Title Details

ABOUT THIS BOOK XVII

ABOUT THE TEST BANK XIX

ABOUT THE SECURITIES INSTITUTE OF AMERICA XXI

CHAPTER 1 DEFINITION OF TERMS 1

Security 1

Person 3

Broker Dealer 4

Agent 4

Issuer 5

Nonissuer 5

Investment Adviser 6

Pension Consultants 6

Form ADV 7

Investment Adviser Representative 8

Solicitor 8

Institutional Investor 8

Accredited Investor 9

Qualified Purchaser 9

Private Investment Company 9

Offer/Offer to Sell/Offer to Buy 9

Sale/Sell 10

Guarantee/Guaranteed 10

Contumacy 10

Federally Covered Exemption 10

Option Contracts 11

Call Options 11

Put Options 11

Futures and Forwards 12

Secondary Market Orders 12

Market Orders 13

Buy Limit Orders 13

Sell Limit Orders 13

Stop Orders/Stop Loss Orders 14

Buy Stop Orders 14

Sell Stop Orders 14

Pretest 15

CHAPTER 2 SECURITIES INDUSTRY RULES AND REGULATIONS 21

The Securities Act of 1933 21

The Securities Exchange Act of 1934 23

Public Utilities Holding Company Act of 1935 25

Financial Industry Regulatory Authority (FINRA) 25

The Trust Indenture Act of 1939 26

Investment Advisers Act of 1940 26

Investment Company Act of 1940 26

Retail Communications/Communications with the Public 27

FINRA Rule 2210 Communications with the Public 28

Blind Recruiting Ads 30

Generic Advertising 30

Tombstone Ads 30

Testimonials 31

Free Services 32

Misleading Communications 32

Securities Investor Protection Corporation Act of 1970 (SIPC) 32

The Securities Acts Amendments of 1975 34

The Insider Trading and Securities Fraud Enforcement Act of 1988 34

Firewall 35

The Telephone Consumer Protection Act of 1991 35

National Securities Market Improvement Act of 1996 36

The Uniform Securities Act 36

Pretest 39

CHAPTER 3 CUSTOMER RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 43

Professional Conduct by Investment Advisers 44

The Uniform Prudent Investors Act of 1994 44

Fair Dealings with Clients 45

Periodic Payment Plans 49

Disclosure of Client Information 50

Borrowing and Lending Money 50

Developing the Client Profi le 50

Investment Objectives 52

Risk vs. Reward 54

Alpha 57

Beta 57

Fundamental Analysis 63

Capitalization 66

Tax Structure 67

Investment Taxation 68

Calculating Gains and Losses 68

Cost Base of Multiple Purchases 69

Deducting Capital Losses 70

Wash Sales 70

Taxation of Interest Income 70

Inherited and Gifted Securities 71

Donating Securities to Charity 71

Trusts 71

Gift Taxes 72

Estate Taxes 72

Withholding Tax 73

Corporate Dividend Exclusion 73

Alternative Minimum Tax (AMT) 73

Taxes on Foreign Securities 74

Pretest 75

CHAPTER 4 VARIABLE ANNUITIES AND RETIREMENT PLANS 79

Annuities 79

Equity-Indexed Annuities 82

Annuity Purchase Options 83

Accumulation Units 83

Annuity Units 84

Annuity Payout Options 84

Factors Affecting the Size of the Annuity Payment 85

The Assumed Interest Rate (AIR) 85

Taxation 86

Sales Charges 86

Variable Annuity vs. Mutual Fund 87

Retirement Plans 87

Individual Plans 87

Individual Retirement Accounts (IRAS) 88

529 Plans 91

IRA Contributions 91

IRA Accounts 91

IRA Investments 91

It Is Unwise to Put a Municipal Bond in an IRA 92

Rollover vs. Transfer 92

Keogh Plans (HR-10) 93

Contributions 93

Tax-Sheltered Annuities/Tax-Deferred Account 94

Contributions 95

Tax Treatment of Distributions 95

Corporate Plans 96

Non-Qualified Corporate Retirement Plans 96

Payroll Deductions 96

Deferred Compensation Plans 96

Qualified Plans 97

Types of Plans 97

Rolling Over a Pension Plan 98

Employee Retirement Income Security Act of 1974 (ERISA) 99

ERISA 404C Safe Harbor 101

Pretest 103

CHAPTER 5 REGISTRATION OF BROKER DEALERS, INVESTMENT ADVISERS, AND AGENTS 107

Registration of Broker Dealers 107

Financial Requirements 108

Agent Registration 108

Registering Agents 110

Changes in an Agent’s Employment 111

Mergers and Acquisitions of Firms 111

Renewing Registrations 111

Canadian Firms and Agents 111

Investment Adviser State Registration 112

The National Securities Market Improvement Act of 1996 (The Coordination Act) 112

Investment Adviser Representative 113

State Investment Adviser Registration 114

Capital Requirements 114

Exams 115

Advertising and Sales Literature 115

Brochure Delivery 116

The Role of the Investment Adviser 117

Additional Compensation for an Investment Adviser 117

Agency Cross Transactions 117

Disclosures by an Investment Adviser 118

Investment Adviser Contracts 119

Additional Roles of Investment Advisers 120

Private Investment Companies/Hedge Funds 120

Fulcrum Fees 120

Wrap Accounts 121

Soft Dollars 121

Pretest 123

CHAPTER 6 SECURITIES REGISTRATION, EXEMPT SECURITIES, AND EXEMPT TRANSACTIONS 129

Exempt Securities 129

Securities Registration 130

Exempt Securities/Federally Covered Exemption 133

Exempt Transactions 134

Pretest 139

CHAPTER 7 STATE SECURITIES ADMINISTRATORS AND THE UNIFORM SECURITIES ACT 145

Actions by the State Securities Administrator 145

Actions Against an Issuer of Securities 147

Rule Changes 147

Investigations 149

Civil and Criminal Penalties 149

Jurisdiction of the State Securities Administrator 150

Administrator’s Jurisdiction over Securities Transactions 150

Right of Rescission 152

Statute of Limitations 153

Pretest 155

ANSWER KEYS 161

GLOSSARY OF EXAM TERMS 171

INDEX 237