Study Question of the Month – April

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 63, 65, and 66. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 63, Series 65, and Series 66):

Jenny is an administrative assistant who mans the phones over the lunch hour for a broker-dealer. She occasionally takes orders while the sales staff is on lunch, but does not solicit orders. She is not compensated directly for the orders she takes. Which of the following is true under the Uniform Securities Act?

Answers:

A. Jenny does not need to register if she only takes unsolicited orders.

B. Jenny does not need to register since her job function is mostly clerical in nature.

C. Jenny needs to register as an agent for the broker-dealer.

D. Jenny does not need to register because she is not compensated for the orders she takes.

Correct Answer: C. Jenny needs to register as an agent for the broker-dealer.

Rationale: Even though Jenny’s job is clerical in nature, if she takes orders, even unsolicited orders, she must register as an agent for the broker-dealer. Interestingly, she is allowed to read off bond quotes or stock prices over the phone and she may access account information without having to register as an agent.

Congratulations! This month’s winner is Jessi B.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Portland, OR – Live, Series 6 & 63 Class this September

Solomon Exam Prep will be holding a “crash course” for the Series 6 & Series 63 this September. Taught by Professor Karen Solomon, this class will cover the major topics that will be encountered on these exams. Enroll now and reserve your spot in class. Continue reading

Looking for a Live, Series 6 and/or Series 63 Class? Look no further!

Solomon Exam Prep will be holding a “crash course” for the Series 6 & Series 63 this September. Taught by Professor Karen Solomon, this class will cover the major topics that will be encountered on these exams. Enroll now and reserve your spot in class. The Live-Class Package for the Series 6 & 63 also includes access to our Digital Exam Study Guide and Online Exam Simulator. Class dates and times are:

Series 6

Tuesday, September 9 – 10:00 AM – 3:00 PM

Wednesday, September 10 – 10:00 AM – 3:00 PM

Series 63

Thursday, September 11 – 10:00 AM – 3:00 PM

Classes will be held across the street from Solomon Exam Prep at the George Fox Portland Center:12753 SW 68th Ave, Portland, OR 97223.

Exam Alert: NASAA revises qualified client standard

Effective April 15, 2013, NASAA revised its model rules specifying who was considered a “qualified client.” The changes bring the rules in line with changes made to federal rules. Continue reading

Effective April 15, 2013, NASAA revised its model rules specifying who is considered a “qualified client.” A qualified client may enter into a performance-based compensation arrangement with an investment adviser.

The changes bring the rules in line with changes made to federal rules (updates on those changes can be found here).

The changes are as follows:

-Clarifies that advisers that are exempt from registration may charge performance-based fees.

-Ties the definition of a qualified client to the definition provided by the federal rule. The standard is currently $1 million in assets under management with the adviser or $2 million in net worth, excluding the value of the client’s primary residence. These amounts will be adjusted for inflation every five years.

-Clarifies that an investor in a private fund must be a qualified client in order for an adviser to charge them performance-based fees. An adviser cannot simply consider the fund itself a “qualified client” in order to charge the investors performance-based fees. If a fund consists of both qualified and non-qualified clients, the adviser may only charge performance-based fees to the qualified clients.

-Put transitional rules into place so that if the rules change, existing contracts will not suddenly be in violation of the new rules. The contract must be in compliance with the rules as of the last time it was entered into, extended, or otherwise renewed.

 

Sources: Model Rule 102(f)-3

Notice of Request for Public Comment: Proposed Changes to Performance Fee Model Rules Under the Uniform Securities Acts of 1956 and 2002

This alert applies to the Series 63, Series 65, and Series 66.

Study Question of the Week: June 11, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 63, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 63, Series 65, and Series 66)

Which of the following are likely to be exempt from state registration as an investment adviser under the Uniform Securities Act?

I. A certified public accountant (CPA) who reviews client asset allocations upon request

II. An individual representative of a firm that offers investment advice and management for a fee

III. A federally covered investment adviser

Answers: 

A. I and II

B. I and III

C. I, II, and III

D. II and III

Correct Answer: C.

Rationale: Federal law and the Uniform Securities Act define investment advisers as people who provide investment advice in exchange for compensation of some kind, but there are several types of exemptions, including: an investment adviser representative (IAR) working for an investment adviser (so II is exempt); a bank, savings institution, or trust company; a lawyer, accountant, teacher, or engineer whose provision of investment advice is incidental to their profession (so the CPA is exempt); a broker-dealer or its agents if the provision of investment advice is incidental to its business of buying and selling securities and not directly compensated; a publisher of a bona fide publication of general and regular circulation; a federally covered investment adviser (III is exempt). If the RIA is federally covered (registered with the SEC as an RIA), then it does not have to register at the state level. However, any of its IARs doing business in the state are required to register.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Exam Alert: Enrollment fees for NASAA exams to increase

Effective June 1, 2013, the fee to enroll in a NASAA exam (Series 63, Series 65, or Series 66) will go up. The new enrollment fees will be as follows:

Series 63: $115,

Series 65: $155,

Series 66: $145 Continue reading

Effective June 1, 2013, the fee to enroll in a NASAA exam (Series 63, Series 65, or Series 66) will go up. The new enrollment fees will be as follows:

Series 63: $115

Series 65: $155

Series 66: $145

 

Source: Important Announcement Regarding Fees for the Series 63, 65, and 66 Exams

 

This alert applies to the Series 63, Series 65, and Series 66.

Join Solomon Exam Prep at the LAMP Conference in sunny San Diego, CA

Solomon Exam Prep is excited to announce its appearance at LAMP March 10-13, 2013 at the Manchester Grand Hyatt in sunny San Diego, CA. Continue reading

Solomon Exam Prep is excited to announce its appearance at LAMP March 10-13, 2013 at the Manchester Grand Hyatt in sunny San Diego, CA.  LAMP is GAMA International’s annual Leadership and Management Program meeting.

GAMA International is an association committed to developing future leaders in the financial services and insurance industry. “LAMP is where industry leaders come to connect with colleagues, learn from industry’s best and brightest, and recharge and reinvigorate themselves for the coming year. It’s an annual must for those field leaders who are serious about working on their business, not just in it.” (http://gamaweb.com/lampconf/)

Come by our booth to learn more about Solomon’s corporate study solutions for the Series 6, Series 63 and Life & Health licensing exams. We will be showcasing our new website & giving away some great licensing exam swag!

Exam Alert: SEC identifies concerns, good practices regarding nonpublic information

On September 27, 2012, the SEC identified situations ripe for abuse of inside information at broker-dealers so that industry professionals will know what to avoid. The SEC also provided examples of good policies put in place at some broker-dealers that minimize the risk of insider trading violations. Continue reading

On September 27, 2012, the SEC identified situations ripe for abuse of inside information at broker-dealers so that industry professionals will know what to avoid. The SEC also provided examples of good policies put in place at some broker-dealers that minimize the risk of insider trading violations.

 

Potentially problematic situations include the following:

-Lots of informal, undocumented interaction between departments with MNPI (material nonpublic information) and sales/trading departments that could abuse that information

-Having senior executives that supervise multiple departments and could spread MNPI from one department to another without oversight, due to being “above” the information barriers

-Lack of review of situations where MNPI is provided from one department to another for business purposes

-Lack of review of trading in customer and affiliate accounts

-Lack of review of situations where MNPI is received from an outside source

 

Effective practices included:

-Having a system that distinguishes MNPI based on source or type of information (possibly even having individualized reports specific to certain pieces of information)

-Expanded review of potential misuse of MNPI, including looking at trading in swaps, loans, components of pooled securities (such as UITs and ETFs), warrants, and bond options

-Monitoring access to electronic sources of MNPI to see which employees access the information

-Monitoring access levels granted via key cards and computer networks to ensure that only authorized personnel have access to restricted areas

 

Source: SEC Issues Report on Brokerage Firms’ Handling of Confidential Information (SEC Release 2012-200)

This alert applies to the Series 24, Series 26, Series 6, Series 7, Series 55, Series 62, Series 79, Series 82, Series 99, Series 63, Series 65, Series 66, and Series 56.

Exam Alert: Test takers with limited English proficiency must submit a form to FINRA to receive extra time

Effective September 1, 2012, FINRA will implement a new policy for providing additional time to people with limited English proficiency on qualification exams and on Regulatory Element Continuing Education sessions. The new policy requires that people requesting additional time must submit an LEP Request Form to FINRA and receive confirmation from FINRA that the form has been processed before scheduling the exam or Continuing Education session. Continue reading

Effective September 1, 2012, FINRA will implement a new policy for providing additional time to people with limited English proficiency on qualification exams and on Regulatory Element Continuing Education sessions.  The new policy requires that people requesting additional time must submit an LEP Request Form to FINRA and receive confirmation from FINRA that the form has been processed before scheduling the exam or Continuing Education session.

This new policy replaces the current policy covering people who speak English as a second language.  Test center personnel will no longer be authorized to provide additional time to people who speak English as a second language or to people with limited English proficiency.

A person is considered to have “limited English proficiency” if they “(1) do not speak English as their primary language; and (2) have limited ability to read, speak, write and understand the English language.”

Further details on the new policy may be found on FINRA’s website.

Sources:

FINRA Information Notice 8/1/2012

Candidates with Limited English Proficiency (FINRA website)

This alert applies to all FINRA-administered exams.  This includes (among others) the Series 24, Series 26, Series 6, Series 7, Series 55, Series 62, Series 79, Series 82, Series 99, Series 56, Series 63, Series 65, and Series 66.

Exam Alert: SEC rule excludes home value from net worth calculation for “qualified clients”

An SEC rule change announced on February 15, 2012, will exclude the value of an investor’s home from the “qualified client” net worth calculation. Continue reading

A qualified client is a client that may be charged performance-based fees by an investment adviser.  The threshold for determining whether a client is a qualified client is if they have at least $1 million in assets under management with the adviser or if they have a net worth of at least $2 million.  An SEC rule change announced on February 15, 2012, will exclude the value of an investor’s home (primary residence) from the net worth calculation.  The rule amendment will take effect 90 days after publication in the Federal Register.

Source: SEC Release 2012-29

This alert applies to the Series 63, Series 65, Series 66, and Series 24.

Exam Alert: FINRA recommends heightened supervision for complex products

On January 17, 2012, FINRA highlighted the need for firms to have adequate supervisory and compliance programs in place in order for registered representatives to recommend complex products. FINRA identified several characteristics that may cause a product to be considered “complex,” such as embedded derivatives or contingencies. The notice states that agents should determine suitability, consider the customer’s financial sophistication, discuss the products with the customer, and consider alternative investments that could meet the customer’s goals. The firm should also review the performance of the products and train the agents about the products. Continue reading

On January 17, 2012, FINRA highlighted the need for firms to have adequate supervisory and compliance programs in place in order for registered representatives to recommend complex products.  FINRA identified several characteristics that may cause a product to be considered “complex,” such as embedded derivatives or contingencies.  The notice states that agents should determine suitability, consider the customer’s financial sophistication, discuss the products with the customer, and consider alternative investments that could meet the customer’s goals.  The firm should also review the performance of the products and train the agents about the products.

Source: FINRA Regulatory Notice 12-03

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 55, Series 62, Series 79, Series 82, Series 99, Series 63, Series 65, and Series 66.