- Under the Uniform Securities Act, which statement is true regarding the Administrator's authority to deny, suspend, or revoke a broker-dealer's registration?
Answer: A willful violation of the Act by the dealer is a statutory ground for revocation of the registration, but only if the Administrator also determines that the revocation is in the public interest.
Uniform Securities Act § 204. The Administrator may deny, suspend, or revoke a registration only when the action is in the public interest and one of the statutory grounds exists; a willful violation is such a ground. A felony conviction is counted only if it occurred within the past 10 years and does not operate automatically. The insolvency ground applies to the registered firm's own insolvency, not a customer's. Failure to pay a fee supports only a denial that is vacated on payment, not an immediate suspension.
- Under the Uniform Securities Act, which statement is true regarding the effectiveness and term of a broker-dealer's state registration?
Answer: A registration becomes effective at noon on the 30th day after filing unless a denial order is in effect or a proceeding is pending; it expires on December 31 unless renewed.
Uniform Securities Act § 202(a) and § 201(e). Under § 202(a), a broker-dealer's registration becomes effective at noon on the 30th day after filing if no denial order is in effect and no proceeding is pending (the Administrator may set an earlier effective date), and under § 201(e) every registration expires on December 31 unless renewed. The one-year-from-effective-date statement, with an Administrator-granted extension, confuses person registration with securities registration; the Act provides no such extension for broker-dealer registration. The statement that affirmative Administrator approval is required misstates the automatic effective date. SEC-registered status does not make a state broker-dealer registration effective immediately.
A broker-dealer is registered in State A, where its principal office is located. The firm has no office in State B. Over the past 12 months, the firm has purchased and sold securities in State B for a State B insurance company, has executed trades for a client who opened her account with the firm while she lived in State A but has since retired and moved to State B, and has accepted a telephone order from a State B resident who was referred to the firm by one of its existing clients. The firm has never registered in State B.
Under the Uniform Securities Act, which of the following is correct? Answer: The firm must register in State B because its in-state business includes retail customers who are State B residents, and the out-of-state exclusion does not apply to them.
Uniform Securities Act § 401 provides that a person with no place of business in a state is not a broker-dealer in that state only if it deals exclusively with issuers, other broker-dealers and institutional buyers, or if it is licensed in its home state and deals with existing customers who are not residents of the state. The State B insurance company is an institutional buyer, so those transactions fit the first prong. The retired client is an existing customer who has become a State B resident, and the referred customer is a new retail customer who resides in State B, so the firm's dealings with them fall outside both prongs and the firm must register in State B. The option stating that no registration is required because the firm may deal with institutional buyers and existing customers omits the requirement that existing customers be nonresidents of the state. The five-customer threshold is the investment-adviser de minimis exemption under USA § 201(c); no client-count de minimis exists for broker-dealers. The notice-of-exemption filing described in the remaining option is not provided for in the Act; the exclusion is self-executing where it applies.
A broker-dealer maintains its only office in State A, where it is registered. It has no place of business in State B. The firm executes securities trades for a pension plan located in State B with $75 million in assets and for an insurance company domiciled in State B. A customer who lives in State A and has maintained an account with the firm for several years placed an order while on vacation in State B. The firm has not solicited any new customers in State B.
Under the Uniform Securities Act, which of the following statements about the firm's obligation to register as a broker-dealer in State B is correct? Answer: The firm is not required to register in State B because its contacts there are institutional buyers and an existing customer who is not a resident of the state.
Governing authority: Uniform Securities Act § 401 (broker-dealer definition and exclusions) and § 201 (registration requirement). A person with no place of business in the state is not a broker-dealer if it deals only with issuers, other broker-dealers and institutional buyers, or if it is licensed in its home state and deals with an existing customer who is not a resident of the state. The pension plan and the insurance company are institutional buyers, and the vacationing customer is an existing customer of the firm's home-state office who is not a resident of State B, so the firm's current contacts with State B fall within the exclusions and no registration is required. The statement that the retail customer's physical presence requires registration ignores the existing-customer exclusion. The five-client limit is the investment-adviser de minimis; the Act provides no client-count exemption for broker-dealers. The statement that the exclusion does not cover pension plans or insurance companies is wrong because both are institutional buyers. Soliciting new retail customers who are State B residents would require registration.
The Administrator learns that a registered broker-dealer has become insolvent. Finding that it is in the public interest, the Administrator summarily suspends the firm's registration pending a final determination, without first holding a hearing, and promptly notifies the firm of the order and the reasons for it. Five days after receiving the notice, the firm sends the Administrator a written request for a hearing.
Under the Uniform Securities Act, which of the following statements is correct? Answer: The Administrator must set the matter down for a hearing within 15 days after receiving the firm's written request for a hearing.
Uniform Securities Act § 204 (summary postponement or suspension). Pending final determination of a proceeding, the Administrator may summarily postpone or suspend a registration without a prior hearing, provided the public interest and a statutory ground exist; the firm's own insolvency is a ground. The Administrator must promptly notify the registrant, and the matter must be set down for hearing within 15 days after the Administrator receives a written request. The firm made that request, so the hearing must be set within 15 days of its receipt. The statement that a hearing must come first ignores the summary-order exception to the notice-and-hearing requirement. The statement that the order lapses if no hearing is held within 15 days of entry measures the period from the wrong event and invents a lapse: if no hearing is requested, the order stays in effect until modified or vacated. The statement that the firm may only seek judicial review confuses the 60-day period for court review of a final order with the right to an administrative hearing.
On December 1, 2026, Traverse Brokerage, Inc. filed a complete application for registration as a broker-dealer with the Administrator. No denial order is in effect and no proceeding is pending, and the Administrator has not set an earlier effective date. Traverse intends to continue in business through 2027.
Under the Uniform Securities Act, which of the following correctly describes the effective date and expiration of Traverse's registration? Answer: The registration becomes effective at noon on December 31, 2026, and expires on December 31, 2026, so Traverse must renew for 2027.
Uniform Securities Act §§ 201-204. A registration becomes effective at noon of the thirtieth day after filing unless a denial order is in effect, a proceeding is pending, or the Administrator sets an earlier date, and every registration expires December 31 unless renewed. Thirty days after December 1 is December 31, so Traverse's registration is effective at noon on December 31, 2026, and expires that same day, requiring a renewal for 2027. The answer that would keep the registration effective through December 31, 2027, misreads the statutory calendar-year expiration as a one-year term from effectiveness. The immediate-effectiveness answer ignores the thirtieth-day rule, and the January 30 answer invents a postponement the Act does not contain.
After receiving several customer complaints, a registered broker-dealer filed a notice of withdrawal of its registration with the Administrator. The Administrator took no action during the 30 days after receiving the notice, and the withdrawal became effective. Eight months later, the Administrator commenced a proceeding to revoke the firm's registration, alleging that the firm willfully violated the Act while registered and that revocation is in the public interest.
Under the Uniform Securities Act, which of the following statements about the proceeding is correct? Answer: The proceeding is timely because the Administrator may commence a revocation or suspension proceeding within one year after the withdrawal becomes effective.
Uniform Securities Act § 204. A withdrawal takes effect 30 days after the Administrator receives it unless a proceeding is pending or is started within those 30 days, and the Administrator may still commence a revocation or suspension proceeding within one year after the withdrawal takes effect. Because the proceeding began eight months after effectiveness, it is within the one-year window and is timely. The 30-day answer treats the withdrawal window as a deadline for all later proceedings; the injunction answer invents a procedural prerequisite; and the jurisdiction answer ignores the Administrator's continued one-year authority to revoke or suspend after a withdrawal.
- Under the Uniform Securities Act, which statement is true regarding the definition of a broker-dealer?
Answer: A person with no place of business in the state that deals only with issuers, other broker-dealers, and institutional buyers is not a broker-dealer.
Uniform Securities Act § 401. The definition of broker-dealer excludes a person with no place of business in the state who deals only with issuers, other broker-dealers, and institutional buyers. The bank exclusion is not limited to fiduciary activity; banks, savings institutions, and trust companies are excluded from the definition. An agent is not a broker-dealer even when acting for the employing firm. The fewer-than-six-retail-clients idea is an investment-adviser de minimis; the Act has no client-count de minimis for broker-dealers.
A broker-dealer is registered in its home state, where its only office is located. The firm has no office or employees in State Z. During the past 12 months, it has effected securities transactions for three institutional buyers located in State Z. Last month, an individual who lives in State Z contacted the firm and asked it to buy municipal bonds for her personal account; the firm executed the trade and charged a commission. The firm is not registered in State Z.
Under the Uniform Securities Act, which of the following statements is correct? Answer: The firm must register in State Z because the out-of-state broker-dealer exclusion does not cover business with a retail customer who is a resident of the state.
Uniform Securities Act § 401. A broker-dealer with no place of business in the state is not within the definition when its State Z business is limited to issuers, other broker-dealers, and institutional buyers; a separate branch protects a home-state-licensed firm dealing only with existing customers who are not residents of the state. The firm's last transaction was with a retail customer who lives in State Z, so neither branch applies and the firm must register. There is no client-count de minimis for broker-dealers; the five-client answer borrows the investment-adviser exemption. The unsolicited-order answer confuses the exempt-transaction provision for securities with the firm's registration obligation, and the exempt-securities answer is wrong because exempt securities are still securities — effecting transactions in them as a business still requires broker-dealer registration.
A firm applies for registration as a broker-dealer in the state. Its president, who will supervise the firm's agents, was convicted eight years ago of a felony for filing a false federal income tax return; the offense did not involve securities. The firm itself has no disciplinary history, and no other ground for denial exists. The Administrator has given the firm notice and an opportunity for a hearing.
Under the Uniform Securities Act, which statement is correct regarding the Administrator's authority to deny the application? Answer: The Administrator may deny the application if denial is in the public interest, because any felony of an officer within ten years is a ground.
Uniform Securities Act § 204(a). The Administrator may deny a registration only if (1) the order is in the public interest and (2) a statutory ground exists. One ground is that the applicant, or in the case of a broker-dealer any partner, officer, director or control person, has been convicted within the past ten years of any felony or of a misdemeanor involving securities. The president's tax felony eight years ago is within that period, so it is a ground, and denial is available if the Administrator also finds the public interest. The statement limiting the ground to securities-related convictions applies the securities limitation that governs misdemeanors to a felony. The statement that the conviction is an automatic bar drops the public-interest finding. The statement that only the firm's own conviction counts ignores that the ground extends to the firm's officers.
- Under the Uniform Securities Act, which statement is true regarding the withdrawal of a broker-dealer's state registration?
Answer: A withdrawal is effective 30 days after the Administrator receives it unless a proceeding is pending or begun within that period; a revocation or suspension proceeding may still begin within one year.
Uniform Securities Act § 204(e). A withdrawal is effective 30 days after the Administrator receives it, or sooner if the Administrator sets an earlier date, unless a proceeding is pending or is begun within those 30 days; the Administrator may still begin revocation or suspension proceedings within one year after the withdrawal becomes effective. Withdrawal is not immediately effective, does not require the Administrator's approval, and is not void for unpaid fees.
Crestline Capital, a newly formed firm, applied for registration as a broker-dealer. Each of Crestline's principals has passed the required qualification examinations, and the firm has hired an experienced compliance officer to supervise its agents, but none of the principals has ever worked in the securities industry. The Administrator proposes to deny the application solely because the principals lack industry experience, and has found that denial would be in the public interest. No other ground for denial exists.
Under the Uniform Securities Act, may the Administrator deny the application? Answer: No, because the Administrator may not deny registration for lack of experience alone when the applicant is qualified by training or knowledge.
Uniform Securities Act § 204. A denial requires both a statutory ground and a finding that denial is in the public interest. Lack of qualification is a statutory ground, but the Act provides that lack of experience alone is not enough when the applicant is qualified by training or knowledge. Crestline's principals passed the required examinations and the firm has an experienced compliance officer, so a denial based solely on their lack of industry experience is improper. The public-interest answer alone is not sufficient, the minimum-experience answer imposes a requirement the Act rejects, and the willful-violation answer is wrong because a willful violation is only one possible ground for denial, not a prerequisite.
- Under the Uniform Securities Act, which statement is true regarding emergency action against a broker-dealer's registration?
Answer: The Administrator may summarily postpone or suspend a registration pending a hearing, but a hearing must be set within 15 days of a written request by the registrant.
Uniform Securities Act § 204. The Administrator may summarily postpone or suspend a registration pending a hearing, and a hearing must be set within 15 days of a written request. A prior hearing is not required for a summary suspension, summary revocation is not the statutory emergency remedy, and a court injunction is not a prerequisite to the Administrator's temporary order.
- Under the Uniform Securities Act, which statement is true regarding partners, officers, and directors of a registered broker-dealer?
Answer: A partner, officer, or director who is an agent is automatically registered as an agent when the firm's registration becomes effective.
Uniform Securities Act § 202(a). Registering a broker-dealer automatically registers its partners, officers, and directors who act as agents or investment adviser representatives, where applicable. The automatic coverage does not extend to everyone by title, no separate agent application is required for the statutory coverage, and supervising agents for a broker-dealer does not by itself make someone an investment adviser representative.
- Under the Uniform Securities Act, which broker-dealer may transact business in a state without registering as a broker-dealer?
Answer: A dealer that is licensed in its home state, has no place of business in this state, and deals only with an existing customer who is not a resident of this state.
Uniform Securities Act § 401. A broker-dealer with no place of business in the state is excluded from the definition if it is licensed in its home state and deals only with an existing customer who is not a resident of the state. Customers who have moved into the state are residents, so that variant does not qualify; the five-client limit is an adviser exemption, not a broker-dealer exemption; and accredited-investor status is not a substitute for the statutory categories.
