SERIES 63 ACTUAL EXAM QUESTIONS WITH
CORRECT ANSWERS
Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities
law practice full time in New York state. He must register as an investment adviser in
New York state if:
a. the clients of Smith's law firm are all residents of Connecticut but conduct their business
with Smith in New York
b. Smith's clients, none of whom are residents of New York, receive investment advice as an
integral part of Smith's legal services
c. he advises his wife, who also has an office in New York, that her investment in 15
technology stocks is too high
d. the clients of Smith's law firm are New York residents and seek advice on the
construction of trust documents that may be helpful in reducing taxes on the securities
in their estates
b. Smith must register as an investment adviser in New York when or if he is offering investment
advice as an integral part of his practice. Since his place of business is in New York, he must register
in New York as an investment adviser, even though his clients are not themselves residents of the
state. If Mr. Smith advises his wife, who also has an office in New York, that her investment in 15
technology stocks is too high, he need not register in New York because he is
,not charging his wife a fee for investment advice. Mr. Smith, as a securities lawyer, need not
register in New York as an investment adviser when he advises clients on the construction
of trust documents.
Under the Uniform Securities Act, which of the following is a broker-dealer?
A)
Credit union that sells its own stock
B)
Issuer
C)
Corporation that sells interests in an oil and gas limited partnership to investors with the
proceeds going to the issuer
D)
Agent
c. A broker-dealer is any person that buys or sells for the accounts of others or for his own
account. In this case, an entity structured as a corporation is selling a security in the form of
limited partnership units and is therefore a broker-dealer. A broker-dealer is not an issuer or
an agent.
A broker-dealer having no place of business in a state is not required to be registered
in that state if the broker-dealer
A)
is a member of FINRA
B)
,is licensed/registered in its state of residence
C)
is a member of the New York Stock Exchange
D)
does no business in that state other than with institutional clients
d. A broker-dealer must be registered in every state it sells or offers to sell securities, unless an
exemption is available. If a broker-dealer has no office in a particular state and no business is
done in that state other than with institutional clients, registration there is not required.
Which of the following firms in the business of rendering investment advice for
compensation would be considered a federal covered adviser?
A)
Retire in Luxury Pension Plan Consultants advising several corporate retirement plans
with combined total assets of $145 million
B)
GHI Consultants, a sole proprietorship, managing $89 million belonging to high net worth
individuals
C)
ABC Money Managers, a partnership with $385 million under management
D)
DEF Fund managers, a corporation managing an unregistered hedge fund with $10 million
in assets
, c. It makes no difference what the structure of the adviser is. As long as the assets under
management are $110 million or more, SEC registration is required. If the investment company
is registered under the Investment Company Act of 1940, the adviser must be registered
regardless of size. The Hedge Fund is an unregistered fund so the rule does not apply to it.
Under the Dodd-Frank Act, the pension consultant must have $200 million under management
to be eligible to be federal covered.
Which of the following are NOT agents as defined in the USA?
A broker-dealer acting on behalf of a properly registered issuer
An individual representing the U.S. government in the sale of its securities
An individual who, acting on behalf of a broker-dealer, sells exempt securities or engages in
an exempt transaction
An individual who represents an issuer selling a nonexempt security in a
nonexempt transaction
I and II
A broker-dealer by definition is not an agent. An individual who, while acting on behalf of the
issuer, sells certain exempt securities, such as those issued by the U.S. government, is not an
agent. The exclusion from the definition of an agent only applies to those individuals who are
selling on behalf of the issuer (never a broker-dealer) and only when the transaction is exempt or
the issuer is one of a specified list of exempt issuers.
Under the terms of the Uniform Securities Act, which of the following is an investment
adviser for purposes of state regulatory jurisdiction?
CORRECT ANSWERS
Peter Smith, a prominent securities lawyer living in Connecticut, conducts his securities
law practice full time in New York state. He must register as an investment adviser in
New York state if:
a. the clients of Smith's law firm are all residents of Connecticut but conduct their business
with Smith in New York
b. Smith's clients, none of whom are residents of New York, receive investment advice as an
integral part of Smith's legal services
c. he advises his wife, who also has an office in New York, that her investment in 15
technology stocks is too high
d. the clients of Smith's law firm are New York residents and seek advice on the
construction of trust documents that may be helpful in reducing taxes on the securities
in their estates
b. Smith must register as an investment adviser in New York when or if he is offering investment
advice as an integral part of his practice. Since his place of business is in New York, he must register
in New York as an investment adviser, even though his clients are not themselves residents of the
state. If Mr. Smith advises his wife, who also has an office in New York, that her investment in 15
technology stocks is too high, he need not register in New York because he is
,not charging his wife a fee for investment advice. Mr. Smith, as a securities lawyer, need not
register in New York as an investment adviser when he advises clients on the construction
of trust documents.
Under the Uniform Securities Act, which of the following is a broker-dealer?
A)
Credit union that sells its own stock
B)
Issuer
C)
Corporation that sells interests in an oil and gas limited partnership to investors with the
proceeds going to the issuer
D)
Agent
c. A broker-dealer is any person that buys or sells for the accounts of others or for his own
account. In this case, an entity structured as a corporation is selling a security in the form of
limited partnership units and is therefore a broker-dealer. A broker-dealer is not an issuer or
an agent.
A broker-dealer having no place of business in a state is not required to be registered
in that state if the broker-dealer
A)
is a member of FINRA
B)
,is licensed/registered in its state of residence
C)
is a member of the New York Stock Exchange
D)
does no business in that state other than with institutional clients
d. A broker-dealer must be registered in every state it sells or offers to sell securities, unless an
exemption is available. If a broker-dealer has no office in a particular state and no business is
done in that state other than with institutional clients, registration there is not required.
Which of the following firms in the business of rendering investment advice for
compensation would be considered a federal covered adviser?
A)
Retire in Luxury Pension Plan Consultants advising several corporate retirement plans
with combined total assets of $145 million
B)
GHI Consultants, a sole proprietorship, managing $89 million belonging to high net worth
individuals
C)
ABC Money Managers, a partnership with $385 million under management
D)
DEF Fund managers, a corporation managing an unregistered hedge fund with $10 million
in assets
, c. It makes no difference what the structure of the adviser is. As long as the assets under
management are $110 million or more, SEC registration is required. If the investment company
is registered under the Investment Company Act of 1940, the adviser must be registered
regardless of size. The Hedge Fund is an unregistered fund so the rule does not apply to it.
Under the Dodd-Frank Act, the pension consultant must have $200 million under management
to be eligible to be federal covered.
Which of the following are NOT agents as defined in the USA?
A broker-dealer acting on behalf of a properly registered issuer
An individual representing the U.S. government in the sale of its securities
An individual who, acting on behalf of a broker-dealer, sells exempt securities or engages in
an exempt transaction
An individual who represents an issuer selling a nonexempt security in a
nonexempt transaction
I and II
A broker-dealer by definition is not an agent. An individual who, while acting on behalf of the
issuer, sells certain exempt securities, such as those issued by the U.S. government, is not an
agent. The exclusion from the definition of an agent only applies to those individuals who are
selling on behalf of the issuer (never a broker-dealer) and only when the transaction is exempt or
the issuer is one of a specified list of exempt issuers.
Under the terms of the Uniform Securities Act, which of the following is an investment
adviser for purposes of state regulatory jurisdiction?
