MGRADES
Series 63 Practice UPDATED ACTUAL
Exam Questions and CORRECT Answers
AN investment adviser is registered in both stat A and state B, and has its principal office in
State B. State A would be allowed to do all of the following EXCEPT:
A. Review the investment advisers books and records in state A
B. Review the investment advisers books and records in state B
C. require advertising and sales literature to be filed in state A
D. Require advertising and sales literature to be filed in state B - CORRECT ANSWER -
D
State A has the authority to inspect the IA books and records, no matter where they are located,
so State A can inspect the IA books and records in both state A and B. State a can require the
filing of advertising and sales literature used in state A. It cannot require the filing of advertising
and sales literature used in state B-- only state B can do this
All of the following are true regarding rules and orders of the administrator under the Uniform
Securities Act EXCEPT:
A. rules are general in applicability; orders apply to specific cases
B. different penalties apply for violations of rules and orders than for violations of the Acts
provisions
C. the administrator may enter an order prior to conducting a hearing
D. the administrator may make any rule order relating to the Act - CORRECT ANSWER -
The penalties for violations of the uniform securities acts provisions are the same as for violating
a rule or order of an administrator that is applying the act. The administrator may make a rule or
order applying to the act (the administrator can modify the acts provisions by making its own
rules; and can enter suspension of revocation orders against registrants). The administrator can
enter an order suspending or revoking a registration, prior to providing a hearing. The only
requirement is that an opportunity for a hearing be provided to the person is the subject of the
rule order
ACME Securities is a registered broker-dealer in State A. ACME is soliciting individuals to
work for the firm in their spare time, from a home office. For selling ACME's products to
customers, these individuals will be paid 25% of commissions generated. Since these individuals
,MGRADES
are not working in ACME's office, ACME has classified them as independent contractors. Which
statement is TRUE?
A. These individuals are not required to be registered as representatives in State A because they
are not ACME employees
B. These individuals must register themselves as representatives in State A because they are not
ACME employees
C. These individuals must be registered as representatives in State A by ACME Securities
D. These individuals only need to be registered in State A by ACME if they become full-time
representatives - CORRECT ANSWER -C
These individuals must be registered as representatives in State A by ACME Securities
All of the following statements are true about surety bond coverage required for a registration
application EXCEPT:
A. if there is a surety bond requirement, the Administrator is not permitted to accept cash or
securities as a substitute
B. in lieu of posting a surety bond, the Administrator must accept a deposit of cash in the
appropriate amount
C. in lieu of posting a surety bond, the Administrator must accept a deposit of securities in the
appropriate amount
D. the Administrator is permitted to waive the surety bond requirement for registrants whose net
capital or net worth exceeds a stated dollar amount - CORRECT ANSWER -A
It is untrue that if there is a surety bond requirement, the Administrator is not permitted to accept
cash or securities as a substitute. It is true that, in lieu of posting a surety bond, the Administrator
must accept a deposit of cash in the appropriate amount, or a deposit of securities in the
appropriate amount. The Administrator is permitted to waive the surety bond requirement for
registrants whose net capital or net worth exceeds a stated dollar amount.
, MGRADES
An agent persuades a client with a conservative risk tolerance to invest in speculative securities.
On settlement date, he tells the client to sell those investments and use the proceeds to buy other
speculative securities. This pattern continues for several months. This is called:
A. selling away
B. excessive trading
C. front running
D. free riding and withholding - CORRECT ANSWER -B
There are really 2 violation her- unsuitable recommendations and churning (excessive trading) of
the customer account. Since only excessive trading is offered as a choice it is the best answer
To be registered as a broker-dealer, the Administrator typically requires the posting of a surety
bond in the amount of:
A. $5,000
B. $10,000
C. $25,000
D. $50,000 - CORRECT ANSWER -B
Under the Uniform Securities Act, the Administrator typically requires the posting of a $10,000
surety bond to be registered as a broker-dealer (though each state administrator can set this
amount)
State registration of non-exempt securities is a requirement of the :
Series 63 Practice UPDATED ACTUAL
Exam Questions and CORRECT Answers
AN investment adviser is registered in both stat A and state B, and has its principal office in
State B. State A would be allowed to do all of the following EXCEPT:
A. Review the investment advisers books and records in state A
B. Review the investment advisers books and records in state B
C. require advertising and sales literature to be filed in state A
D. Require advertising and sales literature to be filed in state B - CORRECT ANSWER -
D
State A has the authority to inspect the IA books and records, no matter where they are located,
so State A can inspect the IA books and records in both state A and B. State a can require the
filing of advertising and sales literature used in state A. It cannot require the filing of advertising
and sales literature used in state B-- only state B can do this
All of the following are true regarding rules and orders of the administrator under the Uniform
Securities Act EXCEPT:
A. rules are general in applicability; orders apply to specific cases
B. different penalties apply for violations of rules and orders than for violations of the Acts
provisions
C. the administrator may enter an order prior to conducting a hearing
D. the administrator may make any rule order relating to the Act - CORRECT ANSWER -
The penalties for violations of the uniform securities acts provisions are the same as for violating
a rule or order of an administrator that is applying the act. The administrator may make a rule or
order applying to the act (the administrator can modify the acts provisions by making its own
rules; and can enter suspension of revocation orders against registrants). The administrator can
enter an order suspending or revoking a registration, prior to providing a hearing. The only
requirement is that an opportunity for a hearing be provided to the person is the subject of the
rule order
ACME Securities is a registered broker-dealer in State A. ACME is soliciting individuals to
work for the firm in their spare time, from a home office. For selling ACME's products to
customers, these individuals will be paid 25% of commissions generated. Since these individuals
,MGRADES
are not working in ACME's office, ACME has classified them as independent contractors. Which
statement is TRUE?
A. These individuals are not required to be registered as representatives in State A because they
are not ACME employees
B. These individuals must register themselves as representatives in State A because they are not
ACME employees
C. These individuals must be registered as representatives in State A by ACME Securities
D. These individuals only need to be registered in State A by ACME if they become full-time
representatives - CORRECT ANSWER -C
These individuals must be registered as representatives in State A by ACME Securities
All of the following statements are true about surety bond coverage required for a registration
application EXCEPT:
A. if there is a surety bond requirement, the Administrator is not permitted to accept cash or
securities as a substitute
B. in lieu of posting a surety bond, the Administrator must accept a deposit of cash in the
appropriate amount
C. in lieu of posting a surety bond, the Administrator must accept a deposit of securities in the
appropriate amount
D. the Administrator is permitted to waive the surety bond requirement for registrants whose net
capital or net worth exceeds a stated dollar amount - CORRECT ANSWER -A
It is untrue that if there is a surety bond requirement, the Administrator is not permitted to accept
cash or securities as a substitute. It is true that, in lieu of posting a surety bond, the Administrator
must accept a deposit of cash in the appropriate amount, or a deposit of securities in the
appropriate amount. The Administrator is permitted to waive the surety bond requirement for
registrants whose net capital or net worth exceeds a stated dollar amount.
, MGRADES
An agent persuades a client with a conservative risk tolerance to invest in speculative securities.
On settlement date, he tells the client to sell those investments and use the proceeds to buy other
speculative securities. This pattern continues for several months. This is called:
A. selling away
B. excessive trading
C. front running
D. free riding and withholding - CORRECT ANSWER -B
There are really 2 violation her- unsuitable recommendations and churning (excessive trading) of
the customer account. Since only excessive trading is offered as a choice it is the best answer
To be registered as a broker-dealer, the Administrator typically requires the posting of a surety
bond in the amount of:
A. $5,000
B. $10,000
C. $25,000
D. $50,000 - CORRECT ANSWER -B
Under the Uniform Securities Act, the Administrator typically requires the posting of a $10,000
surety bond to be registered as a broker-dealer (though each state administrator can set this
amount)
State registration of non-exempt securities is a requirement of the :
