The 1988 Insider and Securities Enforcement Act indicates that a person convicted of insider trading can be subject to which of the following penalties?

• A.up to 10 years in prison and a fine of $1 million or up to 3 times the amount of profits gained, or
• B.up to 3 years in prison, a $5,000 fine, or both
• C.up to 5 years in prison and a fine of $1,500,000 or both
• D.up to 7 years in prison and a fine equal to 200% of the amount of profits gained or losses avoided

Comment: *

Name: *

Email: *

Verification: *

The trade confirmation must be received by the customer no later than

• A.one week after the settlement date.
• B.the settlement date.
• C.the day after the trade takes place.
• D.five business days after the settlement date.

Comment: *

Name: *

Email: *

Verification: *

Which of the following does not describe a prohibited activity by investment advisers and their representatives, according to NASAA Model Rules?

• A.A new client comes to Simon LaGree for investment advice. The client has $25,000 to invest. Simon tells the client that it will cost the client $5,000 to have a customized financial plan developed for him, but after that the client needs to pay only 5% of the total value of the assets under management each quarter.
• B.A 72-year-old retired social worker comes to Simon LaGree for investment advice. She has $50,000 to invest. Simon recommends she invest half of it in an international growth mutual fund and half in a variable annuity.
• C.The agreement that Simon LaGree has his clients sign indicates that LaGree uses SecureMoney Broker-Dealers in executing trades for his clients and that, in return, LaGree receives software from the broker-dealer that allows LaGree to perform some fundamental and technical analysis.
• D.All of the above describe prohibited practices.

Comment: *

Name: *

Email: *

Verification: *

Noah Scruples, an agent with CanDo Broker-Dealers, just got a copy of the most recent report on a certain stock. The report was generated by CanDo's analyst department and is hot off the presses. It has not yet even been put on the firm's website for the firm's clients.
The analyst department has just changed its recommendation on the stock from "Hold" to "Strong Buy" based on new information that it has obtained on the company.
Can Noah rush to his office to buy shares of the stock before the analysts release their reports to CanDo's clients?

• A.Yes. The firm's analysts used publicly available information to assess the stock and make its recommendation, so Noah can buy the stock now on his own account.
• B.No. It is unethical for him to trade based on this information before the firm's clients have received the information.
• C.No. This is a prohibited activity referred to as "painting the tape."
• D.Both B and C are true statements.

Comment: *

Name: *

Email: *

Verification: *

Switch Advisory is a small investment adviser partnership registered in a single state. A larger investment
adviser firm, Bait Investment Adviser, is registered in the same state as well as two other states. Bait has
offered to buy out three of Switch's partners who want to retire. This will give Bait a 60% ownership in
Switch Advisory. Which of the following statements are true?
I. Switch Advisory must obtain the approval of its clients before the partners can sell their interests to Bait.
II. Switch Advisory must notify the state Administrator of this event.
III. Switch Advisory must notify their clients of this event, but does not need the clients' approval.
IV. Switch Advisory must notify the SEC of this event.

• A.I only
• B.I and II only
• C.II, III, and IV only
• D.I, II, and IV only

Comment: *

Name: *

Email: *

Verification: *