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Which of the following orders can an Administrator issue without providing prior notice?
The Administrator can issue an order to cease and desist without providing the party concerned with prior notice. In the cases involving the denial, suspension, or revocation of a license, the Administrator will provide prior notice, along with the opportunity for a hearing, and a written statement of the facts and the legal consequences involved.
George Geek is a computer programmer who tired of working for others and started his own company. He convinced forty investors that he could design software that would rival Microsoft, and sold them each a 10% partnership interest in his firm for $25,000. He designed and printed up the partnership certificates himself. George told the investors that he had a product that was on the verge of being marketable and that when it did-within the next two months-revenues would pour into the company, and he would begin paying dividends. He told them they could expect a 20% return on their money this year, with even higher returns in the years to come. As it turned out, George wasn't quite the programmer he thought he was, and he wasn't able to get all the bugs out of the program to make it marketable within the promised two months.
Within a year, George had tired of the project and was too busy picking up chicks in his new Corvette when he wasn't on the island of St. Bart overseeing the construction of his new beach mansion-and picking up chicks. His activities, of course, were financed by the extremely generous ''salary'' he paid himself from the investors' monies.
Under the Uniform Securities Act, do the investors have any civil claims against George?
Yes. The investors have a civil claim against George under the Uniform Securities Act and can sue for the return of their original investment, plus interest, reasonable attorneys' fees, and court costs. There is no provision for pain and suffering. Partnership interests fall under the definition of securities, so the Uniform Securities Act does apply, and George sold the interests illegally. As securities, they were required to be registered with the state before they could be sold.
Which of the following securities would be exempt from state registration requirements, according to the Uniform Securities Act?
I . a municipal bond issued by the Canadian province of Nova Scotia
II . a bond issued by the county of Cork, Ireland
III . a bond issued by Nationwide Insurance Company
The municipal bond issued by the Canadian province of Nova Scotia and the bond issued by Nationwide Insurance Company are both exempt securities under the Uniform Securities Act. Bonds issued by Canadian government entities at both the national and the municipal level and bonds issued by domestic entities in highly regulated industries, as is the case with insurance companies, are exempt. The bond issued by a county in Ireland is not exempt; with the single exception of Canada, only bonds issued by national governments with which the U.S. has diplomatic relations are exempt.
Which of the following is an example of a non-issuer transaction?
When Jose buys a 10-year bond that has 6 years remaining to maturity, it is a non-issuer transaction since he is buying it in the secondary market from another investor, and Progress Energy does not benefit from the transaction. If a firm receives money when its securities are sold, it is considered an issuer transaction; otherwise it is a non-issuer transaction. When Progress Energy originally issued the bond, it had ten years to maturity, and Progress Energy received the proceeds from the bond issue; that was an issuer transaction. When Jose buys the bond, another investor is receiving the proceeds. When IBM sells new bonds, regardless of whether it is to the general public or to an institutional investor, IBM receives the proceeds from the transaction, so it is an issuer transaction. Similarly, when a firm that is already publicly held, like Google, sells more shares, the firm receives money from the sale, just as when a firm that is going public for the first time, like NewCorp, receives the proceeds generated through the IPO. Those are examples of issuer transactions.
Which of the following is not one of the criteria for a security to be eligible for registration by notification?
The issuer does not have to have both preferred stockholders and common shareholders in order to be eligible for registration by notification. If, however, the issuer does use preferred stock financing, it must not have missed a preferred stock dividend payment.
An agent cannot tell a client that a mutual fund is ''no load'' if the fund has
I . a front-end load
II . a contingent deferred sales load
III . 12b-1 fees
If a fund has either Selection I or Selection II, an agent cannot tell a client it is ''no load.'' If the fund has either a front-end load, a contingent deferred sales load, or both, the client must be told that the fund has a load. If the 12b-1 fees on a fund are 0.25% or less of the annual average net assets, it is not considered to be a load fund.
In its prospectus, the YourMoney Mutual Fund provides charts and tables of its average annual return over the past year, three years, five years, and ten years. The fund's return has indeed been phenomenal over this time period, beating the S&P 500 Index by at least 15%. The prospectus states that this is because the fund invests in securities that are riskier and that, therefore, an investor can expect the fund to continue earning a return higher than the S&P 500 Index.
Is YourMoney guilty of any security violations?
Yes. YourMoney is guilty of fraud in its claim that ''an investor can expect the fund to continue earning a return higher than the S&P 500 Index.'' Past performance is no indication of future performance, and this statement is clearly a misstatement of a material fact. In fact, because the securities the fund invests in are riskier than average, the fund returns can be expected to fall harder than the S&P 500 Index in a market downturn.
Exam domains verified against: Official Finra Series-63 exam guide, last checked October 2026.
Learn the regulatory framework that defines investment advisers and identifies which activities require registration or qualify for exemptions. This foundation establishes which professionals must comply with state and federal oversight.
Understand the definition and registration requirements for investment adviser representatives, including activities that trigger registration obligations and available exclusions from registration rules.
Master the legal definition of broker-dealers, their registration and post-registration requirements, activities requiring state registration, exclusions, and the supervisor's duty to oversee broker-dealer agents appropriately.
Study the definition of broker-dealer agents, their registration obligations, activities requiring registration, available exclusions, and the ongoing updates to uniform registration forms. This is a critical area for those representing firms to customers.
Examine what constitutes a security and issuer under state law, state registration and post-registration procedures, exemptions from registration, and the state Securities Administrator's enforcement and antifraud authority.
Learn the powers of state Securities Administrators to take administrative action, and understand the penalties, liabilities, and other remedies available to states enforcing securities law against violators.
Sample question from this domain above: Q1
Study required product disclosures, unlawful misrepresentations about registration status, the prohibition on guaranteeing performance, customer agreement provisions for new accounts, margin and options, and rules for correspondence, advertising, social media, email and digital messaging, and website communications.
Master compensation practices including fees, commissions and markups, customer fund and securities custody, discretion and trading authorization, conflicts of interest, and prohibited conduct including excessive trading, loans to customers, insider trading, selling away, market manipulation, and exploitation of vulnerable adults.
Common questions about the exam itself
