Question 1

Vious and Associates is a small broker-dealer trying to generate more business. To this end, the firm had a professional four-color brochure printed that provides the years of industry experience of its management along with other information. The firm’s founder, Ms. D. Vious, is listed as having over 30 years of experience in the industry. Ms. D. Vious has worked for broker-dealers for over 30 years, but for 20 of those 30 years, she was a secretary. Has D. Vious violated any securities laws?

Options :

A :

No. Technically, Ms. D. Vious does have over 30 years of experience in the industry, even though it was not in the capacity of an agent or a broker-dealer.

B : No. Ms. D. Vious’ years of experience is not a material fact that would affect an investor’s investment decision.

C :

Yes. The broker-dealer is making a misleading statement in an advertising brochure in order to convince investors to do business with the firm.

D : No. Advertising brochures are not securities.

Answer: C

Question 2

Sam Shyster had his day in court-and lost. His license to do business as an investment adviser in the state has been revoked. What legitimate options does Sam have available to him now?

Options :

A : Sam can move to another state and apply for registration as an investment adviser there.

B : Sam has 45 days in which to file an appeal with the attorney general.

C : Sam can register with the SEC as an investment adviser, which will exempt him from state registration requirements.

D : Sam has 60 days to file an appeal of the decision in a court of law.

Answer: D

Question 3

Which of the following scenarios describes activities that are disallowed under the NASAA Model Rules? I. Broker-dealer Anon observes that a client placed a stop loss order to sell her 1,500 shares of Amazon.com stock for $131 when the stock was selling for $134. Anon sold the stock for $133 when it started to fall during the day and credited the client’s account with $131 per share when stock dropped further to $129 a share. II. Penny is an agent with Broker-dealer Anon. She recently recommended that a client buy a stock that Penny thought would do well. As it turned out, Penny was wrong, and she offers to refund the commission that the client paid her. III. Broker-dealer Anon is part of the selling group of a hot new IPO. As such, the firm purchases 50% of the shares for its own portfolio and sells the remainder to the public.

Options :

A : I only

B : I and II only

C : I and III only

D : I, II, and III

Answer: D

Question 4

Which of the following may an investment adviser not use in an attempt to solicit new clients?

Options :

A : testimonials of satisfied clients

B :

a complete list of the stocks they have recommended in the past year, even if a statement is included that states that past performance is no guarantee of future performance

C : a free initial consultation, with no obligation on the part of the potential client

D : a free financial planning kit, with no obligation on the part of the potential client

Answer: A

Question 5

Once you have passed the Series 63 examination, which entity must then approve your application to sell securities?

Options :

A : FINRA

B : NASAA

C : SEC

D : the state administrator

Answer: D

Confidently Practice Online with Free Series-63 Exam Cram

Buying Options: