SERIES 63 ACTUAL EXAM
QUESTIONS WITH CORRECT
ANSWERS
Under the Uniform Securities Act, which of the following sale would be considered
a nonissuer transaction?
AThe sale of a new issue in a private placement
BThe sale of an outstanding security on the New York Stock
Exchange CThe sale of a security executed by an agent of the issuer
DA primary offering sold by a broker-dealer
B. A nonissuer transaction is a purchase or sale of a security whereby the issuer does not benefit,
directly or indirectly. A trade between two investors for IBM stock on the New York Stock
Exchange (a secondary market trade) would be an example of a nonissuer transaction.
Which of the following activities does NOT meet the definition of an exempt
transaction under the Uniform Securities Act?
AAn agent sells a client shares in a Canadian venture capital fund after the client signs
a form stating that the transaction was unsolicited
BAn issuer of an IPO distributes shares to the lead underwriter
CAn agent sells units in a Canadian limited partnership to several of her clients
DA bankruptcy trustee liquidates a debtor's securities and divides the proceeds among
its creditors
C. This is an example of a question where the answer is determined based on the word "NOT."
Since this is typical of regulatory examinations, it's important to understand what the question is
actually asking. In this question, the answer revolves around determining which is not exempt.
,This means that three of the answers are examples of exempt transactions and one is not. If
the exempt transactions can be identified, the answer will be obvious.
To identify the exempt transactions, there are certain key terms or concepts to remember,
including unsolicited transactions, transactions by a trustee as a part of bankruptcy proceedings,
transactions between an issuer and underwriter, and certain non-issuer (secondary market)
transactions. An example of an exempt, non-issuer transaction is the sale of Canadian securities
that are (1) issued by an entity that files reports with the Canadian regulators and (2) listed on
the Toronto Stock Exchange. There is no indication in the sale of units in a Canadian limited
partnership to several clients that an exemption is available.
Which of the following securities is NOT federal covered?
AA hedge fund that is offered under Section 504 of Regulation
D BA REIT that is listed on the Nasdaq Capital Market
CA real estate limited partnership that is listed on the Nasdaq Global Market
DA fund of funds that is issued by a registered investment company
A. All securities that are listed on Nasdaq (Global Select, Global, and Capital Markets) are
federal covered securities. A fund of funds is a type of mutual fund and is also a federal
covered security.
Regulation D is a group of SEC rules that provide safe harbors for private securities offerings
(private placements). Securities that are issued under Section 504 of Regulation D are NOT
federal covered securities. However, securities that are issued under Section 506 of Regulation
D are federal covered securities.
Rule 504 offerings are limited to $5 million. On the other hand, Rule 506 allows an issuer to sell
, an unlimited amount of securities. Unaccredited investors who purchase securities that are part of
a Rule 506 offering must either be sophisticated or have an independent purchaser representative.
Which of the following is not a security as defined by the USA?
AA preorganization certificate
BA certificate of interest in a profit-sharing agreement
CA futures contract in precious metals
DA certificate of interest in a mining title
C. Futures and commodity contracts are not securities. However, the Uniform Securities Act
includes some seemingly odd instruments as securities, such as interests in mining or
drilling titles and preorganization certificates
A broker-dealer is registering a new issue with the Administrator of State A.
What information must be sent to the Administrator? The number of shares
The Articles of Incorporation
The financials
The tax identification number filed with the IRS
AI, II, and III only
BI only
CII and III only
DI, II, III, and IV
A. This is an example of the detailed nature of the examination. You are expected to know
that the number of shares, the issuer's financial information, and Articles of Incorporation (the
QUESTIONS WITH CORRECT
ANSWERS
Under the Uniform Securities Act, which of the following sale would be considered
a nonissuer transaction?
AThe sale of a new issue in a private placement
BThe sale of an outstanding security on the New York Stock
Exchange CThe sale of a security executed by an agent of the issuer
DA primary offering sold by a broker-dealer
B. A nonissuer transaction is a purchase or sale of a security whereby the issuer does not benefit,
directly or indirectly. A trade between two investors for IBM stock on the New York Stock
Exchange (a secondary market trade) would be an example of a nonissuer transaction.
Which of the following activities does NOT meet the definition of an exempt
transaction under the Uniform Securities Act?
AAn agent sells a client shares in a Canadian venture capital fund after the client signs
a form stating that the transaction was unsolicited
BAn issuer of an IPO distributes shares to the lead underwriter
CAn agent sells units in a Canadian limited partnership to several of her clients
DA bankruptcy trustee liquidates a debtor's securities and divides the proceeds among
its creditors
C. This is an example of a question where the answer is determined based on the word "NOT."
Since this is typical of regulatory examinations, it's important to understand what the question is
actually asking. In this question, the answer revolves around determining which is not exempt.
,This means that three of the answers are examples of exempt transactions and one is not. If
the exempt transactions can be identified, the answer will be obvious.
To identify the exempt transactions, there are certain key terms or concepts to remember,
including unsolicited transactions, transactions by a trustee as a part of bankruptcy proceedings,
transactions between an issuer and underwriter, and certain non-issuer (secondary market)
transactions. An example of an exempt, non-issuer transaction is the sale of Canadian securities
that are (1) issued by an entity that files reports with the Canadian regulators and (2) listed on
the Toronto Stock Exchange. There is no indication in the sale of units in a Canadian limited
partnership to several clients that an exemption is available.
Which of the following securities is NOT federal covered?
AA hedge fund that is offered under Section 504 of Regulation
D BA REIT that is listed on the Nasdaq Capital Market
CA real estate limited partnership that is listed on the Nasdaq Global Market
DA fund of funds that is issued by a registered investment company
A. All securities that are listed on Nasdaq (Global Select, Global, and Capital Markets) are
federal covered securities. A fund of funds is a type of mutual fund and is also a federal
covered security.
Regulation D is a group of SEC rules that provide safe harbors for private securities offerings
(private placements). Securities that are issued under Section 504 of Regulation D are NOT
federal covered securities. However, securities that are issued under Section 506 of Regulation
D are federal covered securities.
Rule 504 offerings are limited to $5 million. On the other hand, Rule 506 allows an issuer to sell
, an unlimited amount of securities. Unaccredited investors who purchase securities that are part of
a Rule 506 offering must either be sophisticated or have an independent purchaser representative.
Which of the following is not a security as defined by the USA?
AA preorganization certificate
BA certificate of interest in a profit-sharing agreement
CA futures contract in precious metals
DA certificate of interest in a mining title
C. Futures and commodity contracts are not securities. However, the Uniform Securities Act
includes some seemingly odd instruments as securities, such as interests in mining or
drilling titles and preorganization certificates
A broker-dealer is registering a new issue with the Administrator of State A.
What information must be sent to the Administrator? The number of shares
The Articles of Incorporation
The financials
The tax identification number filed with the IRS
AI, II, and III only
BI only
CII and III only
DI, II, III, and IV
A. This is an example of the detailed nature of the examination. You are expected to know
that the number of shares, the issuer's financial information, and Articles of Incorporation (the
