THE FEDERAL REGULATIONS SBE UPDATED EXAMS
TEST 2026/2027 QUESTIONS AND ANSWERS RATED A+
✔✔The president of XYZ Corporation owns restricted stock. Under security industry
regulations, the restricted shares could be sold in all of the following transactions
EXCEPT:
[A] A 144 offering.
[B] A private placement.
[C] A registered offering.
[D] An exchange offering. - ✔✔[D] An exchange offering.
The stock cannot be "sold" through an exchange offering because an exchange swaps
a security with value for different security which also has value and does not constitute
a "sale".
✔✔According to SEC rules, how many years must customer account information be
retained by the broker/dealer?
[A] 3
[B] 4
[C] 5
[D] 6 - ✔✔[D] 6
✔✔Which of the following BEST describes the primary goal of the Patriot Act?
[A] To prevent organized criminals from laundering money
[B] To curb the flow of narcotics (drugs) into and out of the US
[C] To prevent acts of terrorism and crimes associated with terrorism
[D] To prevent securities fraud - ✔✔[C] To prevent acts of terrorism and crimes
associated with terrorism
The Patriot Act was created with the goal of deterring, detecting, and preventing
terrorism. Though the Patriot Act facilitates easier investigation and cooperation across
agencies associated with various crimes such as money laundering, narcotics sales,
and even securities fraud, the focus is terrorism-related
✔✔A customer who is a resident of State X calls and wants to buy a security which is
not registered in State X. The order may be taken under which of the following
circumstances?
The security is exempt from registration in State X.
The security is listed on a Canadian or Mexican Stock Exchange.
The security is listed on a national securities exchange in the United States.
The security had a public offering during the past year.
, [A] I and II
[B] III and IV
[C] I and III
[D] II and IV - ✔✔[C] I and III
I is correct. A transaction may be done if the security is exempt from registration.
II is incorrect.
III is correct. Being listed generally causes a security to be exempt from further
registration requirements.
IV is incorrect.
✔✔Which of the following regulations govern distributions of new issues?
[A] Securities Act of 1933
[B] Securities Act of 1934
[C] Maloney Act of 1938
[D] Trust Indenture Act of 1939 - ✔✔[A] Securities Act of 1933
The Securities Act of 1933 regulates the issuance of new equity securities. Some
examples of equity securities are preferred stock and common stock.
✔✔Municipal security issuers and market participants are subject to which of the
following?
Anti-Fraud Provisions of the Securities and Exchange Act of 1934.
Prospectus delivery requirements to purchasers of new issues (Securities Act of 1933).
Issuer reporting requirements to the SEC under the Securities and Exchange Act of
1934.
[A] I only
[B] II, III
[C] I, II
[D] All of the above - ✔✔[A] I only
All securities are subject to the anti-fraud provisions of the 34 Act, but while municipals
do not provide a prospectus, they do provide an Official Statement and municipals are
exempt from the SEC reporting requirements.
✔✔Which of the following regulations or regulators added the requirement that member
firms obtain a client's Social Security Number or Tax ID Number when opening an
account?
[A] FinCen (Financial Crimes Enforcement Network)
[B] The USA Patriot Act
[C] The Red Flags Rule from the FTC (Federal Trade Commission)
[D] Pay-to-Play Rules - ✔✔[B] The USA Patriot Act
TEST 2026/2027 QUESTIONS AND ANSWERS RATED A+
✔✔The president of XYZ Corporation owns restricted stock. Under security industry
regulations, the restricted shares could be sold in all of the following transactions
EXCEPT:
[A] A 144 offering.
[B] A private placement.
[C] A registered offering.
[D] An exchange offering. - ✔✔[D] An exchange offering.
The stock cannot be "sold" through an exchange offering because an exchange swaps
a security with value for different security which also has value and does not constitute
a "sale".
✔✔According to SEC rules, how many years must customer account information be
retained by the broker/dealer?
[A] 3
[B] 4
[C] 5
[D] 6 - ✔✔[D] 6
✔✔Which of the following BEST describes the primary goal of the Patriot Act?
[A] To prevent organized criminals from laundering money
[B] To curb the flow of narcotics (drugs) into and out of the US
[C] To prevent acts of terrorism and crimes associated with terrorism
[D] To prevent securities fraud - ✔✔[C] To prevent acts of terrorism and crimes
associated with terrorism
The Patriot Act was created with the goal of deterring, detecting, and preventing
terrorism. Though the Patriot Act facilitates easier investigation and cooperation across
agencies associated with various crimes such as money laundering, narcotics sales,
and even securities fraud, the focus is terrorism-related
✔✔A customer who is a resident of State X calls and wants to buy a security which is
not registered in State X. The order may be taken under which of the following
circumstances?
The security is exempt from registration in State X.
The security is listed on a Canadian or Mexican Stock Exchange.
The security is listed on a national securities exchange in the United States.
The security had a public offering during the past year.
, [A] I and II
[B] III and IV
[C] I and III
[D] II and IV - ✔✔[C] I and III
I is correct. A transaction may be done if the security is exempt from registration.
II is incorrect.
III is correct. Being listed generally causes a security to be exempt from further
registration requirements.
IV is incorrect.
✔✔Which of the following regulations govern distributions of new issues?
[A] Securities Act of 1933
[B] Securities Act of 1934
[C] Maloney Act of 1938
[D] Trust Indenture Act of 1939 - ✔✔[A] Securities Act of 1933
The Securities Act of 1933 regulates the issuance of new equity securities. Some
examples of equity securities are preferred stock and common stock.
✔✔Municipal security issuers and market participants are subject to which of the
following?
Anti-Fraud Provisions of the Securities and Exchange Act of 1934.
Prospectus delivery requirements to purchasers of new issues (Securities Act of 1933).
Issuer reporting requirements to the SEC under the Securities and Exchange Act of
1934.
[A] I only
[B] II, III
[C] I, II
[D] All of the above - ✔✔[A] I only
All securities are subject to the anti-fraud provisions of the 34 Act, but while municipals
do not provide a prospectus, they do provide an Official Statement and municipals are
exempt from the SEC reporting requirements.
✔✔Which of the following regulations or regulators added the requirement that member
firms obtain a client's Social Security Number or Tax ID Number when opening an
account?
[A] FinCen (Financial Crimes Enforcement Network)
[B] The USA Patriot Act
[C] The Red Flags Rule from the FTC (Federal Trade Commission)
[D] Pay-to-Play Rules - ✔✔[B] The USA Patriot Act
