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What legislation is the Series 63 heavily based upon?
- the Securities Act of 1933
- the Securities Exchange Act of 1934
- the Investment Company Act of 1940
Who was the Uniform Securities Act designed by?
The Uniform Securities Act (USA) is a model statute designed to guide each state in drafting its state securities law. It was created by the National Conference of Commissioners on Uniform State Laws (NCCUSL)
Who uses the Uniform Securities Act?
Investors, investment professionals and firms
What is the basic definition of an investment adviser?
means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities.
What are the seven exceptions to the definition of "investment adviser"?
- 1. an investment adviser representative
- 2. a bank, savings institution, or trust company
- 3. a lawyer, accountant, engineer or teacher whose performance of investment advice is solely incidental to the practice
- 4. a broker-dealer or its agent whose performance of investment advice is solely incidental
- 5. a publisher or a bona fide newspaper, column, newsletter, magazine, publication, that does not consist of the rendering of advice on the basis of the specific investment situation
- 6. any person that is a federally covered investment adviser
- 7. such other persons not within the intent of (the definition of Investment adviser) as the (administrator) may by rule or order designate
What are the two primary reasons for requiring investment adviser registration?
allow both state to track and examine investment advisers operating in their state as well as giving consumers a way of accessing basic information about the advisers and the nature of their practice
What are two exceptions from state registration for investment advisers?
- Investment adviser has no place of business in this state and the adviser's only clients in this state are investment companies
- an adviser has no more than five non institutional clients in a state during the previous 12 months
Advisers are not required to register if their only clients in a state are which kind?
What is the De Minimis rule?
(about minimal things) an adviser has no more than five non-institutional clients in a state during the previous 12 months
What amount of assets under management requires federal registration?
over $100 million in assets, then federal registration is required
An adviser may federally register if they would be required to register in how many states?
- Mid-sized investment advisers ($25-$100 million in assets) are required to register in 15 or more states must register federally
- Smaller investment advisers under ($25 million in assets) are required to register in 30 or more states are allowed to register federally
When do registrations typically become effective?
an application for registration becomes effective at noon on the 30th day after application is initially filed.
When do registrations typically expire?
remains in effect until midnight of December 31st of the year for which the registration is filled.
What are the five most common post-registration requirements?
financial reports, record keeping, audits, bond and insurance required for advisers with custody or authority, brochure rule
How long must investment adviser records be kept?
What record keeping responsibility does an adviser have if they go out of business?
records must be kept at least an additional three years past the date of the firm's closure
What is the Brochure Rule?
may be required by their state to provide certain basic information and disclosures about their business to prospective and existing clients prior to entering or renewing an advisory contract
What types of action can be taken against someone's license or application?
Denial, Revocation, Suspension, Withdrawal, Restriction/Limitation
What are the twelve main reason an adviser may be disciplined?
- 1. Filing Incomplete Application
- 2. Violating State Securities Regulations
- 3. In last 10 years, having Prior Felony Convictions or Securities Related Misdemeanors
- 4. Court Order Limitations
- 5.Prior Disciplinary Orders
- 6. Other Securities Act Violations
- 7.Unethical Behavior
- 8. Insolvency
- 9. Foreign Violations
- 10.Unqualified Adviser
- 11.Failure to Supervise
- 12. Failure to File (pay fees)
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