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FINRA Series63 Exam Syllabus Topics:
| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Regulations of Investment Advisers and Representatives | 15% | - Advertising and recordkeeping rules - Fiduciary duties and disclosure requirements - Registration and exclusions |
| Topic 2: State Securities Acts and Related Rules & Regulations | 40% | - Definitions and jurisdiction - Regulation of broker-dealers and agents - Registration of securities and exemptions - Regulation of investment advisers and representatives |
| Topic 3: Regulations of Agents and Broker-Dealers | 25% | - Supervision and compliance responsibilities - Recordkeeping and reporting obligations - Registration requirements and exemptions |
| Topic 4: Prohibited Practices and Ethical Obligations | 20% | - Administrative remedies and enforcement - Disclosure and fair dealing - Fraudulent and unethical business conduct |
FINRA Uniform Securities Agent State Law Examination Sample Questions:
Which of the following is not one of the criteria for a security to be eligible for registration by notification?
- A. The issuer must never have defaulted on any bond or long-term lease obligation.
- B. If the security to be issued is an equity interest in the firm, its offer price has to be at least $5 a
- C. The issuer must have preferred stockholders as well as common stockholders.
- D. The issuer must have a net worth of $4 million, or its net income before tax for at least two of the
Correct Answer: C 🗳️
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Your client calls you with a market order to purchase 500 shares of the stock of Oracle and asks when payment will be due. If today is Wednesday, September 15th, you inform the client that payment is due on
- A. Monday, September 20th.
- B. Thursday, September 16th.
- C. Saturday, September 18th.
- D. Friday, September 17th.
Correct Answer: A 🗳️
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Painting the tape refers to
- A. the illegal activity of a group of investors who buy and sell a security among themselves to create an artificially high volume of trading in hopes of luring investors to buy the security.
- B. the unethical practice of investment advisers who issue "buy" recommendations for stocks that they own themselves without disclosing the fact.
- C. the practice of buying large amounts of a security to drive its price up artificially.
- D. the prohibited practice of excessively trading on a client's account that is used by some broker-dealers and/or their agents to generate more commissions for themselves.
Correct Answer: A 🗳️
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You are an agent with a broker-dealer and have learned of limited partnership interests being sold by a small company that is planning to come out with a product that you think is going to "wow" the market. You would like to get in on the action, but the minimum investment needed is $10,000, and you don't have that kind of dough lying around. You talk to your brother, who is also one of your clients, and get him interested in investing in the firm, too. The two of you decide to pull your money together, each putting in $5,000, and you agree to split any profits or losses.
Is this permitted?
- A. Maybe. But it will require written consent from both your brother and your firm.
- B. Yes, as long as your brother provides your firm with his written consent.
- C. Yes. This is permitted since the agreement is between you and a family member.
Correct Answer: B 🗳️
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Bob Gogetter is an agent with CanDo Broker-Dealers. One of Bob's clients is out of the country and cannot be contacted. The client holds some stock in a company that just released some information that should make its stock price soar. Bob knows that this client would probably want to increase his holdings, so Bob opens a margin account for his client and borrows the money to buy shares. As it happened, the stock price did soar, and Bob's client earned a sizeable profit.
Is Bob in violation of any securities acts?
- A. Yes. Bob is guilty of prohibited practice of churning.
- B. Yes. It is against the law for an agent to open a margin account for a client without the client's.
- C. No, but only because Bob's client profited from Bob's intervention. If the stock had declined in.
- D. No. Bob has a fiduciary responsibility to his client to act in his best interest, and Bob knew this.
Correct Answer: B 🗳️
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