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FINRA Series-63 - Uniform Securities State Law Examination

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Total 251 questions

Skip is a registered agent with state. He recently quit his job with Venus Broker-Dealers to become affiliated with Mars Broker-Dealers.

Which of the three entities must report this change to the state Administrator?

A.

Skip only

B.

Skip and either Mars or Venus, but not both

C.

Both Skip and Venus

D.

Skip, Mars, and Venus

Which of the following statements best explains the difference between an agent and a broker-dealer?

A.

An agent is an individual who represents a broker-dealer or an issuer and buys and sells securities he does not own in return for a commission on the transactions he executes. A broker-dealer may also buy and sell securities for his own portfolio, in which case the broker-dealer enjoys any price appreciation on those securities.

B.

A broker-dealer must be licensed in the state in which he conducts business, but there are no separate licensing requirements for agents.

C.

Agents are engaged exclusively in the purchase and sale of stocks whereas broker-dealers also buy and sell bonds and option contracts.

D.

Agents conduct their business exclusively in the secondary market, while broker-dealers also operate in the primary market.

Julia Hasty has recently applied with the Administrator to be a registered investment adviser in the state. Eager to open her new business, she has business cards printed that indicate that she is a “state-registered” investment adviser and visits some local businesses, asking them for permission to put some of her cards in their waiting rooms.

Has Julia violated any of the provisions of the Uniform Securities Act by distributing her business cards?

A.

No. As long as her application has been submitted and is pending acceptance, Julia has not violated any provisions of the Uniform Securities Act.

B.

No. The provisions of the Uniform Securities Act relate to securities, not people.

C.

Yes. Julia is not permitted to advertise as a “state-registered” investment adviser until she receives notification of the acceptance of her application by the state Administrator.

D.

No. Julia has merely put her business cards in waiting rooms. She has not opened her business to clients yet.

A broker-dealer of commodity futures contracts has been profiting by trading for its own account either before or after executing a client’s trade on the same commodity, depending on which will be most advantageous. Under the Uniform Securities Act, the broker-dealer is guilty of

A.

fraud.

B.

churning.

C.

unauthorized transactions.

D.

nothing. The Uniform Securities Act (USA) deals only with securities, and a commodity futures contract is not a security.

AllTime Investment Advisers advertises that its phones are manned 24/7, so that a client “doesn’t have to lie awake all night worrying about a financial problem.” In fact, AllTime does have a answering service that answers calls in the evenings and on the weekends when its offices are closed. The service informs the caller of the firm’s business hours, which will be the earliest opportunity the caller will have to talk to an investment adviser representative.

Is this a violation of any securities laws?

A.

No. It’s not a violation of any securities laws, but the firm probably won’t retain many clients this way.

B.

Yes. The Uniform Securities Act prohibits investment advisers from making deceptive statements in the solicitation of clients as well as in advising clients.

C.

No. The firm’s phones are manned 24/7, so it hasn’t lied.

D.

It depends. If, before a client signs a contract with the firm, it is made clear that investment adviser representatives are not, in fact, available to him 24/7, then AllTime is in the clear.