FINRA Series-63 - Uniform Securities State Law Examination

“T + 3” is an abbreviation indicating that the settlement date will be three business days after the trade date, which is the “regular way settlement” for transactions involving stocks and corporate and municipal bonds.

When a bond issue has been effectively registered with the state Administrator, it can be offered for sale in the state. The bond’s acceptance by the Administrator simply means that the issuer has supplied enough information in order for an investor to judge the quality of the bond for himself; it in no way implies that the bond is of sound quality. It could, in fact, be a very risky security and still have met the registration requirements.

Based on the facts provided, Rich Quick need not register in Florida since he has no offices in the state of Florida, and he is conducting business for existing clients who are merely vacationing in Florida and are not residents of the state.

As defined by the Uniform Securities Act, an exempt security is one that need not be registered in the state in which it is sold. Selections A and D describe exempt transactions. Although securities issued by financial institutions, such as banks, are exempt securities, not all securities that a bank purchases and sells qualify as exempt securities. Private placements may also be exempt transactions, but there are other stipulations that must be met.

Under the NASAA Model Rules, the statue of limitations for civil liabilities is the earlier of two years after the discovery of facts and three years after the sale. This follows the recommendations provided by the Uniform Securities Act of 1956.

The amount of money that the investment adviser currently has under management need not be included in an investment advisory contract. The contract does have to include the term of the contract, the advisory fees and the formula used to compute them, and a statement that the contract cannot be assigned to another party without the client’s consent, along with other information.

There is no specified turnover ratio assigned to the prohibited practice of churning since some investors are simply more frequent traders than others.

Painting the tape refers to the illegal activity of a group of investors who buy and sell a security among themselves to create an artificially high volume of trading in hopes of luring investors to buy the security. This is an attempt to manipulate the market and, as such, is illegal.

The term “investment adviser” does not apply to Selections II or III. The term “investment adviser” does not apply to a bank or savings institution or to an investment adviser representative. Those persons are specifically excluded from the definition provided by the USA. Any investment advisory firm, regardless of whether it is owned and operated by a sole proprietor, is considered to be an investment adviser. A broker-dealer that charges for its investment advice, even if it claims that the advice is incidental to its business, would be considered an investment adviser due to the special remuneration the firm receives for its advisory services.

You can tell her that you will be able to execute this for her as a “market not held” order that permits you to use your discretion in timing the purchase in order to try to get a better price than currently exists. As long as you are only being requested to use your discretion in the timing and price of the transaction, and not in the actual security being traded or the size of the trade, you do not need written authorization. However, if written authorization is required, you must have it in your hand before you can effect a transaction. In other words, it isn’t good enough for it to be in the mail.