What Is the Uniform Securities Act?
The Uniform Securities Act is a model law created as a starting point for state-level securities regulation. The purpose of the Uniform Securities Act is to deal with securities fraud at the state level and to assist the Securities and Exchange Commission (SEC) in enforcement and regulation.
Uniform Securities Act Explained
Because not all investments are covered federally and not all investment dealers are registered at the federal level, the SEC cannot protect all investors and pursue all security violations. This created the need for state-level regulations such as the Uniform Securities Act to further protect investors. Each state has its own security laws colloquially referred to as the “blue sky laws.”
How the Uniform Securities Act Is Applied
The Uniform Securities Act is a framework that guides states in the crafting of their own securities legislation. The act evolved through a series of amendments due to earlier regulations not being adopting consistently across the country. Some jurisdictions did not enact each securities act introduced by the Uniform Law Commissioners. Through subsequent revisions and replacements of prior regulations, the Uniform Securities Act brought more parity to the federal and state implementation of securities protections.
One of the issues with regulating securities from two different levels of government is the potential for duplication. The Uniform Securities Act outlines the authority and role of state and federal regulators in dealing with securities fraud. For example, many fraudulent acts occur at the local level with pyramid schemes and other scams. That means enforcement through state law is necessary to address such crimes.
The act provides more structure and consistency in enforcement authority across states as well as in coordination with federal authority regarding the prosecution of securities fraud.
The intent of securities regulations, whether at the state or federal levels, is to prevent the fraudulent sale of securities to investors. Regulatory efforts stem from three primary elements. Registration is required for initial public offerings. Those who deal in securities, specifically investment advisers, broker-dealers, and their representatives and agents, must also be registered. In order to prohibit and prevent securities fraud, regulatory agencies must also have enforcement authority to address such actions. That includes being granted the ability to establish regulations and rules on securities transactions and having the capacity to bring the prosecution of criminal and civil violations to court.
The Uniform Securities Act serves as structure that includes state-level authority to take action on these issues.
When meeting with a potential customer for the very first time, which of the following would be a reasonable course of action?
-Prior to the meeting, informing the client to bring additional financial information.
-If necessary, an IAR may inform the client that he may not know the answer to one of her questions, but will find out and respond within a reasonable period.
-Inform the client that she needs to increase her risk tolerance to
obtain her goals.
-Discuss the customer's current financial situation and her goals for retirement.
I and II only
I, II, and III only
I, II, and IV only
I, II, III, and IV