STC Series 66 Flashcards Chapter 1-6, STC Series 66 Chapter 9 Test, STC
Series 66 Chapter 10 Test, STC Series 66 Chapter 11, STC series 66
Chapter 12 test, STC Series 66 Chapter 1 Test, STC Series 66 Chapter 2
Test, STC Series 66 Chapter 3 Test, STC…
Is a firm considered a BD if it has no office in a state and only deals with institutional clients in the state?
- CORRECT ANSWER - No. The firm is excluded from the BD definition.
May an IA use testimonials in its promotional material? - CORRECT ANSWER - No. IA's may not use
testimonials in promotional material.
True or False: Securities that are listed on the NYSE are exempt from state registration. - CORRECT
ANSWER - True. Securities that are listed on the NYSE are exempt from state registration.
True or False: A trade of unregistered, non-exempt securities between two BDs is a violation of the USA.
- CORRECT ANSWER - False. A trade of unregistered, non-exempt securities between two BDs is a
violation of the USA IS an exempt transaction.
Does a solicitor for an IA provide securities recommendations? - CORRECT ANSWER - No. Solicitors only
solicit new clients; they do not recommend or approve transactions.
May the administrator set net capital requirements for BDs? - CORRECT ANSWER - Yes. The
administrator may set net capital requirements for BD
What form is used to notify administrators that an IA is maintaining custody of client assets? - CORRECT
ANSWER - Form ADV
The ____________________________ is an organization consisting of state administrators. - CORRECT
ANSWER - The North American Securities Administrators Association (NASAA) is an organization
consisting of state Administrators.
What is the three-pronged test for determining whether a firm meets the IA definition? - CORRECT
ANSWER - ABC. A = advice / analyses, B=business, C= compensation
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,An intrastate offering use which method of state securities registration? - CORRECT ANSWER -
Qualification
Does the de minimis exemption apply to BDs that have no place of business in a state? - CORRECT
ANSWER - No. The de minimis exemption only applies to IAs and IARs.
What criteria must be met for commercial paper to be exempt from registration? - CORRECT ANSWER -
A 270-day maximum life, minimum denomination of $50,000, rated in one of the top-three categories
according to an NRSRO.
What is form ADV-E? - CORRECT ANSWER - Form filed by an independent public accountant after
auditing the records of an IA maintaining custody of client assets.
IAs file their applications electronically through the ____________ - CORRECT ANSWER - IAs file their
applications electronically through the Investment Adviser Registration Depository (IARD)
Is Jim an agent if he works in ABC's retirement dept. and, once a year, places ABC stock in employees'
accounts? - CORRECT ANSWER - No, Jim is representing an issuer in an exempt transaction.
A publicly traded corporation has 20,000,000 shares of common stock outstanding and an investor buys
1,400,000 of the shares in the open market. Which of the following forms is the investor required to file
with the SEC? - CORRECT ANSWER - Form 13D
Any investor that acquires more than 5% of the common stock of a reporting company is required to file
Form 13D with the SEC. Since the client has acquired 7% of the 20,000,000 outstanding common shares
($1.4 million ÷ $20 million), he is subject to the filing requirement. Form 13F is filed by institutional
investment managers that exercise investment discretion over $100 million or more in equity securities.
Form 144 is filed when an investor intends to sell restricted (private placement) stock or when an insider
intends to sell control stock.
Under Regulation D of the Securities Act of 1933, accredited investors include:
Accountants
Insurance companies
Any senior officer of a publicly traded company
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,Individuals with a net worth of one million dollars or more - CORRECT ANSWER - II and IV only
No single profession is specified in the definition of an accredited investor. Senior officers are included if
they are senior officers of the issuer. Institutional investors, such as insurance companies, are specified
in the regulation. A person with annual income of $200,000, or net worth of $1 million, is also
considered accredited.
When a client purchases mutual fund shares from a broker-dealer, she receives a summary prospectus.
When will the broker-dealer send the client a statutory (final) prospectus? - CORRECT ANSWER - After
the purchase has been completed, if requested
According to the Investment Company Act of 1940, a client who purchases mutual fund shares must
receive a statutory prospectus after the purchase has been completed. Therefore, if a summary
prospectus is delivered first, a client must receive or be given access to the statutory prospectus, if
requested.
According to the Securities Act of 1933, a pooled investment fund is considered a federal covered
security when it: - CORRECT ANSWER - Registers with the SEC under the Investment Company Act of
1940
An investment pool is considered a federal covered security when recognized as an investment company
under the Investment Company Act of 1940 and when its offering is registered with the SEC. Requesting
an exemption or employing a federal covered adviser does not make an investment pool an investment
company.
Which of the following events would NOT require a public company to file a Form 8-K report? - CORRECT
ANSWER - A minority owned subsidiary changes locations
Form 8-K is the report that companies must file with the SEC to announce material corporate events
that shareholders should know about. A change in the location of a minority owned subsidiary is not a
material event which may affect the company or its shareholders. All of the other answer choices
represent events which require the filing of a Form 8-K.
Which of the following would NOT be defined as an affiliated person under the Investment Company Act
of 1940? - CORRECT ANSWER - The outside legal counsel for an investment company
According to the Investment Company Act of 1940, an affiliated person is considered any officer,
director, partner, copartner, or employee of the investment company. The term also includes any
person who directly or indirectly owns, controls, or holds, with power to vote, 5% or more of the
outstanding securities.
3|Page
, A client purchases 1,500 shares of Bergman's Basketballs, an IPO that was underwritten by Broker-
Dealer X. If the salesperson who sold the shares to the client is employed by Broker-Dealer Z, a member
of the selling group, the client: - CORRECT ANSWER - Should receive the prospectus from Broker-Dealer
Z
Failing to furnish a client who has purchased shares of a new issue with a prospectus is an unethical
and/or dishonest business practice by a broker-dealer and/or an agent. The responsibility to furnish this
document falls on the broker-dealer that sold the security to the client.
Under the Securities Act of 1933, which of the following would MOST LIKELY be included in the
definition of an underwriter? - CORRECT ANSWER - A broker-dealer
A broker-dealer is considered an underwriter when it helps issuers raise capital through the sale of their
new issues. Agents (of broker-dealers) and investment adviser representatives (of investment advisers)
are the individual employees of their respective firms and are, therefore, not considered broker-dealers.
A hedge fund is being sold to accredited investors as a private placement under Regulation D. An agent
believes that this fund would be an excellent investment for several of his clients. The agent may
recommend the fund to which of the following investors? - CORRECT ANSWER - A middle-aged couple
who are both physicians with a joint annual income of $400,000
Many hedge funds are issued as private placements under Regulation D. In order to qualify for the
exemption, they must be offered only to accredited investors and/or no more than 35 non-accredited
investors. Accredited investors include:
Individuals with an annual income of at least $200,000 during the last two years who reasonably expect
to continue to earn that much in the future
A married couple with a joint income of at least $300,000 who reasonably expect their income to
continue at the same level in the future
An individual or a couple with a net worth of at least $1 million
The newly-retired investor meets the income requirement, but his income will likely drop now that he's
retired. The young, aggressive investor fails to meet either the income or the net worth requirements.
The couple that just won the lottery have income for the year that is likely much higher than normal and
it's unlikely to remain at the same level in the future. Only the couple who are both physicians and in
their prime earning years can reasonably expect to continue making the same income.
Under the Uniform Securities Act, which of the following transactions is NOT exempt from state
registration? - CORRECT ANSWER - A Rule 147 offering
The Rule 147 (intrastate) exemption is a federal or SEC exemption and does not apply to the Uniform
Securities Act. For that reason, an issuer conducting an offering of securities in one state is required to
register the offering in that state. On the other hand, a transaction by a fiduciary, such as an executor,
4|Page
Series 66 Chapter 10 Test, STC Series 66 Chapter 11, STC series 66
Chapter 12 test, STC Series 66 Chapter 1 Test, STC Series 66 Chapter 2
Test, STC Series 66 Chapter 3 Test, STC…
Is a firm considered a BD if it has no office in a state and only deals with institutional clients in the state?
- CORRECT ANSWER - No. The firm is excluded from the BD definition.
May an IA use testimonials in its promotional material? - CORRECT ANSWER - No. IA's may not use
testimonials in promotional material.
True or False: Securities that are listed on the NYSE are exempt from state registration. - CORRECT
ANSWER - True. Securities that are listed on the NYSE are exempt from state registration.
True or False: A trade of unregistered, non-exempt securities between two BDs is a violation of the USA.
- CORRECT ANSWER - False. A trade of unregistered, non-exempt securities between two BDs is a
violation of the USA IS an exempt transaction.
Does a solicitor for an IA provide securities recommendations? - CORRECT ANSWER - No. Solicitors only
solicit new clients; they do not recommend or approve transactions.
May the administrator set net capital requirements for BDs? - CORRECT ANSWER - Yes. The
administrator may set net capital requirements for BD
What form is used to notify administrators that an IA is maintaining custody of client assets? - CORRECT
ANSWER - Form ADV
The ____________________________ is an organization consisting of state administrators. - CORRECT
ANSWER - The North American Securities Administrators Association (NASAA) is an organization
consisting of state Administrators.
What is the three-pronged test for determining whether a firm meets the IA definition? - CORRECT
ANSWER - ABC. A = advice / analyses, B=business, C= compensation
1|Page
,An intrastate offering use which method of state securities registration? - CORRECT ANSWER -
Qualification
Does the de minimis exemption apply to BDs that have no place of business in a state? - CORRECT
ANSWER - No. The de minimis exemption only applies to IAs and IARs.
What criteria must be met for commercial paper to be exempt from registration? - CORRECT ANSWER -
A 270-day maximum life, minimum denomination of $50,000, rated in one of the top-three categories
according to an NRSRO.
What is form ADV-E? - CORRECT ANSWER - Form filed by an independent public accountant after
auditing the records of an IA maintaining custody of client assets.
IAs file their applications electronically through the ____________ - CORRECT ANSWER - IAs file their
applications electronically through the Investment Adviser Registration Depository (IARD)
Is Jim an agent if he works in ABC's retirement dept. and, once a year, places ABC stock in employees'
accounts? - CORRECT ANSWER - No, Jim is representing an issuer in an exempt transaction.
A publicly traded corporation has 20,000,000 shares of common stock outstanding and an investor buys
1,400,000 of the shares in the open market. Which of the following forms is the investor required to file
with the SEC? - CORRECT ANSWER - Form 13D
Any investor that acquires more than 5% of the common stock of a reporting company is required to file
Form 13D with the SEC. Since the client has acquired 7% of the 20,000,000 outstanding common shares
($1.4 million ÷ $20 million), he is subject to the filing requirement. Form 13F is filed by institutional
investment managers that exercise investment discretion over $100 million or more in equity securities.
Form 144 is filed when an investor intends to sell restricted (private placement) stock or when an insider
intends to sell control stock.
Under Regulation D of the Securities Act of 1933, accredited investors include:
Accountants
Insurance companies
Any senior officer of a publicly traded company
2|Page
,Individuals with a net worth of one million dollars or more - CORRECT ANSWER - II and IV only
No single profession is specified in the definition of an accredited investor. Senior officers are included if
they are senior officers of the issuer. Institutional investors, such as insurance companies, are specified
in the regulation. A person with annual income of $200,000, or net worth of $1 million, is also
considered accredited.
When a client purchases mutual fund shares from a broker-dealer, she receives a summary prospectus.
When will the broker-dealer send the client a statutory (final) prospectus? - CORRECT ANSWER - After
the purchase has been completed, if requested
According to the Investment Company Act of 1940, a client who purchases mutual fund shares must
receive a statutory prospectus after the purchase has been completed. Therefore, if a summary
prospectus is delivered first, a client must receive or be given access to the statutory prospectus, if
requested.
According to the Securities Act of 1933, a pooled investment fund is considered a federal covered
security when it: - CORRECT ANSWER - Registers with the SEC under the Investment Company Act of
1940
An investment pool is considered a federal covered security when recognized as an investment company
under the Investment Company Act of 1940 and when its offering is registered with the SEC. Requesting
an exemption or employing a federal covered adviser does not make an investment pool an investment
company.
Which of the following events would NOT require a public company to file a Form 8-K report? - CORRECT
ANSWER - A minority owned subsidiary changes locations
Form 8-K is the report that companies must file with the SEC to announce material corporate events
that shareholders should know about. A change in the location of a minority owned subsidiary is not a
material event which may affect the company or its shareholders. All of the other answer choices
represent events which require the filing of a Form 8-K.
Which of the following would NOT be defined as an affiliated person under the Investment Company Act
of 1940? - CORRECT ANSWER - The outside legal counsel for an investment company
According to the Investment Company Act of 1940, an affiliated person is considered any officer,
director, partner, copartner, or employee of the investment company. The term also includes any
person who directly or indirectly owns, controls, or holds, with power to vote, 5% or more of the
outstanding securities.
3|Page
, A client purchases 1,500 shares of Bergman's Basketballs, an IPO that was underwritten by Broker-
Dealer X. If the salesperson who sold the shares to the client is employed by Broker-Dealer Z, a member
of the selling group, the client: - CORRECT ANSWER - Should receive the prospectus from Broker-Dealer
Z
Failing to furnish a client who has purchased shares of a new issue with a prospectus is an unethical
and/or dishonest business practice by a broker-dealer and/or an agent. The responsibility to furnish this
document falls on the broker-dealer that sold the security to the client.
Under the Securities Act of 1933, which of the following would MOST LIKELY be included in the
definition of an underwriter? - CORRECT ANSWER - A broker-dealer
A broker-dealer is considered an underwriter when it helps issuers raise capital through the sale of their
new issues. Agents (of broker-dealers) and investment adviser representatives (of investment advisers)
are the individual employees of their respective firms and are, therefore, not considered broker-dealers.
A hedge fund is being sold to accredited investors as a private placement under Regulation D. An agent
believes that this fund would be an excellent investment for several of his clients. The agent may
recommend the fund to which of the following investors? - CORRECT ANSWER - A middle-aged couple
who are both physicians with a joint annual income of $400,000
Many hedge funds are issued as private placements under Regulation D. In order to qualify for the
exemption, they must be offered only to accredited investors and/or no more than 35 non-accredited
investors. Accredited investors include:
Individuals with an annual income of at least $200,000 during the last two years who reasonably expect
to continue to earn that much in the future
A married couple with a joint income of at least $300,000 who reasonably expect their income to
continue at the same level in the future
An individual or a couple with a net worth of at least $1 million
The newly-retired investor meets the income requirement, but his income will likely drop now that he's
retired. The young, aggressive investor fails to meet either the income or the net worth requirements.
The couple that just won the lottery have income for the year that is likely much higher than normal and
it's unlikely to remain at the same level in the future. Only the couple who are both physicians and in
their prime earning years can reasonably expect to continue making the same income.
Under the Uniform Securities Act, which of the following transactions is NOT exempt from state
registration? - CORRECT ANSWER - A Rule 147 offering
The Rule 147 (intrastate) exemption is a federal or SEC exemption and does not apply to the Uniform
Securities Act. For that reason, an issuer conducting an offering of securities in one state is required to
register the offering in that state. On the other hand, a transaction by a fiduciary, such as an executor,
4|Page
