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NASAA Series 63 practice questions

200 free questions with answers and explanations.

Practice test
  1. 51.An investor purchased unregistered securities on March 1, 2021, and discovered the registration violation on June 1, 2023. Under the Uniform Securities Act's civil liability provisions, what is the latest date by which she may bring a private cause of action against the seller?Remedies and Administrative Provisions
  2. 52.An Administrator issues an informal interpretive opinion stating that a certain type of transaction is exempt from registration under the state's securities law. Which statement best describes the legal effect of this opinion?Remedies and Administrative Provisions
  3. 53.An individual sells securities exclusively on behalf of an issuer in transactions that qualify as exempt transactions under the Uniform Securities Act, and receives no commission or other compensation directly or indirectly related to the sale of those securities. Which statement best describes this individual's status as an agent?Regulation of Broker-Dealers and Agents
  4. 54.Which of the following securities is exempt from the registration requirements of the Uniform Securities Act?Regulation of Securities and Issuers
  5. 55.An agent asks a client to sign a brokerage account agreement stating that the client waives any right to sue under the state's Uniform Securities Act in exchange for a reduced commission rate. Under the Act, this waiver provision is:Remedies and Administrative Provisions
  6. 56.Under the Uniform Securities Act, a person may be criminally prosecuted for violating the Act only if:Remedies and Administrative Provisions
  7. 57.A receptionist at a broker-dealer's branch office answers phones, schedules appointments for agents, and forwards client mail. She never discusses specific securities or takes orders. Under the Uniform Securities Act, is she required to register as an agent?Regulation of Broker-Dealers and Agents
  8. 58.An agent of a broker-dealer exercises discretionary trading authority over numerous client brokerage accounts, deciding what securities to buy and sell without obtaining prior client approval for each transaction. The broker-dealer charges only commissions and no separate advisory fee. How is this activity treated under the Uniform Securities Act?Regulation of Investment Advisers and IARs
  9. 59.A corporation offers rights to purchase additional shares to its existing shareholders on a pro rata basis, and no commission is paid for soliciting the exercise of these rights. Under the Uniform Securities Act, this offer is:Regulation of Securities and Issuers
  10. 60.As part of an application for registration as a broker-dealer in a state, the applicant must file a document appointing the Administrator as the applicant's attorney to receive service of legal process in any noncontractual proceeding arising under the Act. This required document is known as the:Regulation of Broker-Dealers and Agents
  11. 61.An agent resigns from Broker-Dealer ABC to join Broker-Dealer XYZ. Under the Uniform Securities Act, who is responsible for promptly notifying the Administrator of the termination of the agent's employment with ABC?Regulation of Broker-Dealers and Agents
  12. 62.Broker-Dealer DEF relocates its principal office to a new address within the state and opens two new branch offices. Under the post-registration provisions of the Uniform Securities Act, DEF is required to:Regulation of Broker-Dealers and Agents
  13. 63.An Administrator in State X is investigating an agent who has since relocated to State Y, taking relevant business records with him. Can the Administrator subpoena those records even though they are now located outside State X?Remedies and Administrative Provisions
  14. 64.An Administrator determines that a broker-dealer's registration should be revoked based on violations discovered two years ago. Before revoking the registration, the Administrator generally must:Remedies and Administrative Provisions
  15. 65.An investor sues both the agent who sold her unregistered, non-exempt securities and the agent's employing broker-dealer for damages. Under the Uniform Securities Act's civil liability provisions, the broker-dealer may avoid liability as a controlling person if it can show that it:Remedies and Administrative Provisions
  16. 66.An agent files a notice of withdrawal from registration with the state Administrator on June 1. No revocation or suspension proceeding is pending against the agent. Under the Uniform Securities Act, when does the withdrawal become effective, and for how long thereafter may the Administrator institute a disciplinary proceeding based on conduct occurring while the agent was registered?Regulation of Broker-Dealers and Agents
  17. 67.An advisory firm's only clients are two registered investment companies under the Investment Company Act of 1940, and the firm has $60 million in regulatory assets under management. Which statement correctly describes the firm's registration status?Regulation of Investment Advisers and IARs
  18. 68.The Administrator believes an agent is about to commit a violation of the Uniform Securities Act and wants to stop the conduct immediately. Which action may the Administrator take without first providing notice and an opportunity for a hearing?Remedies and Administrative Provisions
  19. 69.An investment adviser employs an analyst who works exclusively in a back office, has no direct contact with clients, but personally decides which securities from the firm's model portfolios will be recommended to advisory clients. Under the Uniform Securities Act, this analyst:Regulation of Investment Advisers and IARs
  20. 70.An investor purchased securities for $20,000 in a transaction that violated the registration provisions of the Uniform Securities Act. She held the securities for two years, received $500 in dividends, and now sues for rescission. The applicable legal interest rate is 6% per year, and she incurs $300 in court costs and $700 in attorney's fees. What is the approximate amount she is entitled to recover?Remedies and Administrative Provisions
  21. 71.Broker-Dealer Alpha acquires the entire retail brokerage business of Broker-Dealer Beta, which is currently registered in State M with eight months remaining in its registration cycle. Alpha intends to continue Beta's business without material change. Under the Uniform Securities Act's successor registration provisions, what is the most accurate description of how Alpha may become registered in State M?Regulation of Broker-Dealers and Agents
  22. 72.An investment adviser firm reports regulatory assets under management of $115 million on its most recent annual updating amendment. Under the Investment Advisers Act of 1940 and NASAA guidance, this firm is:Regulation of Investment Advisers and IARs
  23. 73.The Administrator issues a cease-and-desist order against an investment adviser without a prior hearing, believing immediate action is necessary. Under the Uniform Securities Act, what right does the adviser generally have after receiving the order?Remedies and Administrative Provisions
  24. 74.A broker-dealer's registration in a state becomes effective on July 15. Under the Uniform Securities Act, absent renewal, when will this registration expire?Regulation of Broker-Dealers and Agents
  25. 75.A state securities Administrator reviewing a newly filed Form ADV notes that the firm's compliance manual designates a specific officer who is responsible for administering the firm's written supervisory and compliance policies, including recordkeeping and fiduciary obligations. This officer's role is best described as the firm's:Regulation of Investment Advisers and IARs
  26. 76.An attorney who specializes in estate planning charges clients a separate, itemized fee for reviewing their investment portfolios and recommending specific securities transactions, in addition to fees charged for drafting wills and trusts. Under the Uniform Securities Act, the attorney's investment-related activities:Regulation of Investment Advisers and IARs
  27. 77.A religious organization issues bonds to the public to help fund construction of a community center, with all proceeds used for the organization's charitable purposes. Under the Uniform Securities Act, these bonds are:Regulation of Securities and Issuers
  28. 78.An insurance company issues a variable annuity contract that is registered with the SEC as a security. Under the Uniform Securities Act, this variable annuity is:Regulation of Securities and Issuers
  29. 79.An investment adviser wants to charge a performance-based fee to a client whose account holds $900,000 under management with the adviser but who has a net worth of $2.5 million, excluding the value of a primary residence. Under the 'qualified client' standard, may the adviser charge this client a performance-based fee?Regulation of Investment Advisers and IARs
  30. 80.A security's registration statement became effective on April 15, 2023. Assuming no application for renewal is filed, under the Uniform Securities Act, the registration will expire on:Regulation of Securities and Issuers
  31. 81.A client calls their agent inquiring about their account balance. The agent, while traveling, accesses the client's account details using an unsecured public Wi-Fi network at a coffee shop. The agent then verbally provides the balance and recent transaction history over the phone. This action primarily poses a risk to:Ethical Practices and Obligations
  32. 82.A registered agent receives an unsolicited order from a new client to purchase shares of a highly speculative penny stock. The agent has not yet gathered sufficient financial information about the client to determine the suitability of such an investment. What is the agent's most appropriate action?Ethical Practices and Obligations
  33. 83.A broker-dealer in State X has no office or employees within State Y. All of its transactions in State Y are exclusively with issuers, other broker-dealers, and institutional investors. Under the Uniform Securities Act, how should this broker-dealer be classified in State Y?Regulation of Broker-Dealers and Agents
  34. 84.An agent has established a personal relationship with a client over several years. The client, a busy executive, asks the agent to act as a co-trustee on a newly established trust for the client's minor children, offering a substantial annual fee for this service. The agent accepts without disclosing this arrangement to their broker-dealer or obtaining the firm's written approval. This action is a violation of the Uniform Securities Act regarding:Ethical Practices and Obligations
  35. 85.An Administrator in State Z has grounds to believe that a registered agent has engaged in multiple instances of fraudulent behavior. Before revoking the agent's registration, what is the Administrator legally required to provide?Regulation of Broker-Dealers and Agents
  36. 86.A newly registered agent is approached by a long-time friend who is also a client. The friend is experiencing financial hardship and asks the agent for a personal loan of $5,000 to cover unexpected medical expenses, promising to repay it within three months. The agent, wanting to help a friend, agrees and lends the money. This action is a violation of the Uniform Securities Act pertaining to:Ethical Practices and Obligations
  37. 87.An agent receives a large, unexpected bonus and decides to invest a portion of it. The agent purchases shares of a promising small-cap stock for their personal account. The following day, the agent recommends the same small-cap stock to several clients, for whom it is suitable. The agent ensures the clients' orders are placed after their own. This action, while seemingly benign, could be considered:Ethical Practices and Obligations
  38. 88.A registered agent in State X has a client who moves from State X to State Y. The client wants to continue doing business with the agent. The agent is not registered in State Y. Under the Uniform Securities Act, what is the agent allowed to do to continue servicing this client?Regulation of Broker-Dealers and Agents
  39. 89.A technician who primarily provides IT support and occasional administrative assistance at a broker-dealer's branch office also, on rare occasions, directs clients to a registered agent for securities-related inquiries. Under the Uniform Securities Act, how should this individual be classified?Regulation of Broker-Dealers and Agents
  40. 90.A broker-dealer in State A wants to register in State B. As part of its application to State B, the Administrator requires the broker-dealer to file a surety bond of $10,000. Which of the following may the Administrator also accept in lieu of the surety bond?Regulation of Broker-Dealers and Agents
  41. 91.An Administrator in State Z has grounds to believe that a registered agent has engaged in fraudulent activities. The Administrator issues an order to deny, suspend, or revoke the agent's registration. Before this order can become final, what must the Administrator provide to the agent?Regulation of Broker-Dealers and Agents
  42. 92.A registered agent receives an email from a client requesting a withdrawal of $10,000 from their account to be wired to a new bank account that is not on file with the broker-dealer. The client states they recently moved and opened this new account. What is the MOST appropriate action for the agent to take to comply with ethical and regulatory standards?Ethical Practices and Obligations
  43. 93.A client has a discretionary account with an investment adviser. The client explicitly states to the IAR, 'I do not want to invest in any tobacco-related companies.' Despite this, the IAR purchases shares of a major tobacco corporation for the client's account, believing it to be a strong growth opportunity. This action is a clear instance of:Ethical Practices and Obligations
  44. 94.A client sends an email to their agent requesting that all shares of a specific technology stock be sold immediately. The agent, being out of the office for the day without access to the firm's trading system, forwards the email to a colleague and asks them to execute the trade. The colleague forgets to place the order, and the stock drops significantly the next day. The agent is ultimately responsible for the client's request because:Ethical Practices and Obligations
  45. 95.An investment adviser representative (IAR) manages a client's portfolio, which includes a significant portion of highly illiquid alternative investments. The client, a retiree, has explicitly stated that their primary investment objective is capital preservation and income generation, with a low-risk tolerance. The IAR, without consulting the client, decides to rebalance the portfolio by selling some income-producing bonds and purchasing more of the illiquid alternative investments, citing potential for higher long-term growth. This action is most likely a violation of which ethical practice?Ethical Practices and Obligations
  46. 96.A broker-dealer maintains its principal office in State A and has registered branch offices in States B and C. If the broker-dealer decides to close its branch office in State B, what action is required under the Uniform Securities Act?Regulation of Broker-Dealers and Agents
  47. 97.A newly registered agent is approached by a long-time friend who is also a client. The friend requests a personal loan of $10,000 to cover unexpected medical expenses, promising to repay it with interest within six months. The agent, wanting to help a friend, lends the money without informing their broker-dealer. Under the Uniform Securities Act, this action is:Ethical Practices and Obligations
  48. 98.An investment adviser representative (IAR) maintains several client files, some of which contain sensitive personal information like Social Security numbers and bank account details. The IAR stores these files on a personal laptop that is not encrypted and is often left unattended in public spaces. This practice most directly violates which ethical obligation?Ethical Practices and Obligations
  49. 99.An agent has a client who consistently makes poor investment decisions, often leading to losses. The agent, out of concern for the client's financial well-being, decides to stop communicating with the client and ignores their calls and emails regarding new investment ideas. Which of the following best describes the agent's ethical violation?Ethical Practices and Obligations
  50. 100.A broker-dealer registered in State A wants to conduct business in State B. The Administrator of State B requires the broker-dealer to file an application, consent to service of process, and pay a filing fee. What additional requirement is typically mandated for broker-dealers to maintain their registration in State B?Regulation of Broker-Dealers and Agents