Series 66 Chapter 1 || Needed to Pass.
Investment Adviser Act of 1940 is what kind of law and who regulates it? correct answers
Federal
SEC
The Uniform Securities Act is what kind of law and who regulates it? correct answers State
State Securities Administrators
Two Purposes of Uniform Securities Act are correct answers 1. Minimize duplication of
federal and state registration
2. Prevent fraud (blue-skies)
A "Person" is defined as an correct answers Individual or a legal entity
-Corporations, Partnerships, Associations, Trusts
-Unincorporated organizations,Gov or Gov subdiv
DOES NOT INCLUDE MINORS
A "Broker Dealer" is defined as correct answers Any person (in this case a brokerage firm)
engaged int eh business of effecting transactions for the accounts of others or for the firm's
own account.
How does a "Broker" do business correct answers buying and selling securities for the
accounts of others
How does a "Dealer" do business correct answers buying and selling securities for or from
firms own account
The term "Broker Dealer" does not include the following persons: correct answers 1. Agents
2. Issuers
3. Banks, Savings Institutions, and trust companies
4. Page 3
5. Page 4
6. Page 4
An Agent is defined as correct answers Any individual who represents a Broker Dealer OR
AN ISSUER in effecting to purchases or sales of securities
Refers to employees of broker firm or company issuing securities who execute transactions in
the purchase or sale of securities to the investing public
Are registered representative agents? correct answers Yes of their brokerage firm including
Are individuals that represents an issuer in the sale of an interest in a limited partnership an
agent? correct answers Yes and they must be registered as such
Agents are usually compensated how?
,Is that compensation a requirement to be considered an agent? correct answers Commissions
No
Agents generally prohibited from working for two broker-dealers but if they do they must?
correct answers Register with, and be supervised by, both firms.
ISSUER Exclusions
The term agent does not included transactions in correct answers 1.Government Securities
2. Municipals
3. Canadian Government Securities including Provinces
4. Banks
5. Promissory Notes and Investment Contracts
Issuer Exclusions but you DO NEED to be registered as an agent correct answers 1.
Insurance Company Securities
2. Federal Savings and Loans
Issuer Exclusions Agent EXEMPT TRANSACTIONS correct answers 1. Isolated non-issuer
transactions, meaning secondary market transactions
2. Transactions in certain covered securities
(Sold to qualified buyers or Private Placement)
3. Transactions with investing employees, partners or directors of the issuer if no commission
or other for of payment is paid.
Broker Dealer Exclusions
Agent would also NOT include correct answers 1. Agent for a broker dealer in one state and
servicing a client vacationing in Florida you do not need register in that state
2. A partner, officer, or director of a Broker Dealer
a. If president of a broker-dealer executes transactions for clients, they would be acting as an
Agent.
b. If president of broker-dealer files required reports with the state securities administrator
they would be a principal because they are acting on behalf of firm not clients.
Assistant of an Agent correct answers Agents may hire unregistered assistants or inters and
cant handle trades or make recommendations if NOT registered.
If registered interns or assistants are permitted to act as an agent.
Investment Adviser is: correct answers Person who FOR COMPENSATION, engages in the
BUSINESS of advising others, either DIRECTLY OR INDIRECTLY through publications or
writings, as to the value of SECURITIES (not real estate) or issue or make known to the
public analyses or reports concerning securities.
*No requirement that a client implement the advice, or that the firm manage the funds
, Excluded from definition of Investment Adviser correct answers 1. Investment Adviser
Representatives
2. BANKS, saving institutions, TRUST COMPANIES,
INVESTMENT COMPANIES, other fin. intermediaries
EVEN IF THEY CHARGE A FEE FOR ADVISORY SERVICES
3. LATE. Lawyers, Accountants, Teachers, Engineers
if their advice is incidental to practice of their profes.
4. Broker-Dealers and their Agents if the advice
is incidental to their to their normal brokerage
activities and no extra compensations is charged.
5. PUBLISHERS of any news, business, or financial
publication or service whether hard copy or
electronic who give GENERAL advice about securities
which is not specific to certain clients and does not
respond to specific question from readers.
6. Federal Covered Advisers
7. Employee Benefit Plans
An investment adviser may also be registered as a Broker Dealer and be paid an advisory fee
separate from an y commissions it earns on securities transactions. But acting in both
capacities on the same transaction requires what? correct answers Written disclosure to client
Investment Adviser Representative (IAR) correct answers Individual, partner, officer,
director, employee, or associate of an Investment Adviser (IA)
To be considered a IAR must correct answers 1.Makes recommendations or gives advice
regarding any securities
2. Manages clients accounts and porfolios
3. Determines the suitability of recommendations
4. Solicits, sells, negotiates investment advisory services
5. SUPERVISES EMPLOYEES WHO PERFORM THE ABOVE LISTED SERVICES
Does IAR include solicitors who must be registered as IARs under the Uniform Securities
Act? correct answers Solicitors include salespersons and others who refer customers to IA's
for COMPENSATION. In order to solicit business or be paid a referral fee, the person MUST
BE REGISTERED!!
IAR does not include employees who correct answers 1. Perform only clerical tasks such as a
receptionist
2. Only solicit of fixed Annuities (not a security)
Federal Covered Adviser correct answers Is an IA who comes within the definition of IA
under Federal Investment Advisers Act of 1940.
When you hear Federal or Covered you think correct answers SEC!!
Must only register with SEC
Exempt from state registration
May be required to file a notice with the states in which 6 OR MORE clients transact
business with the Federal Covered Adviser.
Investment Adviser Act of 1940 is what kind of law and who regulates it? correct answers
Federal
SEC
The Uniform Securities Act is what kind of law and who regulates it? correct answers State
State Securities Administrators
Two Purposes of Uniform Securities Act are correct answers 1. Minimize duplication of
federal and state registration
2. Prevent fraud (blue-skies)
A "Person" is defined as an correct answers Individual or a legal entity
-Corporations, Partnerships, Associations, Trusts
-Unincorporated organizations,Gov or Gov subdiv
DOES NOT INCLUDE MINORS
A "Broker Dealer" is defined as correct answers Any person (in this case a brokerage firm)
engaged int eh business of effecting transactions for the accounts of others or for the firm's
own account.
How does a "Broker" do business correct answers buying and selling securities for the
accounts of others
How does a "Dealer" do business correct answers buying and selling securities for or from
firms own account
The term "Broker Dealer" does not include the following persons: correct answers 1. Agents
2. Issuers
3. Banks, Savings Institutions, and trust companies
4. Page 3
5. Page 4
6. Page 4
An Agent is defined as correct answers Any individual who represents a Broker Dealer OR
AN ISSUER in effecting to purchases or sales of securities
Refers to employees of broker firm or company issuing securities who execute transactions in
the purchase or sale of securities to the investing public
Are registered representative agents? correct answers Yes of their brokerage firm including
Are individuals that represents an issuer in the sale of an interest in a limited partnership an
agent? correct answers Yes and they must be registered as such
Agents are usually compensated how?
,Is that compensation a requirement to be considered an agent? correct answers Commissions
No
Agents generally prohibited from working for two broker-dealers but if they do they must?
correct answers Register with, and be supervised by, both firms.
ISSUER Exclusions
The term agent does not included transactions in correct answers 1.Government Securities
2. Municipals
3. Canadian Government Securities including Provinces
4. Banks
5. Promissory Notes and Investment Contracts
Issuer Exclusions but you DO NEED to be registered as an agent correct answers 1.
Insurance Company Securities
2. Federal Savings and Loans
Issuer Exclusions Agent EXEMPT TRANSACTIONS correct answers 1. Isolated non-issuer
transactions, meaning secondary market transactions
2. Transactions in certain covered securities
(Sold to qualified buyers or Private Placement)
3. Transactions with investing employees, partners or directors of the issuer if no commission
or other for of payment is paid.
Broker Dealer Exclusions
Agent would also NOT include correct answers 1. Agent for a broker dealer in one state and
servicing a client vacationing in Florida you do not need register in that state
2. A partner, officer, or director of a Broker Dealer
a. If president of a broker-dealer executes transactions for clients, they would be acting as an
Agent.
b. If president of broker-dealer files required reports with the state securities administrator
they would be a principal because they are acting on behalf of firm not clients.
Assistant of an Agent correct answers Agents may hire unregistered assistants or inters and
cant handle trades or make recommendations if NOT registered.
If registered interns or assistants are permitted to act as an agent.
Investment Adviser is: correct answers Person who FOR COMPENSATION, engages in the
BUSINESS of advising others, either DIRECTLY OR INDIRECTLY through publications or
writings, as to the value of SECURITIES (not real estate) or issue or make known to the
public analyses or reports concerning securities.
*No requirement that a client implement the advice, or that the firm manage the funds
, Excluded from definition of Investment Adviser correct answers 1. Investment Adviser
Representatives
2. BANKS, saving institutions, TRUST COMPANIES,
INVESTMENT COMPANIES, other fin. intermediaries
EVEN IF THEY CHARGE A FEE FOR ADVISORY SERVICES
3. LATE. Lawyers, Accountants, Teachers, Engineers
if their advice is incidental to practice of their profes.
4. Broker-Dealers and their Agents if the advice
is incidental to their to their normal brokerage
activities and no extra compensations is charged.
5. PUBLISHERS of any news, business, or financial
publication or service whether hard copy or
electronic who give GENERAL advice about securities
which is not specific to certain clients and does not
respond to specific question from readers.
6. Federal Covered Advisers
7. Employee Benefit Plans
An investment adviser may also be registered as a Broker Dealer and be paid an advisory fee
separate from an y commissions it earns on securities transactions. But acting in both
capacities on the same transaction requires what? correct answers Written disclosure to client
Investment Adviser Representative (IAR) correct answers Individual, partner, officer,
director, employee, or associate of an Investment Adviser (IA)
To be considered a IAR must correct answers 1.Makes recommendations or gives advice
regarding any securities
2. Manages clients accounts and porfolios
3. Determines the suitability of recommendations
4. Solicits, sells, negotiates investment advisory services
5. SUPERVISES EMPLOYEES WHO PERFORM THE ABOVE LISTED SERVICES
Does IAR include solicitors who must be registered as IARs under the Uniform Securities
Act? correct answers Solicitors include salespersons and others who refer customers to IA's
for COMPENSATION. In order to solicit business or be paid a referral fee, the person MUST
BE REGISTERED!!
IAR does not include employees who correct answers 1. Perform only clerical tasks such as a
receptionist
2. Only solicit of fixed Annuities (not a security)
Federal Covered Adviser correct answers Is an IA who comes within the definition of IA
under Federal Investment Advisers Act of 1940.
When you hear Federal or Covered you think correct answers SEC!!
Must only register with SEC
Exempt from state registration
May be required to file a notice with the states in which 6 OR MORE clients transact
business with the Federal Covered Adviser.
