Series 63 - Questions And Answers 100%
Verified.
Exceptions for BD Agents - correct answer. 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 answer. 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 answer. 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 answer. Exempt Securities
Exempt Securities - correct answer. 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 answer. Exempt Transactions
Exempt Transactions - correct answer. 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 answer. 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 answer. Employees / Securities / No Commissions
(Partners / Members / Board of Directors)
Besides passing the Series 63, what else is required to become an agent? - correct
answer. 1.) Application must be filed with the states Administrator
2.) Filing Fee paid
, Other terms for Administrator - correct answer. 1.) Commission
2.) Commissioner
3.) Secretary
The Administrator's Duties - correct answer. - 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 answer. 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 answer. - 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 answer. - 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
