About the Series 63 Exam xi
About This Book xv
About the Test Bank xvii
About the Securities Institute of America xix
Chapter 1 Federal Law Review 1
The Securities Act of 1933 1
The Prospectus 2
The Final Prospectus 2
Misrepresentations 3
The Securities Exchange Act of 1934 3
Net Capital Requirement 7
Customer Coverage 7
Fidelity Bond 8
The Insider Trading and Securities Fraud Enforcement Act of 1988 8
Firewall 9
The Telephone Consumer Protection Act of 1991 9
National Securities Market Improvement Act of 1996 10
The Uniform Securities Act 11
The Uniform Prudent Investors Act of 1994 12
The Department of Labor Fiduciary Standard 13
The Patriot Act 13
Regulation S-P 14
Identity Theft 15
Chapter 2 Definitions of Terms 17
Security 17
Person 19
Broker Dealer 20
Pension Consultants 22
Investment Counsel 22
Form ADV 23
Investment Adviser Registration Database (IARD) 24
Investment Adviser Representative 25
Offer/Offer to Sell/Offer to Buy 27
Sale/Sell 28
Guarantee/Guaranteed 28
12B-1 Fees 28
Contumacy 29
Federally Covered Exemption 29
Power of Attorney 30
Escheatment 30
Pretest 31
Chapter 3 Registration of Broker Dealers, Investment Advisers, and Agents 37
Registration of Broker Dealers and Agents 37
Agent Registration 38
Registering Broker Dealers 39
Financial Requirements 40
Broker Dealers on the Premises of Other Financial Institutions 40
Hiring New Employees 41
Resignation of a Registered Representative 42
Registering Agents 43
Canadian Firms and Agents 45
Investment Adviser Registration 45
The National Securities Market Improvement Act of 1996/The Coordination Act 46
Investment Adviser Representative 47
Investment Adviser Registration 48
Capital Requirements 48
Exams 49
Advertising and Sales Literature 50
Brochure Delivery 51
Wrap Accounts 51
Pretest 53
Chapter 4 Securities Registration, Exempt Securities, and Exempt Transactions 57
Exempt Securities 57
Securities Registration 58
Registration of IPOs Through Coordination 58
Registration Through Notice Filing 59
Registration of Non-Established Issuers/Registration Through Qualification 59
Exempt Securities/Federally Covered Exemption 61
Exempt Transactions 62
Pretest 67
Chapter 5 Professional Conduct and Prohibited and Fraudulent Actions 73
Fraud 73
Professional Conduct 74
Suitability 74
Market Manipulation 76
Customer Complaints 77
The Role of the Investment Adviser 77
Additional Compensation for an Investment Adviser 78
Agency Cross Transactions 78
Disclosures by an Investment Adviser 78
Investment Adviser Contracts 80
Private Investment Companies/Hedge Funds 80
Fulcrum Fees 80
Soft Dollars 81
Borrowing and Lending Money 82
Free Services 83
Pretest 85
Chapter 6 The State Securities Administrator and the Uniform Securities Act 93
Actions by the State Securities Administrator 93
Cancellation of a Registration 94
Withdrawal of a Registration 95
Actions Against an Issuer of Securities 95
Rule Changes 95
Administrative Orders 95
Interpretive Opinions 97
Administrative Records 97
Investigations 98
Civil and Criminal Penalties 98
Jurisdiction of the State Securities Administrator 99
Administrator’s Jurisdiction over Securities Transactions 100
Radio Television and Newspaper Distribution 102
Right of Rescission 103
Statute of Limitations 103
Pretest 105
Answer Keys 111
Glossary of Exam Terms 119
Index 185