Fountain of Life Investment Securities has met all of the state registration requirements in the state of Wyoming except that Mitchell DeSousa, the company payables officer, has suddenly taken ill and the registration filing fee has gone unpaid. Is Fountain of Life going to be denied registration?
Answer(s): C
Under the Uniform Securities Act, the state administrator may deny registration to an investment advisory firm under a host of possible conditions. One of those conditions is the payment of the filing fee. Therefore, Fountain of Life may be denied registration until the fee has been paid
E-Lated Industries Inc issued securities with registration effective June 1, 2000. Under the Securities Act of 1933, when is E-Lated required to renew its registration?
Answer(s): A
Under federal laws, defined by the Securities Act of 1933, a security registered under the Act is considered registered permanently and renewal is not required. Under state law, the Uniform Securities Act requires that securities' registration is valid for one year from the effective date and must be renewed each year thereafter, unless an exemption can be found
Joel Winestar of KnowetAll Investments wants to sell Jack Phrost 100 shares in a pharmaceutical company. The drug manufacturer is about to announce FDA approval for a revolutionary new pain reliever. Joel learns on the internet that the same pharmaceutical company has just come under fire for insufficient clinical trials on its allergy drug. Because the company has the red-hot pain reliever under approval, Joel does not think it is necessary to mention the problems with the allergy drug and sells Jack the 100 shares. Is Joel in violation of Antifraud Provisions of the Uniform Securities Act?
Answer(s): B
It does not matter if one drug in the company is red hot and the other is a dog; all activities (positive and negative) will affect the pharmaceutical company under the same stock symbol and price. Joel's fiduciary obligation is to reveal material facts to Jack so that Jack is able to make an informed decision
Firelight Brokers Inc controls the market for the stock issues of DealStar Corporation. Ellen James calls her brother Frank, (who is her agent and is employed by Firelight), to inquire about the current price of DealStar. Frank tells her he can get it "at the market". Ellen then calls her friend Jane, the president of DealStar, and tells her that she''s buying shares of DealStar at the market. How is this a conflict of interest?
A broker-dealer is not permitted to quote a price "at the market" if that broker-dealer controls the market for a particular security. In this case, the agent is showing bias and represents a conflict of interest because his broker-dealer makes the market for this stock. He should also disclose to Ellen that his firm has a controlling interest in the stock and quote her the lowest current price being offered (the ask price). If Ellen's friend Jane had given her inside information that was unknown to the public, this would also represent an illegal and fraudulent activity
Under the Uniform Securities Act, which of the following is NOT considered an issuer of securities?
All options except the car insurance salesperson are considered issuers. By definition, an issuer is any entity or person who issues or proposes to issue a security
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