Finra Series-63 Exam Practice Test Instant Access

Question 1

According to the NASAA Model Rules, which of the following institutions would not be considered a qualified custodian?

Aa broker-dealer that is registered with the state

Ba bank that is insured by a private, state-sponsored insurance company

Ca foreign financial institution

Da savings institution that is insured by the FDIC

Answer : B

According to the NASAA Model Rules, a bank that is insured by a private, state-licensed insurance company would not be considered a qualified custodian. Registered broker-dealers, foreign financial institutions, and banks and savings institutions that are insured by the FDIC are on the list of qualified custodians.

Question 2

Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial reports more frequently than:

Aonce a year.

Btwice a year.

Cfour times a year.

Dtwelve times a year.

Answer : C

Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial reports more frequently than four times a year. Under the Securities and Exchange Act of 1934, individual states are prohibited from imposing more stringent requirements than those already required by the SEC, and the SEC requires quarterly reporting. Therefore, a state may not require that a broker-dealer or investment adviser file monthly reports with it.

Question 3

A ''notice filing'' refers to

Athe right of an issuer to run tombstone ads in the newspapers and other publications upon filing a registration application with the state Administrator.

Bthe filing by a federal covered investment adviser of forms already filed with the SEC along with a consent to service of process with the state Administrator.

Ca document that the issuer must file with the SEC informing the SEC that the firm has applied to the state for registration of its new security.

Dnotification to the public by the issuer or its underwriters that the issue is being sold on an ''all or nothing'' basis.

Answer : B

A ''notice filing'' refers to the filing by a federal covered investment adviser of forms filed with the SEC along with a consent to service of process with the state Administrator. The notice filing must be accompanied by the requisite state filing fee as well.

Question 4

Broker-dealer Nebulous opted to withdraw its registration with the state. Six months later, the Administrator finds that Nebulous had been engaged in fraudulent securities transactions.

Which of the following statements is true?

AThe Administrator is unable to take disciplinary action against Nebulous because the self-initiated withdrawal became effective 30 days after the application was filed.

BThe Administrator is only able to take disciplinary action if the misdeeds are discovered within three months of the effective date of the withdrawal, so Nebulous slipped by this time.

CThe Administrator has five years from the discovery of the misdeed to take disciplinary action, so Nebulous will have to be on the lookout for a long time to come.

DThe Administrator can take disciplinary action against Nebulous for up to one year, so Nebulous is in trouble.

Answer : D

Even though Nebulous withdrew its registration from the state, the Administrator has up to a year to take disciplinary action against the broker-dealer if he discovers that Nebulous has been engaged in fraudulent securities transactions after the fact. The Administrator can retroactively begin a revocation or suspension proceeding. Criminal courts can initiate proceedings anytime within five years of the alleged misdeeds.

Question 5

An individual who represents a broker-dealer in the buying and selling of securities is called a(n):

Aunderwriter

Bissuer

Cagent

Dadministrator

Answer : C

An individual who represents a broker-dealer in buying and selling securities is called an agent or a registered representative. An agent may also work for an issuer, which refers to the entity that is selling securities to raise money for itself. An underwriter is the entity that aids the issuer in bringing the new securities to market. Administrator is the title many states use to refer to the official in charge of enforcing the state's securities regulations.

Question 6

For how long after the effective date is a security's registration valid?

Athree months

Bsix months

Cone year

Dtwo years

Answer : C

A security's registration is valid for one year after the effective date, which is the date the Administrator approves the registration. If the entire issue has not been sold in this time frame, the offering may be renewed.

Question 7

Under the 2002 Uniform Securities Act, registration by coordination allows:

Afederal covered securities to be registered simultaneously with the SEC and with the states in which the securities will be offered for sale.

Bsecurities that do not fall within the category of federal covered securities to be registered simultaneously with the SEC and with the states in which the securities will be offered for sale.

Cboth state-registered and out-of-state investment bankers to participate in the underwriting and registration of a new security issue.

Dissuers of federal covered securities to submit only a notice filing with the Administrator of states in which the securities will be offered for sale.

Answer : B

Under the 2002 Uniform Securities Act, registration by coordination allows securities that are not federal covered securities to be registered simultaneously with the SEC and with the states in which the securities will be offered for sale. Federal covered securities are exempt from state registration and are required to submit only a notice filing with the Administrator of the state. This is not the same as registration by coordination.

Finra Uniform Securities State Law Examination Series-63 Exam Practice Test