Series 63 Unit 8

With cyber security presenting such enormous threats to the safety of firm and customer information, NASAA recommends that broker-dealers should A) use encryption on their files and devices. B) update antivirus software at least biennially. C) avoid using VPNs. D) allow bona fide clients access to their accounts without using a password.

A) use encryption on their files and devices.

Which of the following are discretionary orders? I.A customer sends a check for $25,000 to an agent and instructs the agent to purchase bank and insurance company stocks when the price appears favorable. II.A customer instructs an agent to buy 1,000 shares of ABC Corporation at a time or price determined by the agent. III.A customer instructs an agent to purchase as many shares of XYZ as the agent considers appropriate. IV.A customer instructs an agent to sell 300 shares of LMN, Inc. at the best price available in the market. A) II and IV B) I and III C) II and III D) I and IV

B) I and III

Which of the following documents must an existing customer sign to establish a discretionary account? A) New account application B) Options agreement C) Trading authorization D) Customer's agreement

C) Trading authorization

Plenitude Premier Solutions (PPS) is registered in State C. If PPS wished to maintain custody of client funds or securities, A) notice is given to the State C Administrator as part of the annual updating amendment. B) permission would have to be obtained from the State C Administrator. C) prompt notice would have to be given to the State C Administrator on Form ADV. D) prompt notice would have to be given to the State C Administrator in a private letter.

C) prompt notice would have to be given to the State C Administrator on Form ADV.

All of the following would be causes for concern about cybersecurity except A) a broker-dealer's agents operate as independent contractors and maintain devices that access personally identifiable information about clients. B) a broker-dealer stores some of the firm's financial records electronically. C) a broker-dealer's bookkeeper prefers to do the books from home on a personal computer. D) a broker-dealer keeps all the firm's financial records in a ledger book.

D) a broker-dealer keeps all the firm's financial records in a ledger book.

When it comes to identity theft, one of the red flags is suspicious documents. Documents that can offer hints of identity theft would include all of the following except A) the identification doesn't look like the photo or match the physical description of the person presenting it. B) identification that looks altered, forged, or torn up and reassembled. C) the information on the identification differs from what the person with identification is telling you. D) a valid passport with stamps showing visits to countries with which the United States does not have diplomatic relations.

D) a valid passport with stamps showing visits to countries with which the United States does not have diplomatic relations.

A customer placed an order with an agent to sell 100 shares of ABC and he instructed the agent to limit any losses. The agent did not have written discretionary authority over the account and waited to sell the shares, hoping to get a better price for the customer. Several hours later, the price of the shares went down, so the agent sold 50 ABC shares to limit the customer's losses. According to the Uniform Securities Act, this is A) a violation because the agent is required to execute sell transactions immediately after the order is placed. B) a permissible activity because the agent is obligated to get the best price for the customer. C) a permissible activity because the agent does not need written authorization to determine price or time of the order. D) a violation because the agent exceeded his authority.

D) a violation because the agent exceeded his authority.

Under the Uniform Securities Act, an investment adviser who has custody of client securities or funds must do all of the following except A) have client funds and securities examined at least once a year by an independent public accountant on a surprise basis. B) maintain one or more separate bank accounts in which client funds are deposited and keep customers' securities clearly marked and segregated. C) notify the Administrator in writing that the adviser is maintaining custody. D) send clients itemized statements no less frequently than every six months detailing the funds and securities in the adviser's custody at the end of the period.

D) send clients itemized statements no less frequently than every six months detailing the funds and securities in the adviser's custody at the end of the period.