Series 63 - Based on Class Summary

Question 1

The administrator can deny/suspend/revoke a registration if (4 things):

Answer 1

• if, within the last 5 years, the agent had a registration denied or revoked by a foreign securities regulator
• if the person was convicted of a security- or money-related crime or any felony within the past 10 years (120 months)
• if the applicant has already been banned from the securities industry by another jurisdiction
• based upon a FINRA, NYSE, or SEC action against the firm, even if the violation is not a violation in the administrator’s state

Question 2

Can an administrator seek evidence across state lines, require affidavits to be filed, and revoke non-profit security exemptions such as securities issued by a church or university?

Answer 2

YES

Question 3

Does a cease and desist order require prior notice?

Answer 3

No

Question 4

Can an administrator deny a registration based solely on lack of experience or company history?

Answer 4

No

Question 5

Can an administrator put a person in jail, issue a search warrant, or revoke a registration without providing notice to the disciplined party and a hearing if requested by the respondent?

Answer 5

No

Question 6

Does a stop order require prior notice and a hearing to prevent registration of a security in the state?

Answer 6

Yes

Question 7

When will an administrator have jurisdiction over an offer in a state?

Answer 7

(1) originates in the state
(2) directed in the state
(3) accepted in the state

Question 8

While a security’s registration statement is effective, how often may the Administrator require ongoing reports on the progress of the offering?

Answer 8

• quarterly basis

- USA does not permit reports be required more often than that

Question 9

A final order suspending or disciplining a securities professional requires three things:

Answer 9

(1) prior notice to the securities professional
(2) opportunity for a hearing
(3) written findings of fact

Question 10

Administrator can issue _____ to compel testimony, but cannot issue an _____.

Answer 10

subpoenas; injunction

Question 11

Civil penalties for violations of the USA include interest as of the _______ date of the transaction, not the trade date, sale date, or settlement date.

Answer 11

PAYMENT DATE

Question 12

NASAA Model Rules require firms to maintain records the first ____ years of which must be on-site. The firm must also separately store a duplicate copy of all records for the time period.

Answer 12

two years

Question 13

Static vs. Interactive Content (social media)

Answer 13

• “Static” content requires pre-approval
• “Interactive” content must be monitored for compliance. This content allows other users to comment on, reuse, or “like”

Question 14

What is a “contrivance”?

Answer 14

any scheme or program or plan to defraud

Question 15

Agents can borrow money from/lend money to clients ONLY if the client is a _______.

Answer 15

Financial institution (i.e., bank). cannot lend to a customer in any other circumstance, even if the customer is a family member

Question 16

Higher-than-normal commissions are permitted when…

Answer 16

justified by the transaction and with advance notice to the client

Question 17

What does the UPIA (Uniform Prudent Investor Act) govern?

Answer 17

• Trustees and trust investments

- provides that trustees owe a fiduciary duty to the trust’s beneficiaries, not the trust’s grantor

Question 18

What do BDs and agents need to exercise discretion?

Answer 18

-require WRITTEN power of attorney

Question 19

What do IAs and IARs need to exercise discretion?

Answer 19

-can exercise discretion for 10 business days after the first transaction on oral power of attorney, but written authority is required thereafter

Question 20

The six main items that are NOT securities under the USA include:

Answer 20

(1) commodities/future contracts for commodities
(2) collectibles
(3) currency
(4) condo used as personal residence
(5) retirement plans
(6) fixed annuity, insurance policy, or endowment contract