SERIES63 Preparation Material

Test Information:

Total Questions: 250

Test Number: SERIES63

Vendor Name: FINRA

Cert Name:  FINRA Certification

Test Name: Uniform Securities Agent State Law Examination

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Question: 1

 

Moe is a registered investment adviser doing business under the name of MoeMoney

Investment

Advisers, LLC. Larry, Curly, and Mary all hold positions with the firm. Larry is on the board of

directors;

Mary is a sales representative for the firm; and Curly is an administrative assistant, who performs

clerical

duties. Given that Moe is already a registered investment adviser, which of the other three are

automatically registered as investment adviser representatives?

 

A. Larry only

B. Larry and Mary only

C. Larry, Mary and Curly

D. Mary and Curly only

 

Answer: A   

 

Explanation: As a director of the firm, Larry would automatically be registered as an investment

adviser

representative of MoeMoney Investment Advisers. Although directors and officers of the firm are

automatically registered as investment adviser representatives, Mary, as a sales representative,

would

have to apply for her own registration. Curly does not need to be registered since he performs only

clerical

duties.

Question: 2

 

 Assuming there is not a stop order or a proceeding pending, under the registration by

coordination

process a security's registration with the state becomes effective:

 

A. only when it is approved by the state Administrator, regardless of whether it has been approved by

the

SEC.

B. immediately after approval by the SEC as long as the registration statement has been on file for at

least

2 0 days or the Uniform Securities Act has provided an exemption to this waiting period.

C. immediately subsequent to approval by the SEC, regardless of how long the registration statement

has

been on file.

D. only when it is approved by the state Administrator, who will review the registration

documentation

upon notification that SEC approval has been granted.

 

Answer: B   

 

Explanation: Under the registration by coordination process, the security's registration with the state

becomes effective immediately after approval by the SEC as long as the registration has been on file

for

at least 20 days or the Uniform Securities Act has provided an exemption to this waiting period. This

assumes, of course, that there is not a stop order or a proceeding pending.

Question: 3

 

Sam Shade had his agent's license revoked by the state of Washington for repeatedly making

misleading

claims about various investment to investors. He had had it with all the rain anyway and decided to

move

to the sunshine state of Florid

a. His brother-in-law was a computer whiz who made money on the

side

(more than his day job provided, in fact) by supplying illegal immigrants with official-looking

documentation, including social security numbers. Sam Shade became Ian Creed in a few clicks of the

mouse. As Ian Creed, Sam was hired by Sunny Investment Advisers, an investment adviser firm

located

in the Florida Keys, in a clerical role. As such, Sam/Ian had access to the confidential information of

the

firm's clients, which he and his brother-in-law utilized for the purpose of identity theft. Under the

Uniform

Securities Act guidelines, when Sam and his brother-in-law are caught in their illegal activities,

A. Sunny Investment Advisers will not be held liable if it can prove that there was no way it could

have or

should have known of the revocation of Sam Shade's (aka Ian Creed) license.

B. Sunny Investment Advisers will be subject to criminal prosecution for employing an individual

whose

license had been revoked by the Administrator of another state since it obviously did not use due

diligence in hiring Ian Creed, aka Sam Shade.

C. Sunny Investment Advisers will be subject to civil penalties for employing an individual whose

license

had been revoked by the Administrator of another state.

D. Sunny Investment Advisers will be subject to both criminal prosecution and civil penalties for

employing an individual whose license had been revoked by the Administrator of another state since

it

obviously did not use due diligence in hiring Ian Creed, aka Sam Shade.

 

Answer: A   

 

Explanation: When Sam and his brother-in-law are caught, Sunny Investment Advisers will not be

held

liable if it can prove that there was no way it could have or should have known of Sam Shade/Ian

Creed's

license revocation. The drafters of the Uniform Securities Act were cognizant of the fact that

employees

can be remarkably deceptive when applying for a position, and because of this the Act indicates that

the

investment adviser must either "have known or should have known" of the Administrator's adverse

decision against the employee in order to itself be deemed liable.

Question: 4

 

Trevor is currently a registered agent in the state of Connecticut where he has been employed

by Connect

& Company, a broker-dealer that is registered in Connecticut and has subsidiary operations in

Massachusetts, New Jersey, and New York. Trevor has moved to Massachusetts and is now

associated

with one of Connect's subsidiaries, a broker-dealer registered in the state. Trevor has applied to the

Administrator of Massachusetts for registration as an agent. Can Trevor execute purchases and sales

for

clients while his registration is still pending?

 

A. Question:  Until he is informed by the Administrator of Massachusetts that his application has been

accepted,

Trevor may not effect any securities transactions in Massachusetts.

B. Yes. Because Trevor is a registered agent in another state and is affiliated with a broker-dealer that

is

registered in the state of Massachusetts, he is not restricted from executing trades.

C. Yes. Trevor can execute trades for new clients he solicits, but only for sixty days while his

registration

is pending.

D. It depends. Trevor can execute some purchases and sales, but only for clients that he already had

who

may have recently relocated to Massachusetts and only for sixty days while his registration is

pending.

 

Answer: D    <