Series 63 Section 4
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30 terms
Terms | Definitions |
|---|---|
 Anti-Fraud | Neither exempt securities nor exempt transactions are exempt from the ANTI-FRAUD provisions of thestate nad federal securities law. |
| Solicitation | It is unlawfull to solicit orders for unregistered non-exempt securities. |
| Specific Authority | It is prohibited to affect transactions for a client without their specific authority to do so. |
| Prohibitted activity | It is prohibited to make unsuitable recomendations, to repeat rumors or to act on insider information. |
| Capitol Appreciation | Investment Advisors may not enter advisory contracts that provide specifically for his or her compensation (fees) to be based upon a share of the capitol appreciation of the client's funds. |
| Churnig | Excessive trading in a customer's account is called churning and is prohibited. |
| Material Facts | To omit material facts that are essential for making an investment decision is fraud. |
| Suitability | The main factor for determining suitability is determining the costomer's investment objectives. |
| Written Complaints | received from a client by an agent must be forwarded to their broker/dealer. |
| Client/Agent Accounts | An agent may share in the profits and losses ofa clients account, but only in direct proportion to the percentage of the agent's own capitol contribution. |
| Joint Accounts | Agents may have joint accounts with their clinets only with the consent of their broker/dealer and customer. |
| Third party Trading | An agent may only accept orders from his customer, Unless a third party trading authorization has been obtained. |
| Match and Wash | Matching orders and wash sales distort the actual trading activity in a security and are prohibited, as are phony quotes, material misrepresentations and untrue facts |
| Guarantee | It is UNLAWFULL to make a GUARANTEE of profit or losses. |
| Borrowing | You can never borrow money or securities from a customer. |
| Discretionary Authority | An Agent may use general price and timing discretion when executing orders on behalf of the clients without obtaining written discretionary authority. |
| Unsolicited Orders | If a customer is unsure of their finacial objectives and they refuse to give you their finacial Data, you should only accept unsolicited orders. |
| Insider | If you hear a rumor or inside information keep it confidential. |
| Missleading or Untrue Statements | Giving an inaccurate market quotation or missrepresenting to customers the status of their account is considered making missleading or untrue statements. |
| Material facts | Agents do not have to disclose all investment facts, just those that are material. |
| Anti- Fraud | The anti-fraud rules apply to all securities, both exempt and non-exempt, including exempt transaction. |
| Advisors | Investment Advisors must disclose to clients that they also receive commissions for making trades related to the advice they give. |
| Fraud | If a broker/dealer,Agent, Issuer and Advisor all conspire to DEFRAUD the public, all FOUR have violated the ACT. |
| Insider Information | If an agent receives inside information, he cannot refer to his firm's trading department |
| Unsolicited orders | Agents may execute unsolicited orders for unregistered non-issuer securities without violating the ACT. but cannot solicit such orders. |
| Corporate Clients | No Guarantee to break even or a profit or a promise to buy back stock can be made. |
| Specific Authority | Even the wife of a client cannot force a trade or sale for a client without specific authority. |
| Unsuitable Trade | Would be discribed as making a trade for a client with a investment objective of income and purchasing a non- intrest bearing security. This is inclusive even with discetionary authority and you are guilty of making an unsuitable trade. |
| Advisors may | Investment advisors may base their fees on the Average account value calculated over a definite period of time. |
| Advisors May not | Advisors cannot base their fees on capitol gains or capitol appreciation only. |
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