FINRA Series 63 Securities Exam Study Notes, Exams of Business Economics

Download FINRA Series 63 Securities Exam Study Notes and more Exams Business Economics in PDF only on Docsity! FINRA Series 63 selling away - when a representative engages in private securities transactions without the knowledge or consent of his employer. commingling - when a brokerage firm combines its securities with customer's securities (e.g., to present collateral for a bank loan). historical performance - may be shown to investors as long as proper disclosure is provided indicating that it DOES NOT predict future results. legal person - an entity that can engage in legal activities such as signing contracts or opening accounts. These folks are not dead, minors, or people who have been declared mentally incompetent. promptly - The time frame that agents as well as broker-dealers or issuers notify the Administrator when agents begin or terminate employment. December 31st, annually - Registration for both agents and investment adviser representatives expires: administrator - The official or agency administering the securities laws of a state. advertisement - Any material designed for use by newspapers, magazines, radio, television, telephone recording or any other public medium to solicit business. agent - An individual who represents a broker/dealer or an issuer when selling or trying to sell securities to the investing public. This individual is considered an _____ whether he or she actually receives or simply solicits orders. Also known as "registered representatives." anti-fraud rules - Although exempt securities and securities sold in exempt transactions are exempt from the registration and advertising filing requirements of the Uniform Securities Act, no security or person is exempt from the ________________. associated person - Any employee, manager, director, officer or partner of a member broker/dealer or another entity (issuer, bank, etc.) or any person controlling, controlled by or in common control with that member is considered an _____________________ of that member. blue-sky laws - State regulations governing the securities industry. broker/dealer - any person engaged in the business of effecting transactions in securities for the account of others or for his own account. consent to service of process - When applying for registration in a state, agents, broker/dealers and investment advisers must agree to respond to all subpoenas served on them in that state, even if they don't reside there. This is called _____________________________. exempt security - A security exempt from the registration requirements (although not from the anti-fraud requirements) of the Uniform Securities Act (for example, U.S. government and municipal securities). exempt transaction - A transaction exempt from registration and advertising requirements under the Uniform Securities Act. Examples of exempt transactions include private placements and fiduciary transactions. federal covered advisor - An investment adviser that is regulated by the Securities Exchange Commission (SEC) under the Investment Adviser's Act of 1940 rather than the state. Generally, those who manage investment company (mutual fund) portfolios or those who have more than $30 million in assets under management. federal covered security - Security exempt from state registration. Includes new securities issued by companies whose securities already trade on a national securities exchange or in the NASDAQ National Market System, including any security senior or equal to that security. Also exempt from state registration are new securities issued by investment companies (mutual funds). fidelity (surety) bond - A type of bond that indemnifies customers against losses due to check forgery, lost securities, or fraudulent trading. May be required of every agent, broker/dealer and investment adviser at the discretion of the Administrator. Minimum coverage must not be less than $35,000. Broker/dealers with net capital of $35,000 or more may be exempt from the requirement. Appropriate deposits of cash or securities are acceptable by the administrator in lieu of a bond. fraud - The deliberate concealment, misrepresentation or omission of material information or the truth to deceive or manipulate another party for unlawful or unfair gain. guaranteed securities - A __________ ________ is one guaranteed for the payment of principal, interest or dividends. inside information - The federal legislation requiring the full and fair disclosure of all material information about the issuance of new securities. securities and exchange commission (sec) - The commission, created by Congress to protect investors, that enforces the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and other federal securities laws. security - A ________ is defined as any instrument that can be traded for value. An investment is considered one of these, if a person invests his or her money in a common enterprise with the expectation of profit from the managerial efforts of a third party. Insurance policies and fixed annuities are not considered to be __________. solicit a purchase - "offer to sell" is defined as an attempt to ______ _ ________ or sale in a security. An offer includes every offer to dispose of a security for a client or solicitation of an offer to buy a security from a client for value. Included in this definition are incentives related to the offer such as: ♦ Gift of assessable stock ♦ Warrants ♦ Securities offered as a "bonus" for buying other securities or merchandise ♦ Rights offer, offer to sell - Not included within the definition of an _____ or _____ __ ____ are: ♦ Bona fide pledges or loans ♦ Stock dividends ♦ Stockholder approved mergers ♦ Acts incident to approved corporate reorganizations register - If an agent represents a broker/dealer, they must always ________, no matter what they sell. exempt - Broker/dealers must register in every state that they sell in, unless ______. non-exempt - A ___-______ security must be registered in every state where it will be sold. agents, issuers or banks - The definition of a broker/dealer does not include: investment vehicle - An IRA or KEOGH plan is an __________ _______, but not a security itself. option, futures - However, commodity ______ contracts are considered to be securities, though commodity _______ contracts are not. issuer - Refers to "any person who issues or proposes to issue any security." Normally, the corporation who issued the securities, such as General Motors, etc., in the first place. issuer transaction - An ______ ___________ is another name for a primary-market transaction and will require registration, unless it is exempt or an exempt transaction. non-issuer transaction - A ___-______ ___________ is just another name for a secondary market trade, such as a transaction made by selling to stockholders. broker/dealer - A _____________ is a securities firm. dual capacity - The firm, as a broker/dealer, may act in ____ ________ as both broker and dealer, but not in the same transaction. accounts of customers - A broker always acts as an agent for the ________ __ _________. own account - A dealer always acts for his or her ___ _______, buying and selling securities for his or her own inventory, such as in the OTC market (a market maker is a dealer). an agent - A broker/dealer may be __ _____, but not vice versa. SEC and FINRA - Broker/dealers must register as such with the ___ ___ _____, as well as the state securities division. Insurance policies, endowments - _________ ________ or __________ are not securities, unless variable. must always register - If an agent represents a broker/dealer, they, ____ _____ ________ no matter what they sell. every state that they sell in - Agents must register in _____ _____ ____ ____ ____ __. There is no such thing as an exempt agent. unless exempt - Broker/dealers must register in every state that they sell in, ______ ______. every state where it will be sold - A non-exempt security must be registered in _____ _____ _____ __ ____ __ ____.