Series 63 (Uniform Securities Agent State Law Exam) Test Bank Free Trial
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Question 1 of 10
1. Question
As per the Uniform Securities Act an Administrator is not
Correct
The Administrator under the Uniform Securities Act is the administrative agency, government official, or appointed representative that is responsible for handling the administration and enforcement of the Uniform Securities Act in a particular jurisdiction.
Incorrect
The Administrator under the Uniform Securities Act is the administrative agency, government official, or appointed representative that is responsible for handling the administration and enforcement of the Uniform Securities Act in a particular jurisdiction.
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Question 2 of 10
2. Question
What is the penalty for fraudulent security transactions under the Uniform Securities Act?
Correct
Fraudulent securities transactions may result in criminal charges. The statute of limitation for such criminal offenses under the Uniform Securities Act is five years and may carry a maximum penalty of $5,000 and/or up to three years in prison.
Incorrect
Fraudulent securities transactions may result in criminal charges. The statute of limitation for such criminal offenses under the Uniform Securities Act is five years and may carry a maximum penalty of $5,000 and/or up to three years in prison.
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Question 3 of 10
3. Question
What information must an agent not consider while making investment recommendations to a client?
Correct
Agents must consider their clients’ best interests when making investment recommendations. In order to meet this obligation, agents must ask their clients for pertinent information before making any recommendation. The information that agents must request from their clients includes information regarding current finances, investment goals, and need for investment stability.
Incorrect
Agents must consider their clients’ best interests when making investment recommendations. In order to meet this obligation, agents must ask their clients for pertinent information before making any recommendation. The information that agents must request from their clients includes information regarding current finances, investment goals, and need for investment stability.
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Question 4 of 10
4. Question
Which of the following is prohibited by the Uniform Securities Act?
Correct
Matching purchases is a form of market manipulation and is prohibited by the Uniform Securities Act. Parties engaging in matching purchases are attempting to artificially increase the market value of a security.
Incorrect
Investment advisers are permitted to borrow money from a client if the client is a financial institution that loans money as a standard part of its business (such as a bank). Investment advisers are permitted to loan money to clients that are affiliated with the investment adviser.
All client transactions must be accurately recorded in the broker-dealer’s records unless the client has specifically requested in writing that the transaction not be recorded. -
Question 5 of 10
5. Question
Which of the following is a fraud by omission?
Correct
Omitting a material fact is a fraudulent act. Fraud by omission occurs when a person knowingly fails to share information with a client when the information in question is likely to have an impact on the client’s investment decision. For example, if an agent is aware that the broker-dealer he represents has analyzed a particular stock and found that stock is currently a risky investment, but the agent chooses to
withhold the results of his firm’s analysis with a client, the agent is committing an act of fraud. Persons are also prohibited from making true statements if they omit key facts that are necessary to ensure the statements are not misleading. For example, it would be misleading to state that particular security had increased in value every year for the last ten years, but fail to mention that the security had been steadily losing value over the last three months.Incorrect
Omitting a material fact is a fraudulent act. Fraud by omission occurs when a person knowingly fails to share information with a client when the information in question is likely to have an impact on the client’s investment decision. For example, if an agent is aware that the broker-dealer he represents has analyzed a particular stock and found that stock is currently a risky investment, but the agent chooses to
withhold the results of his firm’s analysis with a client, the agent is committing an act of fraud. Persons are also prohibited from making true statements if they omit key facts that are necessary to ensure the statements are not misleading. For example, it would be misleading to state that particular security had increased in value every year for the last ten years, but fail to mention that the security had been steadily losing value over the last three months. -
Question 6 of 10
6. Question
The best practices to ensure cyber security include which of the following?
Correct
Investment advisers ought to implement best practices concerning cybersecurity, which can include but is not limited to the following:
• preventing, identifying, and alleviating identity theft
• storing electronic data such that they cannot be rewritten or erased
• adopting policies, procedures, and training pertaining to cybersecurity
• utilizing encrypted or secure servers, emails, and other media as necessary or feasible
• installing antivirus software
• enacting confidentiality agreements with third-party service providersIncorrect
Investment advisers ought to implement best practices concerning cybersecurity, which can include but is not limited to the following:
• preventing, identifying, and alleviating identity theft
• storing electronic data such that they cannot be rewritten or erased
• adopting policies, procedures, and training pertaining to cybersecurity
• utilizing encrypted or secure servers, emails, and other media as necessary or feasible
• installing antivirus software
• enacting confidentiality agreements with third-party service providers -
Question 7 of 10
7. Question
For Registration by Coordination which of the following statements are applicable?
I. It minimize the unnecessary duplication of effort between state and federal securities regulators.
II. Under this process each of the state registrations will become effective at the same time as or after the SEC registration becomes effective.
III. The issuer must provide timely notification to the federal Administrator of the date that the state registration of the security becomes effective.
IV. Issuers must also provide prompt notification to the Administrator if there are any changes to the pricing amendment.Correct
Issuers seeking to register a security with a state Administrator under the registration by coordination process are required to follow specific notification procedures. The issuer must provide timely notification to the state Administrator of the date that the federal registration of the security becomes effective. Issuers must also provide prompt notification to the Administrator if there are any changes to the pricing amendment and if so, explain the nature of the change and file a copy of the modified pricing amendment. If the issuer does not provide this notice promptly, the Administrator may issue a stop order without prior notice or hearing. The Administrator may also issue a retroactive denial of the security’s registration or suspend registration pending the receipt of the required notice and documentation.
Incorrect
Issuers seeking to register a security with a state Administrator under the registration by coordination process are required to follow specific notification procedures. The issuer must provide timely notification to the state Administrator of the date that the federal registration of the security becomes effective. Issuers must also provide prompt notification to the Administrator if there are any changes to the pricing amendment and if so, explain the nature of the change and file a copy of the modified pricing amendment. If the issuer does not provide this notice promptly, the Administrator may issue a stop order without prior notice or hearing. The Administrator may also issue a retroactive denial of the security’s registration or suspend registration pending the receipt of the required notice and documentation.
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Question 8 of 10
8. Question
Which of the following is an unethical / fraudulent / inappropriate business practice that can lead and Administrator to deny, suspend, revoke, or cancel registration for a security?
Correct
The circumstances in which a security’s registration may not be approved or may be revoked all involve instances in which the party registering the security is engaged in unethical, fraudulent, and/or inappropriate business practices. For example, the registration for a security may be revoked if the Administrator determines that the registrant is charging fees that are unjustifiably high or that the registrant is involved in any fraudulent security offering.
Incorrect
Historical circumstances
An Administrator may deny, suspend, or revoke an applicant’s registration based on the applicant’s previous history both in and out of the state. If the applicant has been convicted of a securities-related misdemeanor or any felony in any state at any time within the last ten years, the Administrator may deny, suspend, or revoke the applicant’s registration.
Application problems
The Administrator may deny, revoke, or suspend a registration in instances when the Administrator determines that the applicant does not have the knowledge, experience, or training needed to qualify, or if the applicant has not paid the required filing fees. -
Question 9 of 10
9. Question
There are several laws and Acts in place to protect the interests of an investor. Which of the following is not covered by these?
Correct
Securities investments, by their very nature, pose a risk of loss that an investor must consider prior to making any investment. If an investor has purchased five hundred shares of a stock, the SIPC ensures that the investor is compensated if the broker- dealer steals those shares or cannot provide them to the investor due to bankruptcy; however, the investor is not protected if the shares lose value.
Incorrect
Securities investments, by their very nature, pose a risk of loss that an investor must consider prior to making any investment. If an investor has purchased five hundred shares of a stock, the SIPC ensures that the investor is compensated if the broker- dealer steals those shares or cannot provide them to the investor due to bankruptcy; however, the investor is not protected if the shares lose value.
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Question 10 of 10
10. Question
Sometimes exempted securities may lose their exempted status. Which of the following do not come under this category?
Correct
There are two types of exempt securities that are generally exempt that may lose their right to exemption. The first are securities issued by non-profit organizations such as churches, schools, athletic clubs, and other charitable institutions. The second are securities offered in the form of investment contracts issued in connection with an employee benefit plan such as a stock-option plan, pension plan, savings plan, or other employee profit-sharing plan are also exempt from registration.
Incorrect
There are two types of exempt securities that are generally exempt that may lose their right to exemption. The first are securities issued by non-profit organizations such as churches, schools, athletic clubs, and other charitable institutions. The second are securities offered in the form of investment contracts issued in connection with an employee benefit plan such as a stock-option plan, pension plan, savings plan, or other employee profit-sharing plan are also exempt from registration.
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