Exam Preparation - Make sure you know the following...

  • State rules, uniformity laws (Blue Sky Laws)

  • What qualifies as insider trading?
    Insider trading is the use of non-public information for the direct benefit of trading. Insiders who use non-public information as the basis for personal gain are in violation of the Securities Exchange Act of 1934. Furthermore, the 1988 Insider Trading and Securities Enforcement Act states that a person convicted of insider trading can face up to 10 years in jail and can be fined either $1 million dollars or up to 300% of profits gained or losses avoided.

  • What would be a fraudulent act and how would you take care of the problem?
    If an agent finds that he or she has violated the USA, he or she can attempt to rescind a sale.

  • What is the difference between an agent and a broker-dealer?

    • Broker-dealer
      The USA specifically defines a broker-dealer as follows:

      "broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account. The term does not include:
      1. An agent;
      2. An issuer;
      3. A bank or savings institution if its activities as a broker-dealer are limited to those specified as:

        1. Banking institution organized under the laws of theUnited States
        2. A savings institution, trust company, credit union, or a depository institution
        3. Those registered under the Securities Exchange Act of 1934, or not required to register because of such

      4. An international banking institution; or
      5. A person excluded by rule adopted or order issued under the USA
    • Agent
      The USA specifically defines a sales representative (agent) as follows:

      • "An individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities, or

      • Represents an issuer in effecting or attempting to effect purchases or sales of the issuer's securities."

Final thought
When you are studying for the exam, focus on understanding the main concepts and do not fuss over the details. If you understand all of the main concepts, you will be able to make educated guesses for those questions that stump you.

Exam Strategies
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