Achieve Success in the FINRA Series-63 Exam: A Detailed Uniform Securities State Law Examination Guide

Under which of the following scenarios can a client legitimately sue a purported professional in the securities industry and expect an award for damages?

I. The securities were sold by an agent whose registration was not yet effective with the state, but who had already applied for registration.

II. The security was a variable annuity, and the sales representative neglected to reveal the details of the surrender clause to the client.

III. The security was the stock of a company, the stock had recently been registered with the state for sale, had been granted registration, and the selling agent had told his client that the security had been state-approved for sale.

S. White and Associates is an investment adviser registered in the state of Kentucky and, as such, is meeting Kentucky’s minimum net capital requirement for investment advisers. The firm recently registered with the state of Virginia and has opened an office there. Virginia has a significantly higher net capital requirement for its investment advisers.

Which of the following statements is true?

Your next-door neighbor’s brother works for a large pharmaceutical company and confided in her that one of the company’s chemists has just discovered a compound that will cure baldness and that the firm plans to make the discovery public later in the week. Your next-door neighbor passes this information on to you over a cup of coffee the next morning. You immediately call your broker and place an order to buy shares of the company’s stock.

Has any illegal insider trading taken place?

In accordance with the Telephone Consumer Protection Act of 1991 (TCPA), if a prospective client requests to be put on your firm’s Do-Not-Call (DNC) list, the client must be kept on that list for

BondsRUs is a broker-dealer that (unsurprisingly) specializes in bonds. The firm has found that it is able to sell Treasury bonds that it buys for $90 per $100 of par value for $99 per $100 of par value to some of its more naïve clients, who never pay attention to the confirmation statements BondsRUs sends them. BondsRUs is guilty of

While on vacation in Colorado, Mr. Moneybags became interested in the stock of a company called SafeAway, which designs and installs customized high-tech security systems in the multimillion dollar mansions located in Colorado’s pricier ski resort areas, such as Vail and Aspen. Upon returning to his home in Boston, he calls his broker-dealer with an order to purchase 10,000 shares of the stock, which he learned trades in the over-the-counter market. Fast Eddie, a registered agent with his broker-dealer, discovers that SafeAway’s stock is registered only in the states of Colorado and Wyoming. Neither Fast Eddie nor his broker-dealer are registered to do business in either of those states. Under these circumstances,

Which of the following does not describe a prohibited practice for broker-dealers under the NASAA Model Rules?

I. SecureMoney Broker-Dealers has received a request from a client who wants SecureMoney to “identify a few solid firms in the Asian market and invest up to $20,000 in them.” SecureMoney executes the purchases and receives the requisite signed discretionary authorization from the client before the settlement date.

II. CanDo Broker-Dealers executes a margin transaction for a client, promptly receiving a signed, written margin agreement from the client after the transaction takes place.

III. GetErDone Broker-Dealers receives a call from a client who wants to purchase some securities on margin. GetErDone has the client come into the office to sign a properly executed margin agreement prior to effecting the transaction.

The Administrator may require a firm to supply it with any prospectus, pamphlet, advertisement, or other sales literature intended for prospective investors unless the security

I. will be sold only through an investment advisory firm.

II. is a federal covered security.

III. is issued by a state credit union.

A margin transaction refers to a transaction

uestion No: 124

Jack and Jill are a newly married couple in their mid-20s. They are determined to retire by the time they are 50 and have arranged a meeting with a representative of Professional Investment Advisers to structure a financial plan that will allow them to achieve this goal.

The representative, Mr. Hill, advises them to invest at least 60% of their money in bond funds to minimize the risk of loss on the way to their goal. Mr. Hill has