Series 65 – Uniform Investment Adviser Law Exam Uniform Securities Act and State Regulations 1 — Questions and Answers
Question 1: Under the Uniform Securities Act, who is defined as an 'investment adviser representative' (IAR)?
- Any employee of a registered investment adviser
- A person who is supervised by an investment adviser and makes investment recommendations or manages client accounts (Correct answer)
- Any person who sells securities on behalf of an investment adviser
- A person who prepares marketing materials for an investment adviser
Correct answer: A person who is supervised by an investment adviser and makes investment recommendations or manages client accounts
An IAR is an individual associated with a registered investment adviser who provides investment advice, manages client portfolios, or solicits advisory clients.
Question 2: What is the typical notice filing requirement for a federally covered investment adviser in a state?
- Full state registration as if they were a state-registered adviser
- Filing a copy of Form ADV and paying a state fee, but not full state registration (Correct answer)
- No filing required in any state
- Filing Form U4 for each IAR located in the state
Correct answer: Filing a copy of Form ADV and paying a state fee, but not full state registration
Federally covered advisers (SEC-registered) must file a notice with each state where they have a place of business, typically submitting Form ADV and paying a fee, rather than registering as a state adviser.
Question 3: Under the Uniform Securities Act, which of the following is NOT exempt from the definition of a broker-dealer?
- An agent trading only for their own account
- A bank effecting securities transactions
- A firm that regularly buys and sells securities for its own account with the public (Correct answer)
- A person who has no place of business in the state and deals only with issuers
Correct answer: A firm that regularly buys and sells securities for its own account with the public
A firm that regularly buys and sells securities with the public for its own account as a dealer is not exempt from broker-dealer registration requirements.
Question 4: What authority does a state securities administrator have under the Uniform Securities Act?
- Only the authority to collect registration fees
- The authority to register securities, advisers, and broker-dealers, investigate violations, issue cease-and-desist orders, and seek civil and criminal penalties (Correct answer)
- Only the authority to approve or deny new securities offerings
- The authority to set national securities regulations
Correct answer: The authority to register securities, advisers, and broker-dealers, investigate violations, issue cease-and-desist orders, and seek civil and criminal penalties
State administrators have broad authority including registration oversight, investigation of fraud and violations, administrative penalties, and referral of cases for civil or criminal action.
Question 5: Which of the following securities is exempt from registration under the Uniform Securities Act?
- A new corporate IPO
- U.S. government securities (Correct answer)
- A variable annuity contract
- Shares of a new startup company
Correct answer: U.S. government securities
U.S. government securities are exempt from registration under the Uniform Securities Act because they are issued by the federal government and subject to federal oversight.
Question 6: Under the Uniform Securities Act, what is the maximum criminal penalty for willful violations?
- $5,000 fine and/or 1 year imprisonment
- $5,000 fine and/or 3 years imprisonment (Correct answer)
- $10,000 fine and/or 5 years imprisonment
- $50,000 fine and/or 10 years imprisonment
Correct answer: $5,000 fine and/or 3 years imprisonment
The Uniform Securities Act provides for criminal penalties of up to $5,000 in fines and/or up to 3 years in prison for willful violations of the Act.
Series 65 – Uniform Investment Adviser Law Exam Uniform Securities Act and State Regulations 1
Under the Uniform Securities Act, who is defined as an 'investment adviser representative' (IAR)?