Under the anti-fraud clause of the Uniform Securities Act, it is unlawful to:
I. Employ any device, scheme, or artifice to defraud
II. Make any untrue statement of fact
III. Omit a material fact
IV. Engage in any act, practice, or course of business that operates or would operate as a fraud or ...
under the anti fraud clause of the uniform securit
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Series 63 Chapter 3
Series 63 Chapter 3
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Under the anti-fraud clause of the Uniform Securities Act, it is unlawful to:
I. Employ any device, scheme, or artifice to defraud
II. Make any untrue statement of fact
III. Omit a material fact
IV. Engage in any act, practice, or course of business that operates or would operate as a fraud or
deceit upon any person
A) II only
B) I, II, and IV only
C) I, II, III, and IV
D) I, III, and IV only correct answers D) I, III, and IV only
It is not fraudulent to make an untrue statement of an immaterial fact when selling securities.
Therefore "make any untrue statement of fact" is not considered fraud.
Which of the following best describes the meaning of "guaranteed" in the Uniform Securities
Act?
A) Unlikely to cause a loss for the client
B) Backed by the U.S. Government
C) Guaranteed as to principal, interest, or dividends
D) Guaranteed as to principal only correct answers C) Guaranteed as to principal, interest, or
dividends
Which of the following is an essential characteristic of a churning violation?
A) Unprofitable transactions
B) Excessive transactions
C) Abuse of discretion
D) Unauthorized trades correct answers B) Excessive transactions
If a client opens a margin account, which of the following must be obtained promptly after the
first transaction?
A) A hypothecation agreement
B) Written discretionary authority
C) An executed stock power
D) Full payment for the transaction correct answers A) A hypothecation agreement
An agent of a broker-dealer may split a commission on a securities transaction with:
A) An insurance agent
B) Any employee of the same broker-dealer
C) An attorney
D) An agent of an affiliated broker-dealer correct answers D) An agent of an affiliated broker-
dealer
, A customer was referred by a bank employee to its affiliated broker-dealer, located across the
lobby, and purchased several mutual funds. Which of the following statements regarding this
transaction is correct?
A) The bank employee must be registered as an agent for the broker-dealer
B) This is an unlawful transaction
C) The agent must obtain a signed disclosure agreement from the customer
D) The customer's purchase is insured by the FDIC correct answers C) The agent must obtain a
signed disclosure agreement from the customer
The disclosure must be obtained, and states that the securities are not federally insured, not
obligations of the bank, and that they are subject to investment risks.
Which of the following activities by an agent constitutes market manipulation?
I. Creating the impression that a security is actively trading
II. Providing false market quotations
III. Recommending an investment without considering the client's risk tolerance
IV. Excessive trading in a client's account
A) I & II
B) II & III
C) I & IV
D) II & IV correct answers A) I & II
Which of the following is NOT required to be part of an investment advisory contract under the
Uniform Securities Act?
A) The term of the contract
B) The advisory fee and any formula for computing it
C) A clause granting discretionary authority to the adviser
D) The services to be provided correct answers C) A clause granting discretionary authority to
the adviser
An advisory contract must indicate whether discretionary authority has been granted to the
adviser, but the USA does not require such authority to be granted.
Which of the following is not a permissible soft dollar expenditure?
A) Computer
B) Seminar Tuition
C) Investment research software
D) Investment publication subscription correct answers B) Seminar Tuition
Under the Uniform Securities Act, which of the following statements is true regarding an
investment adviser having custody of client funds or securities?
A) An investment adviser that takes custody of client funds or securities may not charge a fee for
this service
B) An investment adviser may not have custody of client funds or securities
C) An investment adviser may not have custody of client funds or securities unless it is also
registered as a broker-dealer
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