Series 63 QUESTIONS AND ANSWERS 100% CORRECT

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Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities law practice full time in New York state. He must register as an investment adviser in New York state if: a... . the clients of Smith's law firm are all residents of Connecticut but conduct their business with Smith in New York b. Smith's clients, none of whom are residents of New York, receive investment advice as an integral part of Smith's legal services c. he advises his wife, who also has an office in New York, that her investment in 15 technology stocks is too high d. the clients of Smith's law firm are New York residents and seek advice on the construction of trust documents that may be helpful in reducing taxes on the securities in their estates Correct Answer: b. Smith must register as an investment adviser in New York when or if he is offering investment advice as an integral part of his practice. Since his place of business is in New York, he must register in New York as an investment adviser, even though his clients are not themselves residents of the state. If Mr. Smith advises his wife, who also has an office in New York, that her investment in 15 technology stocks is too high, he need not register in New York because he is not charging his wife a fee for investment advice. Mr. Smith, as a securities lawyer, need not register in New York as an investment adviser when he advises clients on the construction of trust documents. Under the Uniform Securities Act, which of the following is a broker-dealer? A) Credit union that sells its own stock B) Issuer C) Corporation that sells interests in an oil and gas limited partnership to investors with the proceeds going to the issuer D) Agent Correct Answer: c. A broker-dealer is any person that buys or sells for the accounts of others or for his own account. In this case, an entity structured as a corporation is selling a security in the form of limited partnership units and is therefore a broker-dealer. A broker-dealer is not an issuer or an agent. A broker-dealer having no place of business in a state is not required to be registered in that state if the broker-dealer A) is a member of FINRA B) is licensed/registered in its state of residence C) is a member of the New York Stock Exchange D) does no business in that state other than with institutional clients Correct Answer: d. A broker-dealer must be registered in every state it sells or offers to sell securities, unless an exemption is available. If a broker-dealer has no office in a particular state and no business is done in that state other than with institutional clients, registration there is not required. Which of the following firms in the business of rendering investment advice for compensation would be considered a federal covered adviser? A) Retire in Luxury Pension Plan Consultants advising several corporate retirement plans with combined total assets of $145 million B) GHI Consultants, a sole proprietorship, managing $89 million belonging to high net worth individuals C) ABC Money Managers, a partnership with $385 million under management D) DEF Fund managers, a corporation managing an unregistered hedge fund with $10 million in assets Correct Answer: c. It makes no difference what the structure of the adviser is. As long as the assets under management are $110 million or more, SEC registration is required. If the investment company is registered under the Investment Company Act of 1940, the adviser must be registered regardless of size. The Hedge Fund is an unregistered fund so the rule does not apply to it. Under the Dodd-Frank Act, the pension consultant must have $200 million under management to be eligible to be federal covered. Which of the following are NOT agents as defined in the USA? A broker-dealer acting on behalf of a properly registered issuer An individual representing the U.S. government in the sale of its securities An individual who, acting on behalf of a broker-dealer, sells exempt securities or engages in an exempt transaction An individual who represents an issuer selling a nonexempt security in a nonexempt transaction Correct Answer: I and II A broker-dealer by definition is not an agent. An individual who, while acting on behalf of the issuer, sells certain exempt securities, such as those issued by the U.S. government, is not an agent. The exclusion from the definition of an agent only applies to those individuals who are selling on behalf of the issuer (never a broker-dealer) and only when the transaction is exempt or the issuer is one of a specified list of exempt issuers. Under the terms of the Uniform Securities Act, which of the following is an investment adviser for purposes of state regulatory jurisdiction? A) An accountant locate [Show More]

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