Series 63 || very Flawless.
Exceptions for BD Agents correct answers The only exceptions that apply to a person working
for a BD effecting securities transactions is in reference to WHO they sell to:
1.) Non-Resident Customer (30 day)
-RR can continue to service customer even if he is not registered as an agent in the state in
which the customer is temporarily located.
-Time frame is 30 days or less
2.) New Resident Customer (60 day)
-RR is not considered an agent in customers new state for a period of 60 days.
-RR must file an application to register in the new state within 10 business days of whichever is
later:
+A transaction w/ the client in the new state
+The discovery by the RR of the clients change in residence
3 Conditions for BD Agent Exceptions correct answers 1.) Exception does not apply if RR is
ineligible to register in the new state
2.) RR must be registered with a registered securities association (FINRA) and at least 1 state
3.) RR's BD must be registered in the new state
Issuer correct answers Any person who issues or proposes to issue any security (considered an
agent representing an Issuer), except that:
1.) If you see a question about the issuer of a certificate of deposit, voting trust certificate or
collateral trust certificate, look for the terms "depositor" or "manager" in the answer choices
2.) With respect to certificate of interest or participation in oil, gas, or mining titles or leases, or
in payments out of production under such titles or leases, there is not considered to be any
"issuer."
***If you are asked who the issuer of a certificate of interest or participation in oil, gas or mining
titles or leases, the correct answer is there is NO issuer.
A person who represents the issuer of certain _____________ _________ is not an agent. correct
answers Exempt Securities
Exempt Securities correct answers 1.) U.S. Government bonds (T-Bonds, T-Bills, T-Notes,
agency securities such as GNMA pass-through certificates)
,2.) Municipal securities (bonds issued by state and local gov., as wells authorities, such as
housing and port authorities)
3.) Canadian government and municipal securities (federal and municipal level)
4.) Securities issued by recognized foreign governments (excludes securities issued by foreign
gov entities below the national level)
5.) Securities issued by domestic banks, savings institutions and trust companies (NOT including
securities issued by bank holding companies OR by non-U.S. banks)
6.) Investment-grade promissory notes (commercial paper) and bankers' acceptances (if they
mature in 9 months or less AND have minimum denominations of at least $50,000)
7.) Investment contracts issued in connection with an employees' stock purchase, savings,
pension, profit-sharing or similar benefit plan
A person who represents an issuer in an __________ ____________ is not an agent. correct
answers Exempt Transactions
Exempt Transactions correct answers 1.) Any isolated non-issuer transaction
(Non-issuer transaction is a transaction that does not involve the issuer. Is also called a secondary
market transaction)
+ USA doesn't define what "isolated" means, more than one or two transactions per year by the
same broker dealer is to my need to qualify for this exemption
2.) A non-issuer of a transaction by a RR agent of a registered BD of the security of an issuer
filing financial reports with the SEC or with similar information listed in a nationally recognized
securities manual ("manual exemption)
+ However, an issuer qualifies only if it is engaged in business AND is not in the organizational
or bankruptcy stage AND is not a bank check, blind pool OR shell company planning to engage
in an unidentified merger or acquisition
3.) An unsolicited, non-issuer transaction
+ The administrator may require that the customer acknowledge, in writing, that the order was
unsolicited
4.) Transactions between an issuer and it's underwriters
5.) Transactions in bonds secured by real estate (mortgage bonds)
6.) Transactions by certain fiduciaries including: executors, administrators (of estates), sheriffs,
marshals, receivers, trustees in bankruptcy, guardians and conservators
7.) Transactions by a bona fide pledgee, if the transaction is not intended to avoid the USA
+ Example: A bank selling stock that was pledged as collateral for a loan that is now in default
,8.) Offers or sales to institutional investors (Banks, savings institutions, trust companies,
insurance companies, registered investment companies, pension plans and other financial
institutions)
9.) Offers or sales of pre organizational certificates
+ Conditions for this exemption: no commissions and 10 or fewer subscribers
10.) Transactions with existing securities holders involving convertible securities OR war
A person who represents an issuer selling only to ___________ ________________ or in a
___________ ___________________ under the Securities Act of 1933 is not an agent. correct
answers Qualified Purchasers / Private Placement
A person who represents an issuer in transactions with ______________ of that issuer involving
that issuer's ________________ is not an agent, as long as that person receives _____
_______________ for such transactions. (Also includes sales to __________ of the issuer or
___________ of its ___________ of ____________.) correct answers Employees / Securities /
No Commissions
(Partners / Members / Board of Directors)
Besides passing the Series 63, what else is required to become an agent? correct answers 1.)
Application must be filed with the states Administrator
2.) Filing Fee paid
Other terms for Administrator correct answers 1.) Commission
2.) Commissioner
3.) Secretary
The Administrator's Duties correct answers - Person in the state that is responsible for enforcing
the status securities laws and rules.
- Has the power to create certain rules and regulations
- Does NOT write the law itself (law is created by the State Legislature)
Information required on an Agent AND IAR applications correct answers 1.) Applicant's
qualifications and business history
2.) Any injunctions or administrative orders involving a security
3.) Any convictions for misdemeanors involving securities
, 4.) Any felony convictions
5.) The applicant's financial condition and history
6.) Consent to Service of Process
***All securities-related misdemeanor convictions and all felony convictions must be disclosed
on the application regardless of time frame
Consent to Service of Process correct answers - Once signed, legal papers meant to be served to
the agent will have the same force by being served to the Admin instead.
- Done to prevent the delay of legal proceedings under the USA by avoiding the receipt of a
summons or subpoena.
- Does NOT need to be renewed
Surety Bond correct answers - An agent with discretionary authority over client funds or
securities may be required by the Admin to post this
- Used to cover some of the damages that result from legal action against the agent or the firm
- Admin has some discretion in the $ amount
- Most common amount is $10,000
Grounds for denying an application for registration as an agent. correct answers - Filing
incomplete application or one that contains a false or misleading statement
- Willfully violating or failing to comply w/ any provision of the USA
- Being convicted of any misdemeanor involving any aspect of the securities business, or any
felony, within the last 10 years
- Having been enjoined (prohibit) by a court from participating in the securities business
- Found to have violated any federal securities or commodities law or such laws in another state
- Engaging in dishonest or unethical practices in the securities business
- Not being qualified on the basis of such factors as training, experience or knowledge of the
securities business
- Failing to pay proper filing fee
