Section One
Federal Law Review 7
Introduction 7
The Securities Act of 1933 7
The Prospectus 7
The Final Prospectus 8
SEC Disclaimer 8
Misrepresentations 8
The Securities Exchange Act of 1934 9
The Securities Exchange Commission/SEC 9
Extension of Credit 10
Public Utilities Holding Company
Act of 1935 10
The Maloney Act of 1938/NASD 10
The Trust Indenture Act of 1939 10
Investment Advisors Act of 1940 11
Investment Company Act of 1940 11
Securities Investor Protection Corporation
Act of 1970 (SIPC) 11
Net Capital Requirement 11
Customer Coverage 12
Fidelity Bond 12
The Insider Trading and Securities Fraud
Enforcement Act of 1988 12
Fire Wall 13
The Telephone Consumer Protection
Act of 1991 13
Exemption from the Telephone Consumer
Protection Act of 1991 14
National Securities Market Improvement
Act of 1996 14
The Uniform Securities Act
(also known as “USA” or “The Act”) 14

Section Two
Definition of Terms 15
Introduction 15
Security 15
Person 17
Broker Dealer 17
Agent 17
Issuer 18
Non-Issuer 18
Investment Advisor 18
Investment Advisor Representative 19
Institutional Investor 19
Accredited Investor 20
Qualified Purchaser 20
Private Investment Company 20
Offer/Offer To Sell/Offer To Buy 20
Sale/Sell 20
Guarantee/Guaranteed 21
Contumacy 21
Federally Covered Exemption 21

Section Three
Registration of Broker Dealers,
Investment Advisors and Agents 27
Introduction 27
Registration of Broker Dealers 27
Agent Registration 28
Registering Broker Dealers 28
Financial Requirements 29
Registering Agents 29
Changes in an Agent’s Employment 29
Mergers and Acquisitions of Firms 30
Renewing Registrations 30
Canadian Firms and Agents 30
Investment Advisor Registration 30
The National Market Improvement Act
of 1996/The Coordination Act 30
Investment Advisor Representative 31
Investment Advisor Registration 31
Capital Requirements 31
Exams 32
Advertising and Sales Literature 32
Brochure Delivery 33
Wrap Accounts 33

Section Four
Securities Registration, Exempt
Securities and Exempt Transactions 39
Introduction 39
Exempt Securities 39
Securities Registration 39
Registration of IPO’s Through Coordination 39
Registration of Established Issuers/Registration
Through Filing or Notification 40
Registration of Non-Established
Issuers/Registration Through Qualification 41


 

Exempt Securities Federally
Covered Exemption 42
Exempt Transactions 43
Private Placements/Regulation D Offerings 43
Transactions with Financial Institutions 43
Transactions with Fiduciaries 43
Transactions with Underwriters 44
Unsolicited Orders 44
Transactions in Mortgage Backed Securities 44
Pledges 44
Offers to Existing Securities Holders 44
Offers Made Before the Registration
Statement is Effective 44
Pre-organization Certificates 45
Isolated Non-issuer Transactions 45
Non-issuer Transactions 45

Section Five
Professional Conduct and
Prohibited and Fraudulent Actions 51
Introduction 51
Fraud 51
Professional Conduct 51
Suitability 52
Market Manipulation 52
The Role of The Investment Advisor 53
Additional Compensation For An
Investment Advisor 53
Agency Cross Transactions 53
Disclosures By An Investment Advisor 53
Investment Advisor Contracts 54
Private Investment Companies/Hedge Funds 54

Section Six
State Securities Administrator
The Uniform Securities Act 61
Introduction 61
Actions By The State Securities Administrator 61
Cancellation of a Registration 62
Withdrawal of a Registration 62
Actions Against an Issuer of Securities 62
Rule Changes 62
Investigations 62
Civil and Criminal Penalties 63
Jurisdiction of the State Securities
Administrator 64
Introduction 64
Administrator’s Jurisdiction Over Securities
Transactions 64
Right of Rescission 66
Statute of Limitations 66

 

PRETEST ANSWER KEY

Section Two
Definition of Terms 22 73

Section Three
Registration of Broker
Dealers, Investment
Advisors and Agents 34 75

Section Four
Securities Registration,
Exempt Securities and
Exempt Transactions 46 77

Section Five
Professional Conduct
and Prohibited and
Fraudulent Actions 55 79

Section Six
State Securities
Administrator
The Uniform
Securities Act 67 81

GLOSSARY OF EXAM TERMS 83