MGRADES
Series 63 Practice UPDATED Exam
Questions and CORRECT Answers
State securities law generally limits agents to employment with a single broker-dealer unless
A) multiple employment is widespread and does not require specific Administrator approval
B) permission has been granted by the SEC
C) the Administrator, by rule or order, authorizes employment with more than one broker-dealer
D) permission is received from both broker-dealers regardless of Administrator approval -
CORRECT ANSWER - the Administrator, by rule or order, authorizes employment with
more than one broker-dealer. The USA generally limits agents to single employment unless the
Administrator, by rule or order, authorizes multiple affiliations.
federal covered security - CORRECT ANSWER - Federal covered securities include those
on the NYSE, the Chicago (CHX), and all tiers of the Nasdaq Stock Market as well as
investment companies registered under the Investment Company Act of 1940.
Registration statements for securities under the Uniform Securities Act are generally effective for
- CORRECT ANSWER - Securities registration statements are generally effective for 1
year from the effective date. However, if the issuer or underwriter still has unsold shares, the
effective date may be extended until those shares are sold. That would be a more complete
answer, but you weren't given that choice.
A stock that is listed on the New York Stock Exchange is - CORRECT ANSWER -
Securities listed on the New York Stock Exchange (NYSE), Chicago Stock Exchange, or Nasdaq
Stock Market are federal covered securities and do not need registration in any state under the
Uniform Securities Act.
An agent in Illinois, Missouri, and Iowa has a client move from Chicago to Detroit on July 1,
2014. On September 1 of that year, he buys 100 shares of a nonexempt security in a nonexempt
transaction. On August 1, 2015, the client discovered that the agent's firm never licensed him in
Michigan and therefore, he is subject to civil liability to the purchaser. The statute of limitations
for this sale runs out - CORRECT ANSWER - The statute of limitations for civil liability
,MGRADES
is the earlier of three years after the date of the sale, or two years after discovery of the violation.
In this case, the earliest date is two years after the discovery date of August 1, 2015.
Which of the following statements regarding state registration of securities is TRUE?
A) Notice filing is effective when ordered by the Administrator.
B) Registration by coordination is effective on the 10th day after filing with the Administrator.
C) Registration by coordination is effective concurrent with federal registration.
D) Registration by qualification is effective after 30 days. - CORRECT ANSWER - C)
Coordination is the method used to register a security simultaneously under the Securities Act of
1933 and under the USA in a state. If the security's federal registration is pending and the
Administrator has received all of the required material, the two registrations can be declared
effective at the same time.
Federal covered securities
are exempt from registration under the USA
are nonexempt from registration under the USA
can be required to pay state filing fees
cannot be required to pay state filing fees
A) II and IV
B) II and III
C) I and III
D) I and IV - CORRECT ANSWER - Federal covered securities are exempt from
registration under the USA. However, issuers of federal covered securities may be required to
pay state filing fees in the states where they are sold and are subject to the antifraud provisions of
the USA.
Which method of securities registration would most likely be used to register an initial public
offering that is intended to be offered for sale in several states?
,MGRADES
A) Registration by publication
B) Notice filing
C) Qualification
D) Coordination - CORRECT ANSWER - Since the offering will be made in more than
one state, registration with the SEC is required. Coordination is concurrent registration with the
SEC and the state for public offerings. Notice filing pertains to certain federal covered securities,
primarily by investment companies (mutual funds).
Which of the following securities is most likely to register by qualification under the USA?
A) An initial public offering of a stock to be offered in 40 states
B) An initial public offering of a corporate bond to be offered in 15 states
C) A subsequent primary offering of stock in a large, established company to be offered in 30
states
D) A public offering of a stock to be offered exclusively in 1 state - CORRECT
ANSWER - Offerings of corporate securities in a single state are most likely to be made
through qualification. Multi-state public offerings of stock are generally registered by
coordination, which describes the simultaneous registration of a public issue of a corporate
security at both state and federal (SEC) levels.
Agent A with Firm Y and Agent B with Firm Z conduct a joint seminar. They agree to share the
commissions on any resulting business. Under the Uniform Securities Act, which of the
following statements regarding sharing commissions is CORRECT?
A) Sharing of commissions by agents of two unrelated firms is prohibited.
B) Only an agent who makes a sale is eligible to earn a commission.
C) Sharing commissions that are a result of a joint seminar is never permitted.
D) In this instance, sharing of commissions could only be done with the approval of both firms.
- CORRECT ANSWER - Unless an exception is granted by the Administrator, it is
prohibited for an agent to share commissions with any person not also registered as an agent for
the same or affiliated broker-dealer.
, MGRADES
Steven is registered as an agent with Maple Leaf Securities, a Canadian broker-dealer located in
Toronto with no offices in the United States. One of Steven's clients has recently made a
permanent move to Florida. Which of the following statements with respect to Steven is
CORRECT?
A) Under no circumstances is Steven permitted to have any dealings with this client once
residence in Florida has been effective for more than 30 days.
B) Steven and Maple Leaf Securities must register with both FINRA and the State of Florida.
C) As long as the only dealings with this client are with a previously established Canadian tax
qualified retirement plan, Steven only has to file an application and a consent to service of
process.
D) Steven 's current Canadian registration is sufficient to deal with a client who moves to
another country. - CORRECT ANSWER - Canadians have their equivalent of our IRA
called an RRSP and, as long as the account is opened in Canada with a properly registered agent,
that agent may continue to handle transactions in that account for clients who move out of the
country.
Under the National Securities Markets Improvement Act of 1996 (NSMIA), investment
companies registered under the Investment Company Act of 1940 are required to register
A) as securities at the federal level only
B) as securities at both state and federal levels
C) as securities at the state level only
D) as exempt securities, at neither state nor federal levels - CORRECT ANSWER - A)
The NSMIA requires that the SEC, rather than individual states, assume responsibility for the
registration and regulation of federal registered mutual funds and other investment companies.
Thus, these federal registered investment companies are no longer required to register at the state
level; however, they will likely have to pay state filing fees by going through the notice filing
procedure.
person - CORRECT ANSWER - The term "person" has an extremely broad definition
under the USA. Persons under the act include, among other things, individuals, corporations,
unincorporated associations, and political subdivisions. For test purposes, focus on the three non-
persons; deceased individuals, those declared incompetent, and minors. By the way, don't ever
Series 63 Practice UPDATED Exam
Questions and CORRECT Answers
State securities law generally limits agents to employment with a single broker-dealer unless
A) multiple employment is widespread and does not require specific Administrator approval
B) permission has been granted by the SEC
C) the Administrator, by rule or order, authorizes employment with more than one broker-dealer
D) permission is received from both broker-dealers regardless of Administrator approval -
CORRECT ANSWER - the Administrator, by rule or order, authorizes employment with
more than one broker-dealer. The USA generally limits agents to single employment unless the
Administrator, by rule or order, authorizes multiple affiliations.
federal covered security - CORRECT ANSWER - Federal covered securities include those
on the NYSE, the Chicago (CHX), and all tiers of the Nasdaq Stock Market as well as
investment companies registered under the Investment Company Act of 1940.
Registration statements for securities under the Uniform Securities Act are generally effective for
- CORRECT ANSWER - Securities registration statements are generally effective for 1
year from the effective date. However, if the issuer or underwriter still has unsold shares, the
effective date may be extended until those shares are sold. That would be a more complete
answer, but you weren't given that choice.
A stock that is listed on the New York Stock Exchange is - CORRECT ANSWER -
Securities listed on the New York Stock Exchange (NYSE), Chicago Stock Exchange, or Nasdaq
Stock Market are federal covered securities and do not need registration in any state under the
Uniform Securities Act.
An agent in Illinois, Missouri, and Iowa has a client move from Chicago to Detroit on July 1,
2014. On September 1 of that year, he buys 100 shares of a nonexempt security in a nonexempt
transaction. On August 1, 2015, the client discovered that the agent's firm never licensed him in
Michigan and therefore, he is subject to civil liability to the purchaser. The statute of limitations
for this sale runs out - CORRECT ANSWER - The statute of limitations for civil liability
,MGRADES
is the earlier of three years after the date of the sale, or two years after discovery of the violation.
In this case, the earliest date is two years after the discovery date of August 1, 2015.
Which of the following statements regarding state registration of securities is TRUE?
A) Notice filing is effective when ordered by the Administrator.
B) Registration by coordination is effective on the 10th day after filing with the Administrator.
C) Registration by coordination is effective concurrent with federal registration.
D) Registration by qualification is effective after 30 days. - CORRECT ANSWER - C)
Coordination is the method used to register a security simultaneously under the Securities Act of
1933 and under the USA in a state. If the security's federal registration is pending and the
Administrator has received all of the required material, the two registrations can be declared
effective at the same time.
Federal covered securities
are exempt from registration under the USA
are nonexempt from registration under the USA
can be required to pay state filing fees
cannot be required to pay state filing fees
A) II and IV
B) II and III
C) I and III
D) I and IV - CORRECT ANSWER - Federal covered securities are exempt from
registration under the USA. However, issuers of federal covered securities may be required to
pay state filing fees in the states where they are sold and are subject to the antifraud provisions of
the USA.
Which method of securities registration would most likely be used to register an initial public
offering that is intended to be offered for sale in several states?
,MGRADES
A) Registration by publication
B) Notice filing
C) Qualification
D) Coordination - CORRECT ANSWER - Since the offering will be made in more than
one state, registration with the SEC is required. Coordination is concurrent registration with the
SEC and the state for public offerings. Notice filing pertains to certain federal covered securities,
primarily by investment companies (mutual funds).
Which of the following securities is most likely to register by qualification under the USA?
A) An initial public offering of a stock to be offered in 40 states
B) An initial public offering of a corporate bond to be offered in 15 states
C) A subsequent primary offering of stock in a large, established company to be offered in 30
states
D) A public offering of a stock to be offered exclusively in 1 state - CORRECT
ANSWER - Offerings of corporate securities in a single state are most likely to be made
through qualification. Multi-state public offerings of stock are generally registered by
coordination, which describes the simultaneous registration of a public issue of a corporate
security at both state and federal (SEC) levels.
Agent A with Firm Y and Agent B with Firm Z conduct a joint seminar. They agree to share the
commissions on any resulting business. Under the Uniform Securities Act, which of the
following statements regarding sharing commissions is CORRECT?
A) Sharing of commissions by agents of two unrelated firms is prohibited.
B) Only an agent who makes a sale is eligible to earn a commission.
C) Sharing commissions that are a result of a joint seminar is never permitted.
D) In this instance, sharing of commissions could only be done with the approval of both firms.
- CORRECT ANSWER - Unless an exception is granted by the Administrator, it is
prohibited for an agent to share commissions with any person not also registered as an agent for
the same or affiliated broker-dealer.
, MGRADES
Steven is registered as an agent with Maple Leaf Securities, a Canadian broker-dealer located in
Toronto with no offices in the United States. One of Steven's clients has recently made a
permanent move to Florida. Which of the following statements with respect to Steven is
CORRECT?
A) Under no circumstances is Steven permitted to have any dealings with this client once
residence in Florida has been effective for more than 30 days.
B) Steven and Maple Leaf Securities must register with both FINRA and the State of Florida.
C) As long as the only dealings with this client are with a previously established Canadian tax
qualified retirement plan, Steven only has to file an application and a consent to service of
process.
D) Steven 's current Canadian registration is sufficient to deal with a client who moves to
another country. - CORRECT ANSWER - Canadians have their equivalent of our IRA
called an RRSP and, as long as the account is opened in Canada with a properly registered agent,
that agent may continue to handle transactions in that account for clients who move out of the
country.
Under the National Securities Markets Improvement Act of 1996 (NSMIA), investment
companies registered under the Investment Company Act of 1940 are required to register
A) as securities at the federal level only
B) as securities at both state and federal levels
C) as securities at the state level only
D) as exempt securities, at neither state nor federal levels - CORRECT ANSWER - A)
The NSMIA requires that the SEC, rather than individual states, assume responsibility for the
registration and regulation of federal registered mutual funds and other investment companies.
Thus, these federal registered investment companies are no longer required to register at the state
level; however, they will likely have to pay state filing fees by going through the notice filing
procedure.
person - CORRECT ANSWER - The term "person" has an extremely broad definition
under the USA. Persons under the act include, among other things, individuals, corporations,
unincorporated associations, and political subdivisions. For test purposes, focus on the three non-
persons; deceased individuals, those declared incompetent, and minors. By the way, don't ever
