duplication of efforts that existed between federal and state governments under previous legislation by defining the specific securities and transactions that would fall under federal jurisdiction.Incorrect
Objectives of the Uniform Securities Act vs. the NSMIA of 1996
The National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the Uniform Securities Act. The goal of the Uniform Securities Act was to provide model legislation in an effort to promote the implementation of consistent security regulations across state lines. Congress drafted the National Securities Markets Improvements Act of 1996 (NSMIA). NSMIA was designed to eliminate the conflicts that existed between the many state regulations and the federal regulations, and to generate efficiency by establishing a clear division of responsibilities between the state regulators and the federal regulators. The NSMIA eliminated the duplication of efforts that existed between federal and state governments under previous legislation by defining the specific securities and transactions that would fall under federal jurisdiction.