Series 63 practice exam

An agent registered with a broker-dealer in the state has had his license enjoined. This means A) the individual is prohibited from acting as an agent pending the results of a hearing. B) the Administrator has used the power of the office to issue an injunction against that agent. C) a revocation of the agent's license is pending until re-registration is authorized. D) the agent's application for membership in the local securities dealers association has been accepted.

A) the individual is prohibited from acting as an agent pending the results of a hearing.

There are a number of alternatives when it comes to investing money. The Series 63 exam is concerned with investing in securities. Under the Uniform Securities Act, the term security includes A) master limited partnerships. B) rare timepieces available for sale on the internet. C) gold coins. D) heating oil futures.

A) master limited partnerships

Dr. David Livingstone is registered as an agent in States H and M with Stanley Securities, a broker-dealer registered in every state. Livingstone would now like to register in State W. In order to do so, all of the following are required ​except​ A) passing State W's qualification exam. B) ​filing a consent to service of process with State W. C) filing an application for registration with State W. D) paying the appropriate fee to State W.

A) passing State W's qualification exam

One of the most important terms used on the Series 63 exam is agent. Which of the following meets the definition of an agent as described in the Uniform Securities Act? A) The receptionist in a broker-dealer's office with the responsibility of mailing customer confirmations and account statements B) An individual employed by a broker-dealer accepting unsolicited orders from existing customers to purchase exempt securities C) A broker-dealer acting on behalf of a client and charging a commission D) An individual representing the issuer in a sale of securities to an underwriter

B) An individual employed by a broker-dealer accepting unsolicited orders from existing customers to purchase exempt securities

NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers states that it would be considered an unethical business practice for an investment adviser to charge an unreasonable advisory fee. In which of the following cases would it be likely that the Administrator would find the investment adviser's compensation to be unreasonable? A) In addition to charging a fee based on assets under management, the investment adviser also charges commissions on any securities transactions it effects. B) An investment adviser's fee schedule is not competitive with other advisers in the same general area offering essentially the same services. C) The investment adviser reduces the rate charged as the assets under management increase. D) The investment adviser charges the same hourly fee, regardless of the amount of the specific client's assets under management.

B) An investment adviser's fee schedule is not competitive with other advisers in the same general area offering essentially the same services.

The Uniform Securities Act has provisions for agent registration and termination. Which of the following statements apply to withdrawals of an agent's registration? A) The Administrator may institute a disciplinary action within two years after the effective termination date. B) If the Administrator commences an action against the agent prior to the effective date of the withdrawal, the withdrawal will be delayed until completion of the action. C) The effective date of a withdrawal, in the absence of any action by the Administrator, is 60 days after filing. D) An agent may withdraw the registration simply by failing to pay the license renewal fee.

B) If the Administrator commences an action against the agent prior to the effective date of the withdrawal, the withdrawal will be delayed until completion of the action.

Strategic Planning, Inc. (SPI), a broker-dealer registered with the state, has recently paid its renewal fees for registration. Three months later, Planned Stewardship, LLC, a new firm established to provide brokerage services, acquires SPI. Under the Uniform Securities Act, A) Planned Stewardship must pay the difference between the fees already paid by SPI and the new fees required. B) Planned Stewardship has no registration fees to pay. C) Planned Stewardship's acquisition will not go into effect until the renewal date. D) Planned Stewardship is required to pay the full cost of the registration fees.

B) Planned Stewardship has no registration fees to pay.

Abigail Jefferson recently obtained her MBA in finance from a prestigious Ivy League university. She has just been hired by Wentworth, Witherspoon, and Wilson, Ltd., a Wall Street investment banking firm. While in the process of preparing to take her Series 63 examination to become licensed as an agent for WWW, Ltd., she would be permitted to A) accept unsolicited orders from existing clients. B) update client account records. C) prequalify potential clients. D) conduct seminars discussing WWW's current recommendations.

B) update client account records.

Which of the following transactions would be exempt from the advertising and sales literature filing requirements of the Uniform Securities Act? A) A preorganization certificate is sold for which the only compensation is on sales to institutional clients. B) A retired customer calls an agent and enters an order to purchase 1,000 shares of a low-priced stock traded on the Nasdaq Stock Market. C) A client purchases 2,000 shares of a Canadian mining company after her agent suggested the stock would be an appropriate investment for one looking for an aggressive position. D) A broker-dealer sells an unregistered issue to a maximum of 10 individuals during any 12-month period.

B)A retired customer calls an agent and enters an order to purchase 1,000 shares of a low-priced stock traded on the Nasdaq Stock Market. exempt>dont have to file>unsolicited>exempt

Which of the following would be considered an unethical business practice? A) Broker-dealers sending retail clients an email 30 days in advance of a change to fees. B) Broker-dealers charging larger than ordinary commissions on certain transactions. C) Agents correcting bona fide execution errors in their customer's accounts. D) Agents exercising discretion in discretionary accounts

C) Agents correcting bona fide execution errors in their customer's accounts. When a good-faith error is made, only the firm can make the correction; the regulators are concerned that giving that power to an agent could lead to covering up unethical activity.

The Uniform Securities Act grants the authority to the Administrator to A) revoke the exemption of a federal covered security. B) issue a final order suspending a registration containing misleading or inaccurate information without an opportunity for a hearing. C) investigate the records of an investment adviser domiciled in another state but doing business in his state. D) arrest violators of the act.

C) investigate the records of an investment adviser domiciled in another state but doing business in his state.

Big Sky Securities (BSS) is a broker-dealer registered in states M, I, and W. They have no place of business in State O. The registration provisions of the Uniform Securities Act would not apply to BSS in State O if they confined their securities business in State O to all of these except A) closed-end investment companies registered under the Investment Company Act of 1940. B) banks. C) investment advisers. D) other broker-dealers.

C) investment advisers.

The Uniform Securities Act provides an exclusion from the definition of an agent under certain specified conditions for those persons representing an issuer in the sale of its securities. An individual representing the issuer in the sale of that issuer's securities to the public would not qualify for that exclusion and have to register if A) the issuer is a Canadian provincial government. B) the transaction is exempt. C) the issuer is a federal credit union. D) the issuer is a savings institution organized and supervised under the laws of any state.

C) the issuer is a federal credit union

Which of the following individuals would be most likely to be willing to sell securities for the benefit of the issuer without receiving any compensation based upon those sales? A) A registered broker-dealer concentrating on investment banking B) An investment adviser representative C) A salaried individual working in the broker-dealer's order room D) A member of the issuer's board of directors

D) A member of the issuer's board of directors

Under the Uniform Securities Act, in which of the following cases would an individual employed by a broker-dealer be required to register as an agent in a state? A) The broker-dealer has no place of business in the state and the only clients the broker-dealer has are savings institutions. B) While on vacation in the state, the individual calls a number of his clients to discuss the broker-dealer's current recommendations. C) One of the agent's clients has been visiting her grandchildren in the state for more than 30 days. D) The individual supervises agents registered in that state but does not have any dealings with retail clients in the state.

D) The individual supervises agents registered in that state but does not have any dealings with retail clients in the state.

A state-registered investment adviser must deliver the Part 2A brochure and any Part 2B brochure supplements required by the rule to a prospective advisory client A) not less than 72 hours prior to entering into any advisory contract with such client or prospective client. B) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within 48 hours after entering into the contract. C) not less than 48 hours after entering into any advisory contract with such client or prospective client. D) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

D) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

Under the Uniform Securities Act, the Administrator is empowered to do all of the following ​except​ A) publish information relating to violations committed in the state. B) require an agent to submit a written statement relating to an investigation. C) issue a cease and desist order. D) file a civil suit against a broker-dealer who has sold an unregistered nonexempt security to a resident of this state.

D) file a civil suit against a broker-dealer who has sold an unregistered nonexempt security to a resident of this state. civil lawsuit can only be filed by mad purchaser

Broker-dealers are required to disclose their capacity in any transaction with their customers. If the broker-dealer acted as the contra party to the trade, that would mean that the firm acted A) as the client's agent. B) in the capacity of a broker. C) unethically. D) in the capacity of a dealer.

D) in the capacity of a dealer. Every securities trade has two parties: the buyer and the seller. The one on the opposite side of you is the contra party. Therefore, when a broker-dealer acts as a contra party, they are one of the two principals (buyer or seller) in the trade and must indicate that they were acting as a dealer.

Under the Uniform Securities Act, individuals do not meet the definition of an agent if they are employed by a broker-dealer and only A) trade exempt securities. B) deal with institutional clients. C) involve themselves in exempt transactions. D) process securities transactions and the handling of money.

D) process securities transactions and the handling of money.

A client who wishes to open a margin account with a broker-dealer would have to comply with all of the following except A) signing the hypothecation agreement. B) signing the credit agreement. C) returning the signed documents promptly after the first margin trade in the account. D) signing the stock loan consent agreement.

D) signing the stock loan consent agreement. stock loan consent agreement is optional

Under the provisions of the Uniform Securities Act, as amended, a gift of nonassessable stock would be which of the following? A) A potential liability to the recipient B) An offer and a sale C) Permitted only if the security or the transaction were exempt D) A gift

D) a gift Nonassessable stock is free and clear, so the gift is truly a gift and not a sale. Had the question referred to an assessable stock, it would have created a potential liability to the recipient and therefore been considered an offer and a sale. LO 5.a

Under the Uniform Securities Act, when material information relating to a broker-dealer's registration changes, the Administrator must be notified A) within 30 days. B) within 24 hours. C) no later than the time of license renewal. D) promptly.

D) promptly

Which of the following is not exempt from registration as an investment adviser or an investment adviser representative in the state in which a place of business is maintained? I)A certified financial planner who prepares financial plans and whose only compensation is commissions II)An insurance agent who prepares comprehensive financial plans and receives commissions on any insurance products purchased by his clients III)A broker-dealer exclusively engaged in retail securities transactions in the state IV)The SWW Growth Fund, a mutual fund with an office and shareholders in the state

I and II

Under the Uniform Securities Act, registration with the state as either an investment adviser or investment adviser representative would be required of which of the following? I)An individual employed by an investment adviser who is responsible for supervising the firm's client-facing analysts, but who personally offers no advice to any client II)A firm registered as an investment adviser in States C and D with offices in no other state that offers investment advice to an insurance company in State M III)An agent with a broker-dealer who offers wrap fee programs charging an annual fee with a sliding scale based on assets under management IV)An individual offering financial advice on behalf of the Fourth Second National Bank of Columbus

I and III

In which of the following situations is an agent most likely to be in violation of the NASAA Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents? I)A client directs that the agent purchase 100 shares of a stock that the broker-dealer's research department has just given a bad review. Instead, the agent purchases a stock on the firm's top-rated list. II)An agent requests that his broker-dealer register him in State Z, even though he does not live there and has no clients there. III)A client instructs an agent to purchase 100 shares of ABC common stock and asks the agent to use her discretion as to the time and price of the order. The agent fails to obtain written discretionary authorization. IV)An agent who deals primarily with institutional clients follows a practice recommending specific securities to those clients shortly after purchasing those securities for his own account.

I and IV

Arthur Conley is a registered agent with Atco Securities, a broker-dealer registered only with the Georgia Administrator. If Arthur accepted a better job offer from Redding and Cooke Securities (RCS), a broker-dealer registered with the SEC and in all 50 states, then I)Conley would have to notify the Administrator that he was leaving Atco and joining RCS. II)Atco would have to notify the Administrator that Conley was leaving. III)RCS would have to notify the Administrator that Conley was being hired.

I,II, and III

GEMCO Securities, a broker-dealer registered with the Administrator, was bought out by KAPCO Investments, Inc., who has never been registered in this state as a broker-dealer. If the deal closed on July 15, 2020, which of the following statements is correct? I)KAPCO would have to file an application along with a consent to service of process and the appropriate fee. II)KAPCO would have to file an application along with a consent to service of process, but would not need to submit a fee. III)GEMCO would have to renew its registration on December 31, 2020. IV)The Administrator would be able to initiate proceedings against GEMCO until July 15, 2021.

II and IV

Registration as an agent under the Uniform Securities Act would be required of which of the following? I)A broker-dealer with an office in this state selling securities to the general public II)An individual employed by an issuer to place the issuer's securities in an exempt transaction III)The secretary of a licensed agent who contacts the agent's clients with market suggestions when the agent is on vacation IV)An officer of a broker-dealer whose only responsibility is performing suitability review of transactions based upon recommendations to clients

III and IV

The Uniform Securities Act excludes which of the following persons from the definition of broker-dealer? One who is engaged in the business of effecting transactions in securities for the account of others or for his own account One who has no office in the state and deals with a maximum of five individual clients during any 12-month period One who has no office in the state and deals exclusively with other broker-dealers and investment companies in this state An issuer of securities who hires agents to distribute its new issue of stock

III and IV