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FINRA Series-63 - Uniform Securities State Law Examination

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Total 251 questions

Under NASAA Model Rules, it is permissible for the registered representative of a broker-dealer to split his or her commission with

I. a client.

II. the broker-dealer with which the registered representative is affiliated.

III. another registered representative working for the same broker-dealer.

IV. the administrative assistant who directs calls to the registered representative and provides other services for the agent.

A.

I, II, III, and IV

B.

I, II, and III only

C.

II, III, and IV only

D.

II and III only

Which of the following entities are subject to post-registration provisions?

I. broker-dealers

II. agents

III. investment advisers

IV. investment adviser representatives

A.

I and II only

B.

I and III only

C.

II and IV only

D.

All of the entities are subject to post-registration provisions.

Registration by coordination is provided for by which of the following federal securities acts?

A.

Securities Act of 1933

B.

Securities and Exchange Act of 1934

C.

Investment Advisers Act of 1940

D.

Investment Company Act of 1940

The Administrator of a state will deny the registration of a security if

I. the mandated filing fee has not been paid.

II. the compensation of the underwriters is excessive.

III. the registration statement is incomplete.

IV. the issuer is registering the security through the registration by coordination process and has not complied with all the stipulated requirements.

A.

I, II, III, or IV

B.

I or III only

C.

III or IV only

D.

I, III or IV only

Price pegging refers to

A.

the practice of buying large amounts of a security to drive its price up artificially.

B.

the illegal activity of a group of investors who buy and sell a security among themselves to create an artificially high volume of trading in hopes of luring investors to buy the security.

C.

the prohibited practice of excessively trading on a client’s account that is used by some broker-dealers and/or their agents to generate more commissions for themselves.

D.

the unethical practice of investment advisers who issue “buy” recommendations for stocks that they own themselves without disclosing the fact.

Jeremy Sly considered himself somewhat of an inventor. The only problem was that his day job interfered with his opportunity to exercise his creativity. He came up with a plan to get outside investors to support his inventive activities. To this end, he produced and distributed a brochure advertising partnership interests with a guaranteed return on investment of at least 15% after the first 12 months, based on what he had allegedly generated from his other (non-existent) inventions.

Given these facts, is Jeremy guilty of any security violations under the Uniform Securities Act (USA)?

A.

No. The facts don’t indicate whether any partnership interests were actually sold, and there can be no violation unless there is a sale.

B.

No. An interest in a partnership is not considered a security.

C.

No. It is not against the law to believe in oneself and promote one’s ideas.

D.

Yes. Even an “offer” to sell securities must not contain any untruths.

When a customer files a complaint with a broker-dealer,

I. the broker-dealer must submit the complaint to the firm’s compliance department.

II. the broker-dealer must provide a prompt written response to the complainant.

III. the broker-dealer must temporarily suspend the activities of any agent named in the complaint.

A.

I, II and III

B.

I and II only

C.

I and III only

D.

II and III only

Trevor is currently a registered agent in the state of Connecticut where he has been employed by Connect & Company, a broker-dealer that is registered in Connecticut and has subsidiary operations in Massachusetts, New Jersey, and New York. Trevor has moved to Massachusetts and is now associated with one of Connect’s subsidiaries, a broker-dealer registered in the state. Trevor has applied to the Administrator of Massachusetts for registration as an agent.

Can Trevor execute purchases and sales for clients while his registration is still pending?

A.

No. Until he is informed by the Administrator of Massachusetts that his application has been accepted, Trevor may not affect any securities transactions in Massachusetts.

B.

Yes. Because Trevor is a registered agent in another state and is affiliated with a broker-dealer that is registered in the state of Massachusetts, he is not restricted from executing trades.

C.

Yes. Trevor can execute trades for new clients he solicits, but only for sixty days while his registration is pending.

D.

It depends. Trevor can execute some purchases and sales, but only for clients that he already had who may have recently relocated to Massachusetts and only for sixty days while his registration is pending.

You are employed as an agent with CanDo Broker-Dealers. Your brother is software engineer with VideoMagic. When you were talking to him on the phone the other day, he told you that he overheard a conversation by some of the firm’s executives that indicated that VideoMagic was about to take over another software company.

Which of the following would violate insider trading rules?

I. The next day, you get an unsolicited call from a client requesting that you sell his shares in Video Magic, and you execute the trade.

II. You buy stock in Video Magic’s target firm in anticipation that its stock price will rise when the information becomes public.

III. You recommend the stock of Video Magic’s target firm to investors based on the fact that, on average, the stock price of target firms increases.

A.

I, II and III

B.

I and II only

C.

I and III only

D.

II and III only

The 1988 Insider and Securities Enforcement Act indicates that a person convicted of insider trading can be subject to which of the following penalties?

A.

up to 10 years in prison and a fine of $1 million or up to 3 times the amount of profits gained, or

B.

up to 3 years in prison, a $5,000 fine, or both

C.

up to 5 years in prison and a fine of $1,500,000 or both

D.

up to 7 years in prison and a fine equal to 200% of the amount of profits gained or losses avoided