Wednesday, March 20, 2013

Series 65 and Series 66 practice question

This one will make you think. First, it's a topic most people are not comfortable with. Second, the way it's written is intentionally confusing. Let's take a swing at it:

Which of the following statements is accurate?
A. A security registered by coordination is registered with both the SEC and one or more state securities Administrators
B. Securities registered with the states must also be registered with the SEC
C. Securities registered with the SEC must also be registered with the states
D. Investment company shares are registered both with the SEC and the states

EXPLANATION: what you have to do with these questions is take each answer choice and try to eliminate it. Don't worry about whether you've ever seen something like this; just use what you know to see which answer choices can be eliminated to improve your odds dramatically on the "hard questions." Choice A looks pretty good, so you might have to just put it aside and keep looking for chess pieces to knock off the board. Choice B looks right at first, so you have to see if you can argue against it--can an issuer register with just a state Administrator? Yes, under qualification, when doing an intrastate offer. B is eliminated. You know that federal covered securities by definition are not registered with the states, so Choice C is eliminated. Choice D is really tempting, but before you pick it, ask yourself if a notice filing and a registration are the same thing? Not sure--look at Choice A again. If my company offers shares in several states, we have to register with the SEC under the Securities Act of 1933, and if we're not federal covered, we will also register with the states, and we will use registration by coordination. So, I see nothing wrong with Choice A, while Choice D is over-stating what a notice filing is--it is not a registration but merely a filing of notice. The answer is Choice A. And, if you're willing to think through questions in this way, you will arrive at answers that you know are correct. Trust me, that helps you focus on the next question on your screen. Get Series 66 Questions Here

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