- no need to register these securities
- securities for friendly governments to USA
- securities issued by bank, savings institution, trust company
- commercial paper in top 3 rating categories by major agencies, must be $50,000 or more, mature in 9mo or less
exempt transactions
- isolated nonissuer transactions
- transactions between the issuer and underwriters
- transactions with financial institutions
- private placements
agent registration requirements
- registration requirements for non-exempt agent are similar to those for B/d
- individual must be properly registered in a state to conduct securities transactions
- must be registered to receive unsolicited orders
- if an agent does business in a state, agent must be registered in state
- if B/D registration ends, agent cannot continue activities
- if agent quits, B/D must notify Administrator
- no net worth requirements
exempt
- clerical
- administrative-assist with research
- posting trade details to client accounts
- must not involve selling/offering securities and opening accounts
Case study take away
- City of Chicago is an issuer of exempt securities
- an employee of City of Chicago who helps sell exempt securities is not an agent
- a representative from First Securities Corporation of Chicago would need to register because he represents a B/D in effecting securities transactions
Commission sharing
- registered agents of B/D can share fees/split commissions with agents at same B/D
Multiple registrations
- individual cannot act as an agent for more than one B/D unless Administrator grants exception
Limited registration of Canadian broker/dealers and agents
- cannot sell to Canada citizen who is a temporary resident of state
- cannot handle Canadian Registered Retirement Savings Plan
for an agent who represents Canadian B/D
- file an application in the form jurisdiction's principal office in Canada wants
- file a consent to service of process
- provide evidence that it is registered in good standing in its home jurisdiction
- be a member of an SRO or stock exchange in Canada
- requirements for agents are the same
Quiz 2C (firs try 5/7)
1. Under the USA, the term agent would include an individual who represents an issuer in effecting non-exempt transactions in: non-exempt securities (D)
2. Under the USA, the term agent would include (pdf p. 85) an individual who represents a B/D in a transaction in an exempt security. (B)
3. Person who effects transactions in municipal securities on behalf of B/D. Yes. (A)
4. An agent's salaries secretary who takes orders. Yes. (A)
*5. An employee of a bank that is issuing shares who receives a commission for selling the bank's securities. NOT (B)
6. Individual who represents her nonexempt employer in the sale of its securities to existing employees for a commission. Yes. (A)
*7. Person who represents an issuer in effecting transactions with underwriters. NOT (B)
investment adviser
- any person who advises others about value of securities-to buy or sell for compensation
- can be in writing, in person, through research reports
- provide advice about securities NOT jewelry, rare coins, real estate
- provide that advice as part of an ongoing business
- receive compensation-get paid for the advice
investment adviser representative
- individual who represents a state-registered investment adviser or federal covered investment adviser
Broker dealer
- primary business function is executing transactions in securities
- compensation is earned in the form of commissions and markups (markdowns)
agent
- individuals employed by broker/dealers to handle their customer orders to buy or sell securities
- separate function from an IAR
investment adviser
- primary business function is giving advice
- compensation is earned in the form of fees of other charges generally based on the amount of assets managed
investment adviser representative
- individuals employed by investment advisers to give advice to their clients
- after an IAR advises a client about a specific security the next step is to contact the broker/dealer where the client has the account to give the buy/sell order to an agent
general registration procedures
- submit an application
- provide a consent to service of process
- pay a filing fee
- post a bond if required by the Administrator
- take and pass an exam if required by the Administrator
submitting an application
- initial application and renewals
- form and place of business for B/D and IA
- proposed method of doing business
- qualifications and business history (B/D) and IA must include the qualifications and history of partners, directors, and other persons with controlling influence over the organization
- court issued injunctions and administrative orders
- adjudications by the SEC or any securities SRO within the past 10 years
- convictions of misdemeanors involving a security or any aspect of the securities business
- felony convictions whether securities related or not
- financial condition and history of the firm not credit reports of the officers
- any information to be furnished or disseminated to client if applicant is an investment adviser
- for individual registrant, citizenship information
- may require an announcement of registration in one or more newspapers
provide a consent to service of process
- appoints Administrator as attorney for applicant to receive and process noncriminal securities related complaints against the applicant
payment of initial and renewal filing fees
- states require filing fee for initial and renewal application
- if application is withdrawn or denied, Administrator can keep a portion of the fee
- no filing or registration fee until renewal of firm's license w/ successor firm
effectiveness of registration
- license becomes effective at noon, 30 days after application is filed
- complete when applicant has furnished information responsive to each applicable item of the application
- if withdrawal, Administrator has jurisdiction of former registrant for one year
Quiz D
1, A consent to service of process must be submitted with each renewal application. False.
2. A Canadian B/D properly registered w. the Administrator of the province in which he is headquartered and with no office in the state, may do business with his customers who are on a skiing vacation in Vail without registered with the Colorado Administrator. True.
3. When a securities professional registers in a state he must provide the state Administrator with a list of all the states where he intends to register. False.
Postregistration requirements
- once registered, B/Ds are subject to numerous administrative requirements to keep their registrations current and in good order
Books and records
- B?D must keep
- accounts,
- records of original entry,
- correspondence w/ emails,
- memoranda
- papers
- books
- preserved for 3 years
- periodic, special, other examination by state Administrator
- website design is kept for 3 years, new copy is maintained
What is a security
- investment of money
- in a common enterprise
- with expectation of profits
- to be derived from the efforts other than the investor
List of Securities Under The Uniform Securities Act
- notes
- stocks
- treasury stocks
- bonds
- debentures
- evidence of indebtedness
- certificates of interest or participation in a profit-sharing agreement
- collateral trust certificates
- preorganization certificates or subscriptions
- transferable shares
- investment contracts
- voting trust certificates
- certificates of deposit for a security
- certificate of interest or participation in an oil, gas, or mining title or lease
- puts, calls, straddles, options, or privileges on a security
- options on futures
- any interest or instrument commonly known as a security
Not securities
- an insurance contact
- annuity contract
- endowment policy
- interest in a retirement plan such as an IRA or Keogh plan
- collectibles
- commodities such as precious metals and grains
- condominiums used as a personal residence
- currency
