BigCash Broker-Dealers is registered in the state and is in the process of purchasing a smaller
broker-dealer, Target Investments, as a subsidiary. Target Investments is also registered in the state.
After completing the purchase, what actions must BigCash take regarding registration of its new
subsidiary?

• A. BigCash must file a new application with the state to register its new subsidiary, but will be able to
  utilize the remainder of any annual filing fees that Target Investments had paid for the year.
• B. BigCash need do nothing since Target Investments was already duly registered with the state as a
  broker-dealer.
• C. BigCash will need to pay the annual filing fees required by the Administrator, but will not need to file a
  new registration application.
• D. BigCash must file a new application with the state to register its new subsidiary and must also pay the
  annual filing fees required by the Administrator.

Which of the following scenarios does not meet the definition of "custody" under NASAA Model Rules?

• A. An investment adviser receives a check from a client that is written to a mutual fund and forwards the
  check to the mutual fund within three business days of receipt.
• B. An investment adviser keeps a client's securities in its safety deposit box.
• C. An investment adviser is mistakenly sent a client's securities, but returns them to the sender within
  three business days of receipt.
• D. An investment adviser has general power of attorney for a client and is authorized to withdraw client
  funds or securities that are on deposit with a registered broker-dealer upon the investment adviser's
  request.

An arrangement wherein a terminally ill person sells a second party his life insurance policy at a discount
from its face value, giving the buyer the right to the policy's face value when the seller dies is called a:

• A. death warrant.
• B. life straddle.
• C. deceased option.
• D. viatical settlement.

Which of the following is not one of the criteria for a security to be eligible for registration by notification?

• A. The issuer must never have defaulted on any bond or long-term lease obligation.
• B. The issuer must have a net worth of $4 million, or its net income before tax for at least two of the
• C. If the security to be issued is an equity interest in the firm, its offer price has to be at least $5 a
• D. The issuer must have preferred stockholders as well as common stockholders.

Joe Romeo is a broker-dealer registered with the state. He has recently hired Betty Buxom as his
administrative assistant. As part of her duties, he has given her the responsibility for effecting the
purchases and sales of securities for some of his firm's smaller accounts. Ms. Buxom has never applied
for nor been granted registration as a broker-dealer or agent. Based on these facts,

• A. the Administrator is required by the Uniform Securities Act to revoke Joe Romeo's registration and file
  criminal and civil charges against him.
• B. the Administrator may elect to revoke or suspend Joe Romeo's registration, and Joe may also face
  both civil and criminal penalties.
• C. there is no problem as long as Ms. Buxom registers with the state as an agent within thirty days.
• D. the Administrator is required to turn the case over to the state's district attorney, who will file criminal
  charges against both Joe Romeo and Betty Buxom.