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Home FINRA Series 63

FINRA Series 63 Exam Practice Questions (P. 5)

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Question #21
In order to maintain its registration with a state, a broker-dealer may be required to:
I. take a written or oral exam.
II. pay an annual filing fee.
III. maintain a minimum net capital.
IV. file all advertising material with the Administrator.
  1. A
    I and II only
  2. B
    II and III only
  3. C
    II, III, and IV only
  4. D
    I, II, III, and IV

Correct Answer:
D
In order to maintain its registration with a state, a broker-dealer may be required to take a written or oral exam, pay an annual filing fee, maintain a minimum net capital, and file all advertising material with the state's Administrator. The Administrator of each state has the authority to determine the specific requirements for the state. All of the selections are within the realm of the Administrator's jurisdiction.

Question #22
Once a broker-dealer has applied for and been granted state registration, the registration remains valid
  1. A
    until December 31st.
  2. B
    for twelve months.
  3. C
    for three years.
  4. D
    for five years.

Correct Answer:
A
Once a broker-dealer has been granted state registration, that registration is valid until December 31st of that year. Registration automatically terminates annually on December 31st although an Administrator may elect to revoke or suspend a broker-dealer's registration at any time if the Administrator finds just cause.

Question #23
A broker-dealer is required to keep his records for how long?
  1. A
    at least three years
  2. B
    at least five years
  3. C
    at least seven years
  4. D
    broker-dealer is required to keep his records for as long as he is registered in the state.

Correct Answer:
A
A broker dealer is required to keep his records at least three years.

Question #24
Which of the following entities would be required to register with the state as a broker-dealer under the guidelines of the Uniform Securities Act (USA)?
  1. A
    an underwriter with no offices in the state that is helping a firm that is incorporated within the state with the sale of its new bond issue to insurance companies.
  2. B
    a credit union that operates within the state and provides loans to its members.
  3. C
    an agent who executes the purchase and sale of stocks and bonds for his clients.
  4. D
    None of the above entities would be required to register with the state as a broker-dealer under the guidelines of the Uniform Securities Act.

Correct Answer:
D
Under the guidelines of the USA, none of the entities described in Selections A, B, or C would be required to register with the state as a broker-dealer since the term, as defined by the USA, does not include agents, savings institutions, or entities with no offices in the state who deal exclusively with issuers and/or other broker-dealers, financial institutions, insurance companies, pension funds, or insurance companies. Selections B and C refer to a financial institution and an agent, respectively. In the scenario described in Selection A, the underwriter has no offices in the state and is dealing exclusively with the issuer of the bonds and insurance companies.

Question #25
Joe Romeo is a broker-dealer registered with the state. He has recently hired Betty Buxom as his administrative assistant. As part of her duties, he has given her the responsibility for effecting the purchases and sales of securities for some of his firm's smaller accounts. Ms. Buxom has never applied for nor been granted registration as a broker-dealer or agent. Based on these facts,
  1. A
    the Administrator is required by the Uniform Securities Act to revoke Joe Romeo's registration and file criminal and civil charges against him.
  2. B
    there is no problem as long as Ms. Buxom registers with the state as an agent within thirty days.
  3. C
    the Administrator may elect to revoke or suspend Joe Romeo's registration, and Joe may also face both civil and criminal penalties.
  4. D
    the Administrator is required to turn the case over to the state's district attorney, who will file criminal charges against both Joe Romeo and Betty Buxom.

Correct Answer:
C
Since Joe Romeo has allowed Betty Buxom to execute trades, a duty that can legally be performed only by a registered broker-dealer or agent, the
Administrator may elect to revoke or suspend Joe Romeo's registration, and Joe may also face civil and criminal penalties. Ms. Buxom needed to be registered as an agent prior to effecting any transactions in the securities markets; there is no grace period. The Administrator is not required to take any action, however.

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