GUARANTEED - "Guaranteed" means guaranteed as to payment of all principal and all interest."

This is much like a person co-signing for another person as security for a loan, except that in the USA, it most frequently refers to a parent corporation "guaranteeing" a subsidiary company's securities.
There are only three entities that may legitimately make guarantees:

  • The U.S. government
  • An insurance company
  • A parent company, as indicated above
Exam Tips and Tricks
Agents may not make guarantees. This point is likely to be emphasized on the exam.

 

  • INSTITUTIONAL INVESTOR - "Institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity:
    1. A depository institution or international banking institution;
    2. An insurance company;
    3. A separate account of an insurance company;
    4. An investment company as defined in the Investment Company Act of 1940;
    5. A broker-dealer registered under the Securities Exchange Act of 1934;
    6. An employee pension, profit-sharing or benefit plan if the plan has total assets in excess of $10,000,000 ..."
In preparing for the Series 63 exam, you will note that "institutions" and "institutional investors" are quite frequently associated with exemptions, just like banks. Again, the USAdoes not place as much emphasis on protecting institutions as it does on protecting individual investors.
  • INVESTMENT ADVISER REPRESENTATIVE - "Investment adviser representative" means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing. The term does not include an individual who:
    1. Performs only clerical or ministerial acts;
    2. Is an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisery services;
    3. Is employed by or associated with a federal covered investment adviser, unless the individual has a "place of business" in this state ..."
Notice that the law stipulates both what is and what is not an investment adviser representative. The IAR works for an investment adviser, just as an agent works for a B/D. The IAR was not defined in the 1956 USA. This definition comes from the 2002 version of the law.

A NASAA Memorandum of Understanding (MoU) from 1997 on this subject deals with both Federal Covered Investment Adviser and Investment Adviser Representative:
"If an investment adviser is registered with the SEC, the states may not require registration, licensing, or qualification of the investment adviser or its supervised persons, except that states may license, register, or otherwise qualify investment adviser representatives who have a place of business located within that state."
This MoU refers to NSMIA and lays out the requirements for testing persons who are to be IARs.

IARs are always registered with the state. The IA firms that they work for may or may not be registered, depending on their status as defined by NSMIA.
The Uniform Securities Act (USA) - Definitions Part 5

Related Articles
  1. Financial Advisor

    Series 63, Series 65 Or Series 66?

    When joining the world of investment professionals, you must take the right exams.
  2. Financial Advisor

    5 Traits the Best Financial Advisors Share

    Discover what the best financial advisers share in terms of the traits they possess, and learn what clients value most in their advisers.
  3. Retirement

    The Risk of Offering Social Security Advice

    Savvy financial advisers will either need to gain Social Security advice expertise or find a source or partner to provide this vital service to clients.
  4. Financial Advisor

    5 Traits the Worst Financial Advisors Share

    Learn how the worst financial advisers tend to share common traits, including greed, arrogance, ignorance and being difficult to reach when times are tough.
  5. Financial Advisor

    How Advisors Can Create Compliance Programs

    Here's how investment advisers can set up a compliance program that adheres to SEC requirements.
  6. Financial Advisor

    Who Needs to Take the Series 65?

    Most states require individuals to pass the Series 65 exam in order to act as investment advisors.
  7. Financial Advisor

    Vital Considerations for a Transitioning Advisor

    Advisors who are considering breaking away from a big firm should consider these points.
  8. Financial Advisor

    Breaking Down Financial Securities Licenses

    Find out which exam you need to begin your career as an investment professional.
  9. Personal Finance

    The Cost and Benefit of Investment Advice

    Investors benefit from working with fiduciary advisors and should understand the fees they charge.
  10. Personal Finance

    The Series 79 Exam: What It Is And When You Need It

    If you're getting into the field of investment banking, you'll need to know all about the Series 79.
Frequently Asked Questions
  1. Why Do Most of My Mortgage Payments Start Out as Interest?

    Fear not: Over the life of the mortgage, the portions of interest to principal will change.
  2. What is the difference between secured and unsecured debts?

    The differences between secured and unsecured debt, and how banks buffer risks associated with each type of loan through ...
  3. How Many Times has Warren Buffett Been Married?

    Warren Buffett has been married twice in his life, but the circumstances surrounding the marriages were unconventional.
  4. What's the smallest number of shares of stock that I can buy?

    Many people would say the smallest number of shares an investor can purchase is one, but the real answer is not as straightforward. ...
Trading Center