SERIES 63 TOP EXAM QUESTIONS
WITH CORRECT ANSWERS
A broker-dealer that is registered in State A is underwriting the IPO for a local company,
which will not be listed. As required, the broker-dealer is making the final prospectus
available electronically to all purchasers. How long does the broker-dealer need to keep the
prospectus on file electronically?
a 25 days
b 40 days
c 90 days
d 270 days
C
All investors who purchase new issues must receive prospectuses, which may be made available
electronically. A firm that sells a new issue in the aftermarket shortly after it begins trading may
also be required to give prospectuses to its customers. This obligation to provide a prospectus
continues for 25 days after the effective date for securities that will be listed on a national exchange.
For secondary offerings of securities that will trade over-the-counter (securities that are not eligible
to be listed), this obligation lasts for 40 days. In this question, the offering is an IPO that will not be
listed, which means the prospectus must be available for 90 days.
Under the Uniform Securities Act, a person's registration may be revoked or denied
for which of the following reasons?
The person was convicted of a non-securities-related misdemeanor three years
ago The person was convicted of a drug-related felony seven years ago
There is mounting evidence that the individual is involved in a securities-related fraud
,The person was convicted of a securities-related misdemeanor six years ago
a I and IV only
b II and IV only
c II and III only
d I, II, and IV only
B
Under the Uniform Securities Act, the Administrator may deny, revoke, cancel, or withdraw the
registration of any person if he has been convicted within the past 10 years of any felony or any
misdemeanor involving a security. The Administrator may not take any action if a person has
been accused or indicted, but has not been convicted.
A purchaser wishes to take action against a seller to recover money paid for securities
issued in violation of blue-sky laws. Under the Uniform Securities Act, the burden to
prove that the stock was sold in violation is on the:
A Administrator
B Purchaser
C State administrative court
D Broker-dealer
B
The purchaser must prove that the stock was sold in violation of blue-sky laws. (75625)
Goldrush Securities is a Canadian broker-dealer located in the Yukon Territory. Which of
the following individuals may it contact in the United States?
A A prospective client who lives in Canada but is currently on vacation in Alaska
,B A prospective client who is on an extended road trip in the United
States C An existing client who is living in Minneapolis temporarily D A
U.S. citizen who is thinking of relocating to the Yukon
C
A Canadian broker-dealer may not solicit prospective clients in the United States unless it registers
under the Uniform Securities Act. The broker-dealer may continue to do business with its existing
clients who are in the United States temporarily, which is the scenario in choice (c).
In order to continue to service its existing clients, a broker-dealer that is properly registered in
Canada and does not have an office in the state may take advantage of the exemption (limited
registration provision) available to Canadian broker-dealers under the Uniform Securities Act.
In order to do so, a Canadian broker-dealer must file the following documents with the
Administrator: a Consent to Service of Process, a registration document filed with its Canadian
regulator, and proof of membership in a self-regulatory organization such as an exchange.
The term churning is defined as:
The sale of an unregistered nonexempt security
Trading one security for another in a client's account
Excessive activity in a client's account
Trading done solely to make it appear that there is activity in the security
Churning is defined as generating excessive activity in a client's account, usually for the
sole purpose of producing commissions.
, A sole proprietor who was registered as a broker-dealer is now charging a separate fee for
securities advice. According to the Uniform Securities Act, the sole proprietor:
A Has an exemption from registration as an investment
adviser B Would need to register as an investment adviser
C Must change from sole proprietor to another business structure in order to become an
investment adviser
D Must only register if the activities are called financial planning
B
Any business entity not specifically exempted from registration and charging a separate fee for
administering advice, is subject to registration as an investment adviser. Broker-dealers are
excluded from the definition of investment adviser if they provided only incidental advice
with no separate, identifiable charge.
An agent receives a letter from an irate client. The letter is the fifth in the last six
months and the language is abusive. The agent forwards it to his supervisor. The
supervisor decides against a reply and discards the letter. In this instance, which of the
following statements is TRUE?
A The supervisor is entitled to decide how to handle such situations
B If the supervisor forwards the complaint to the Administrator, this is acceptable
C The Uniform Securities Act requires that all material complaints be forwarded to the
Administrator
D The Uniform Securities Act requires that a response be made to all written complaints
WITH CORRECT ANSWERS
A broker-dealer that is registered in State A is underwriting the IPO for a local company,
which will not be listed. As required, the broker-dealer is making the final prospectus
available electronically to all purchasers. How long does the broker-dealer need to keep the
prospectus on file electronically?
a 25 days
b 40 days
c 90 days
d 270 days
C
All investors who purchase new issues must receive prospectuses, which may be made available
electronically. A firm that sells a new issue in the aftermarket shortly after it begins trading may
also be required to give prospectuses to its customers. This obligation to provide a prospectus
continues for 25 days after the effective date for securities that will be listed on a national exchange.
For secondary offerings of securities that will trade over-the-counter (securities that are not eligible
to be listed), this obligation lasts for 40 days. In this question, the offering is an IPO that will not be
listed, which means the prospectus must be available for 90 days.
Under the Uniform Securities Act, a person's registration may be revoked or denied
for which of the following reasons?
The person was convicted of a non-securities-related misdemeanor three years
ago The person was convicted of a drug-related felony seven years ago
There is mounting evidence that the individual is involved in a securities-related fraud
,The person was convicted of a securities-related misdemeanor six years ago
a I and IV only
b II and IV only
c II and III only
d I, II, and IV only
B
Under the Uniform Securities Act, the Administrator may deny, revoke, cancel, or withdraw the
registration of any person if he has been convicted within the past 10 years of any felony or any
misdemeanor involving a security. The Administrator may not take any action if a person has
been accused or indicted, but has not been convicted.
A purchaser wishes to take action against a seller to recover money paid for securities
issued in violation of blue-sky laws. Under the Uniform Securities Act, the burden to
prove that the stock was sold in violation is on the:
A Administrator
B Purchaser
C State administrative court
D Broker-dealer
B
The purchaser must prove that the stock was sold in violation of blue-sky laws. (75625)
Goldrush Securities is a Canadian broker-dealer located in the Yukon Territory. Which of
the following individuals may it contact in the United States?
A A prospective client who lives in Canada but is currently on vacation in Alaska
,B A prospective client who is on an extended road trip in the United
States C An existing client who is living in Minneapolis temporarily D A
U.S. citizen who is thinking of relocating to the Yukon
C
A Canadian broker-dealer may not solicit prospective clients in the United States unless it registers
under the Uniform Securities Act. The broker-dealer may continue to do business with its existing
clients who are in the United States temporarily, which is the scenario in choice (c).
In order to continue to service its existing clients, a broker-dealer that is properly registered in
Canada and does not have an office in the state may take advantage of the exemption (limited
registration provision) available to Canadian broker-dealers under the Uniform Securities Act.
In order to do so, a Canadian broker-dealer must file the following documents with the
Administrator: a Consent to Service of Process, a registration document filed with its Canadian
regulator, and proof of membership in a self-regulatory organization such as an exchange.
The term churning is defined as:
The sale of an unregistered nonexempt security
Trading one security for another in a client's account
Excessive activity in a client's account
Trading done solely to make it appear that there is activity in the security
Churning is defined as generating excessive activity in a client's account, usually for the
sole purpose of producing commissions.
, A sole proprietor who was registered as a broker-dealer is now charging a separate fee for
securities advice. According to the Uniform Securities Act, the sole proprietor:
A Has an exemption from registration as an investment
adviser B Would need to register as an investment adviser
C Must change from sole proprietor to another business structure in order to become an
investment adviser
D Must only register if the activities are called financial planning
B
Any business entity not specifically exempted from registration and charging a separate fee for
administering advice, is subject to registration as an investment adviser. Broker-dealers are
excluded from the definition of investment adviser if they provided only incidental advice
with no separate, identifiable charge.
An agent receives a letter from an irate client. The letter is the fifth in the last six
months and the language is abusive. The agent forwards it to his supervisor. The
supervisor decides against a reply and discards the letter. In this instance, which of the
following statements is TRUE?
A The supervisor is entitled to decide how to handle such situations
B If the supervisor forwards the complaint to the Administrator, this is acceptable
C The Uniform Securities Act requires that all material complaints be forwarded to the
Administrator
D The Uniform Securities Act requires that a response be made to all written complaints
