NASAA Series 63 — All Questions

Ana, a supervised person of an SEC-registered adviser, has 36 clients, 8 of them natural persons who are not qualified clients. Four of those 8 do not live in the United States, and Ana does not count them, as Rule 203A-3 permits. Is she an investment adviser representative?

• a.No, because only 4 countable natural-person clients remain, not more than five.✓
• b.No, because natural persons count only if each holds at least $1 million with the adviser.
• c.Yes, because the non-resident exclusion applies to the 10% test but not to the count of five.
• d.Yes, because 8 natural persons exceed five and make up more than 10% of her 36 clients.

Rule 203A-3(a)(4) says supervised persons need not count clients who are not residents of the United States. Without the four non-residents, Ana has 4 natural-person clients, which is not more than five, so paragraph (a)(1) is not satisfied. Counting all eight would give a different result, but the exclusion covers the count of five as well as the percentage, and no minimum asset level appears in the rule.Advisers Act Rule 203A-3(a)(4)

A corporation's sales officer is paid a commission to sell the company's own promissory notes to individual investors. The notes mature in 180 days, come in $100,000 denominations, and carry the second-highest rating from a nationally recognized rating organization. Must the officer register as an agent?

• a.No, because an employee who sells only the employer's own securities is outside the agent definition, whatever the security.
• b.Yes, because a person paid commission to sell securities to individual investors is an agent unless the buyers are all institutions.
• c.No, because notes that meet the maturity, denomination and rating tests are exempt, so the issuer's own representative is excluded.✓
• d.Yes, because only securities issued or guaranteed by governments or banks can be sold by an issuer's staff without registration.

Section 401(b) excludes an issuer's representative who effects transactions in securities exempt under Section 402(a)(10). That exemption covers notes maturing within nine months, issued in denominations of at least $50,000 and rated in one of the three highest categories, and these notes meet every test. The commission and the individual buyers do not change the result. The exclusion is not limited to government or bank securities, and it is not a blanket rule for an issuer's own securities, because most exempt categories are not covered by it.Uniform Securities Act §401(b); §402(a)(10)

A manufacturer's sales representative is paid a commission to sell the manufacturer's twelve-month promissory notes to individuals. The notes are issued in $100,000 denominations and carry a top rating from a nationally recognized rating organization. What is the representative's status?

• a.An agent only if the notes are also sold in another state, because the Act applies solely to interstate selling.
• b.Not an agent, because the denomination and rating tests are met, and maturity is not a condition of the exemption at all.
• c.An agent, because notes maturing after nine months fall outside Section 402(a)(10), so the exclusion is unavailable.✓
• d.Not an agent, because notes sold in $100,000 pieces are institutional-size sales that need no registered salesperson.

The commercial paper exemption in Section 402(a)(10) requires all three conditions together: maturity within nine months, denominations of at least $50,000 and a top-three rating. A twelve-month maturity fails the first, so the notes are not exempt and the representative falls outside the Section 401(b) exclusion; the commission leaves the individual squarely inside the agent definition. Denomination size alone creates no exclusion, and a sale made in the state is covered whether or not another state is also involved.Uniform Securities Act §401(b); §402(a)(10)

An issuer's employee is paid a commission to sell the issuer's common stock, listed on the New York Stock Exchange, to retail customers in the state. The stock is exempt from registration under Section 402(a)(8). Must the employee register as an agent?

• a.No, because the commission is paid by the issuer rather than by a broker-dealer, so no agency relationship exists.
• b.No, because listed stock is a covered security, and the registration provisions of the Act do not reach those who sell it.
• c.Yes, because the issuer exclusion reaches only certain exempt securities, and exchange-listed stock is not one of them.✓
• d.No, because a security that is exempt from registration may be sold by an issuer's representative with no agent registration.

Section 401(b) excludes an issuer's representative only for securities exempt under clauses (1), (2), (3), (10) and (11) of Section 402(a), plus certain exempt transactions. Listed securities fall under clause (8), which is outside that list, so the employee who sells them for commission is an agent. Exemption of the security from registration is a separate question from whether the seller must register. Covered-security status limits what a state may require of the security, not of its sellers, and an agent may represent an issuer, so the payer being the issuer changes nothing.Uniform Securities Act §401(b); §402(a)(8)

A religious congregation issues bonds to finance a new building and engages a paid fundraiser to sell them to the public in the state for a commission. The bonds are exempt from registration as securities of a not-for-profit religious organization. What is the fundraiser's status?

• a.Not an agent, because the securities are exempt from registration, and so are the people who sell them for a commission.
• b.An agent, because the issuer exclusion does not extend to securities exempt as nonprofit under Section 402(a)(9).✓
• c.Not an agent, because fundraising for a religious issuer is a charitable function and not a commercial securities sale.
• d.An agent only if the bonds are sold to buyers who are not members of the congregation that issued them.

Section 401(b) excludes issuer representatives only for clauses (1), (2), (3), (10) and (11) of Section 402(a), and the nonprofit exemption is clause (9). A paid fundraiser who sells nonprofit bonds is therefore an agent, and the commission confirms that the work is a securities sale. Exempting a security from registration does not exempt the seller from registering, the issuer's purpose does not alter the seller's function, and the buyers' membership is irrelevant to the definition.Uniform Securities Act §401(b); §402(a)(9)

A corporation will start an employee profit-sharing plan involving an investment contract on November 1. It wants staff who administer the plan to stay outside the agent definition under Section 402(a)(11). What is the latest date for written notice to the Administrator?

• a.October 1, because notice is due thirty days before the start and the start date counts as day one.
• b.October 2, since notice is due thirty days before inception and October has 31 days.✓
• c.December 1, because notice may be filed up to thirty days after the plan has already begun.
• d.October 31, because notice is due by the end of the calendar month before the plan begins.

Section 402(a)(11) exempts the investment contract only if the Administrator is notified in writing thirty days before the inception of the plan. Counting back from November 1, thirty days earlier is October 2, because October has 31 days. October 1 would be early but compliant, so it is not the latest date. A month-end deadline appears nowhere in the Act, and notice after the plan begins is the lapse the provision is meant to prevent.Uniform Securities Act §402(a)(11); §401(b)

The human resources director of a private company sells newly issued company shares to current employees, and the company pays her a one-percent commission on every sale. How does the commission affect her status?

• a.She is an agent, because a sale to employees is excluded only when no commission is paid.✓
• b.She is not an agent, because her main duties are administrative and the selling is incidental to her position.
• c.She is an agent only if a broker-dealer, not the issuer that employs her, is the one who pays the commission.
• d.She is not an agent, because her buyers are employees of the issuer who already know the business well.

Section 401(b) excludes an issuer's representative who deals with existing employees, partners or directors only if no commission or other remuneration is paid, directly or indirectly, for soliciting any person in the state. The one-percent commission removes the exclusion, so she is an agent. The buyers' familiarity with the company is not part of the test, an issuer's payment counts as much as a broker-dealer's, and incidental selling that earns transaction pay is still selling.Uniform Securities Act §401(b)

At an issuer's call center, a caller phones prospects, describes the offering and its price, and urges them to buy. A registered agent later takes each order, and the caller never accepts one. Is the caller an agent?

• a.Yes, because attempting to effect sales makes her an agent, even if someone else completes the order.✓
• b.Yes, but only if the caller is paid compensation that is tied directly to the orders that result.
• c.No, because only the individual who accepts the order and completes the sale is an agent under the Act.
• d.No, because the caller only generates leads for the registered agent who takes and completes each order.

Section 401(b) defines an agent as an individual who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales. Describing the offering and urging a purchase is an attempt to effect a sale, so the caller must be registered. Completing the order is not required, the registered agent's involvement does not cover the caller, and the definition has no requirement of transaction-based pay.Uniform Securities Act §401(b)

An issuer's officer personally offers newly issued notes to eight individuals in the state during one twelve-month period. All eight buy for investment, and no one is paid for soliciting. The officer receives only a salary. Is the officer an agent for this offering?

• a.No, because the offers are exempt under Section 402(b), so an issuer's representative making only them is excluded.✓
• b.Yes, because every individual who offers securities to people in the state must register before the first offer.
• c.Yes, because the limited-offering exemption permits no more than five offerees in any twelve-month period of selling.
• d.No, because an officer of an issuer is excluded from the agent definition whatever the securities or the buyers.

Section 401(b) excludes an issuer's representative who effects transactions exempt under Section 402(b). Section 402(b)(9) exempts offers to not more than ten persons in the state in twelve months when buyers purchase for investment and no commission is paid for soliciting, and eight buyers satisfy it. The permitted number is ten, not five. An officer is an agent only if he otherwise falls within the definition, so the exclusion rests on the exempt transaction rather than on the title.Uniform Securities Act §401(b); §402(b)(9)

A representative is named in a consumer-initiated arbitration claim filed in 2024 alleging unsuitable recommendations, which settles for $14,000. A second consumer-initiated sales-practice arbitration claim filed in 2025 settles for $15,000. How many settlements require a yes answer on Form U4?

• a.One, because each matter stands alone and only the $15,000 settlement meets the $15,000 threshold.✓
• b.None, because a settlement is reportable only when an arbitration award is also entered against him.
• c.Two, because the combined total of $29,000 exceeds the reporting threshold for settlements of claims.
• d.Two, because every settlement of a sales-practice claim is reportable, whatever amount is paid.

For arbitration claims filed on or after May 18, 2009, Question 14I(4)(a) asks about a settlement of $15,000 or more. Each claim is tested separately, so the $14,000 settlement falls short and the $15,000 settlement meets the threshold exactly. Settlements are not added together, and the form sets a dollar floor for settlements. The award prong, which applies regardless of amount, is a separate prong, so a settlement does not need an award.Form U4 (Rev. 05/2009), Question 14I(4)(a)

Within the past 24 months a representative received two unsettled written customer complaints. One alleges sales practice violations and claims $4,000 in damages. The other alleges that she forged a client's signature on a withdrawal form and states no dollar amount. How must she answer Question 14I(3)?

• a.Yes, but only for the forgery complaint, since the sales-practice complaint is below the damages limit.✓
• b.Yes, because both complaints are reportable within 24 months whatever the amount claimed in each one.
• c.No, because neither complaint has settled, produced an award, or claimed damages of more than $5,000.
• d.Yes, but only because of the sales-practice complaint, since forgery allegations are asked about elsewhere.

Question 14I(3) asks about written consumer complaints in the past 24 months that either allege sales practice violations and claim compensatory damages of $5,000 or more, or allege forgery, theft, misappropriation or conversion of funds or securities. The forgery allegation qualifies with no dollar threshold, while the $4,000 claim is under $5,000. A pending or unsettled status does not matter for this question, and forgery sits within the same question.Form U4 (Rev. 05/2009), Question 14I(3)

An applicant filed a personal bankruptcy petition twelve years ago. Seven years ago a corporation he controlled filed a bankruptcy petition because of events that occurred while he controlled it. How must he answer Question 14K?

• a.Yes, but only if the corporation's creditors were not paid in full when the case was finally closed.
• b.No, because the question concerns only the applicant's own filings, and his personal petition is too old to count.
• c.Yes, because bankruptcy filings must be disclosed on Form U4 no matter how long ago they occurred.
• d.Yes, because an organization he controlled filed within the past ten years, though his own petition did not.✓

Question 14K covers the past ten years and includes an organization's bankruptcy based on events that occurred while the applicant exercised control over it. The corporation's filing seven years ago is inside that period, so the answer is yes. His own petition twelve years ago is outside it. The question is not limited to personal filings, it is not open-ended in time, and it asks about the filing rather than the recovery of creditors.Form U4 (Rev. 05/2009), Question 14K

Twenty years ago an applicant was charged with a felony. The charge was dismissed, and no conviction or plea resulted. How should he answer Question 14A(1)(b), which asks whether he has ever been charged with a felony?

• a.Yes, but only if the felony involved securities, fraud, or the wrongful taking of property.
• b.Yes, because the question asks whether he was ever charged, and dismissal does not remove that.✓
• c.No, because charges that are more than ten years old no longer need to be reported at all.
• d.No, because only felony convictions and guilty or no-contest pleas must be reported on the form.

Question 14A(1)(b) asks whether the applicant has ever been charged with any felony, with no time limit and no requirement of conviction. Dismissal does not change the fact of the charge. Convictions and pleas are asked about in a separate part of the same question, the ten-year period belongs to Question 14K rather than 14A, and the securities, fraud or property qualifier belongs to the misdemeanor question, 14B.Form U4 (Rev. 05/2009), Question 14A(1)(b)

Fifteen years ago an applicant pled guilty to misdemeanor shoplifting. Last year she was convicted of misdemeanor reckless driving. How should she answer Question 14B(1)(a), which concerns certain misdemeanor convictions?

• a.Yes, because both misdemeanors are reportable, as the question reaches any misdemeanor conviction.
• b.Yes, because shoplifting is a wrongful taking of property, and the driving offense is not covered here.✓
• c.No, because the shoplifting plea is more than ten years old and the question reaches back only that far.
• d.No, because only misdemeanors connected with the securities business are covered by the question.

Question 14B(1)(a) covers a conviction or plea to a misdemeanor involving investments or an investment-related business or any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit one of these. Shoplifting is a wrongful taking of property, and a guilty plea counts. Reckless driving is not on the list. The question is not limited to securities offenses, and it asks whether she has ever been convicted, not about a ten-year period.Form U4 (Rev. 05/2009), Question 14B(1)(a)

An applicant has an unpaid tax lien against her and a separate court judgment that she paid in full two years ago. Which statement about Question 14M, concerning unsatisfied judgments or liens, is correct?

• a.She answers no, because a tax lien is reported only if the lienholder is a bonding company.
• b.She answers yes, because both items must be reported until ten years have passed from their dates.
• c.She answers no, because the question applies only to judgments that arose from investment-related activity.
• d.She answers yes for the unpaid lien, since the question reaches only unsatisfied judgments and liens.✓

Question 14M asks whether there are any unsatisfied judgments or liens against the applicant. The unpaid tax lien is unsatisfied, so the answer is yes, and the judgment paid in full is not within the question. The question is not limited to investment-related judgments, it has no ten-year window, and it does not depend on a bonding company, which is the subject of Question 14L.Form U4 (Rev. 05/2009), Question 14M

A representative resigned after her firm alleged that she had wrongfully taken customer funds. No regulator or court ever brought a proceeding. How should she answer Question 14J?

• a.Yes, because resigning after allegations of wrongfully taking property is reportable even without a proceeding.✓
• b.Yes, but only if the firm also reported the allegation to regulators on its own Form U5 filing for her.
• c.No, because a resignation is voluntary, and only a discharge from the firm is disclosed by this particular question.
• d.No, because the allegation was never proven in any regulatory or court proceeding against the representative.

Question 14J asks whether the applicant has ever voluntarily resigned, been discharged or been permitted to resign after allegations accusing her of, among other things, fraud or the wrongful taking of property. The answer depends on the allegation and the departure, not on a proceeding or proof. A voluntary resignation is expressly included, and the question does not depend on what the firm filed.Form U4 (Rev. 05/2009), Question 14J(2)

A representative learns on March 3 that a customer has filed a written complaint alleging that she forged a signature. The complaint changes an answer previously reported on her Form U4, and no statutory disqualification is involved. By what date must the Form U4 be amended?

• a.March 31, which is the end of the calendar month in which she learned of the facts about the complaint.
• b.May 2, which is sixty days after the date on which she first learned of the facts about the complaint.
• c.December 31, which is the next date on which her registration in the state comes up for annual renewal.
• d.April 2, which is thirty days after the date on which she learned of the facts that changed her answer on the form.✓

FINRA By-Laws Article V, Section 2 requires an amendment to the Form U4 to be filed within 30 days of learning of the facts that give rise to it. Counting from March 3, March has 28 more days to March 31 and two more reach April 2, so the thirtieth day is April 2. The deadline is not tied to month-end, is not 60 days, and is not deferred to renewal.FINRA By-Laws, Art. V, §2(c); Form U4 Section 15D

On June 1 an agent leaves Firm One, where she was registered in States A and B. On June 15 Firm Two files her Form U4 requesting registration in States A, B and C and includes the temporary registration acknowledgment. What may she do?

• a.Request it in no state, since it is available only to applicants who have never been registered before.
• b.Request it in all three states, since the acknowledgment covers every jurisdiction listed on the form.
• c.Request it in States A and B and act there as soon as Firm Two has filed her Form U4 online.
• d.Request temporary registration only in States A and B, and act only after CRD says it is granted.✓

Section 15C allows temporary registration only in jurisdictions where the applicant was registered with her prior firm within the previous 30 days. June 15 is 14 days after June 1, so States A and B qualify but State C does not. She may not engage in activity requiring registration until she receives notice from CRD or IARD that temporary registration has been granted. Prior registration is what makes the request available, not a bar, and filing alone confers no authority.Form U4 (Rev. 05/2009), Section 15C

A broker-dealer hires an applicant who has worked for several firms during the past eight years. The firm's signatory completes the firm representations on the Form U4. How far back must the firm have communicated with the applicant's previous employers?

• a.The past eight years, to match the length of the applicant's actual securities experience.
• b.The past three years, with the persons contacted and the dates of contact documented.✓
• c.The past five years, to match the period covered by the applicant's residential history.
• d.The past ten years, to match the period covered by the applicant's employment history.

The firm representations in Section 15B state that the firm has communicated with all of the applicant's previous employers for the past three years and has documentation on file with the names of the persons contacted and the date of contact. The five-year and ten-year periods are the form's residential and employment history periods, which are different requirements, and the look-back does not stretch to the applicant's full experience.Form U4 (Rev. 05/2009), Section 15B

A firm files one amendment to a representative's Form U4 that changes only her residential address. It files a second amendment that adds a new customer complaint to a disclosure reporting page. For which amendment must the representative give her own signed acknowledgment?

• a.Only the second, because her acknowledgment is needed when an amendment changes Section 14 or a disclosure reporting page.✓
• b.Neither, because the firm's signatory may give the acknowledgment for the individual on all amendments.
• c.Only the first, because a change to personal information may be made on the form only with her consent.
• d.Both, because the individual must personally acknowledge every amendment filed on her behalf, whatever it changes.

Section 15D must be completed on any amendment that changes information in Section 14 (the disclosure questions) or on any disclosure reporting page. The address-only amendment needs only the firm's amendment representations in Section 15E. The form does not require her acknowledgment for every change, and the firm does not sign in her place for disclosure changes.Form U4 (Rev. 05/2009), Sections 15D and 15E

An applicant seeks registration only as an investment adviser representative, in states that require fingerprint cards, and is not also applying to become a broker-dealer representative with that firm. How does Form U4 handle his fingerprints?

• a.He submits the card to FINRA, which forwards it to every state, because states do not collect fingerprint cards.
• b.He submits the card to the SEC, which processes it and posts the result to each state in which he applies.
• c.He submits no card, because adviser representatives are exempt under the permissive exemptions in Rule 17f-2.
• d.He affirms he applies only as an investment adviser representative and sends the fingerprint card to the states directly.✓

Section 2 contains an option for applicants applying only as investment adviser representatives and not also as broker-dealer representatives with that firm. Such an applicant either applies only in jurisdictions with no fingerprint card requirement or submits the appropriate card directly to the jurisdictions for processing under their rules. Routing through FINRA is for broker-dealer registration. The Rule 17f-2 exemptions are separate, narrow federal exceptions, and the form never routes this card to the SEC.Form U4 (Rev. 05/2009), Section 2

A registered representative's employment with a broker-dealer ends on September 12. When must the firm submit the Form U5, and what must it give the former representative?

• a.The firm must file by September 30, the end of the month, and give the individual a copy when he asks.
• b.The firm must file by October 12 and give the individual a copy within the same 30-day period.✓
• c.The firm must file by December 11, which is ninety days after the end of his employment with the firm.
• d.The firm must file by September 22 and send the individual a copy only if he requests one in writing.

A Form U5 must be submitted within 30 days of the individual's employment end date, and the firm must also give the individual a copy within 30 days. Thirty days after September 12 is October 12. A ten-day deadline, a month-end deadline and a ninety-day deadline have no basis in the filing requirements, and the copy to the individual is not conditioned on a request.FINRA Form U5 filing requirements

An agent's registrations were terminated by a Form U5 filed last January. Fourteen months later she moves to a new apartment and has not joined another firm. What is her obligation regarding her residential address?

• a.She need not report it, because her obligations to regulators ended when the firm filed the Form U5 last January.
• b.She must report it, because she remains subject to regulators' jurisdiction for at least two years after the termination date.✓
• c.She must report it only if the move is to another state, because the regulators with jurisdiction are state agencies.
• d.She must report it, but only until six months after termination, a period that has already passed by now.

Individuals remain subject to the jurisdiction of the regulators with which they were registered for at least two years after termination, and must report residential address changes for two years following the termination date or the last Form U5 amendment. Fourteen months is inside that period. The filing of the Form U5 does not end the duty, the duty is not limited to interstate moves, and the period is two years, not six months.FINRA Form U5 instructions; individual obligations after termination

An agent remains employed and registered with her firm in States A and B, but the firm withdraws her registration in State C because she no longer solicits there. Which Form U5 filing does the firm use?

• a.A partial Form U5, which ends only the State C registration and omits the termination reason and disclosure questions.✓
• b.No Form U5, because a firm files the form only when an agent leaves the firm completely and not for a single state.
• c.An amendment Form U5, which updates the termination date for registrations that have already been ended on an earlier filing.
• d.A full Form U5, which ends all of her registrations and must include the reason for termination and the disclosure questions.

A partial Form U5 terminates the individual from selected SROs and jurisdictions and does not include the reason for termination or the disclosure questions. A full Form U5 terminates all registrations, which is not what the firm intends. An amendment form is for an individual who was previously terminated, and a firm that drops a state registration still files a partial form.FINRA Form U5 filing types

Six weeks after filing a full Form U5 for a former agent, a firm learns that a customer complained about the agent in writing before he left, alleging forgery. What must the firm do?

• a.Ask the former agent to report the complaint on his own, because only the individual may amend after termination.
• b.File a new Form U4 for the former agent, because disclosure after termination goes on that form.
• c.Do nothing, because the firm's duty ended when the original Form U5 was filed on time.
• d.Amend Section 7 of the Form U5 within 30 days after learning of it, since the filing is now incomplete.✓

FINRA By-Laws Article V, Section 3(b) requires a member that learns of facts making its termination notice inaccurate or incomplete to amend the notice within 30 days after learning of them, and the Section 7 disclosure answers on the Form U5 are among those that must be corrected. The duty does not end with the first filing, the amendment is the firm's to file rather than the former agent's, and a Form U4 is the application a new firm files, not the vehicle for a former firm's disclosure.FINRA By-Laws, Article V, Section 3(b) (amend the termination notice within 30 days after learning of facts); Form U5, Section 7

A candidate takes the Series 63 and answers 42 of the 60 scored questions correctly, plus 4 of the 5 pretest questions. What is the result?

• a.The candidate fails, because only the scored questions count and at least 43 of them must be correct.✓
• b.The candidate fails, because every one of the 65 questions must be answered correctly to pass.
• c.The candidate passes, because the pretest questions are counted whenever the candidate answers them correctly.
• d.The candidate passes, because 46 of the 65 questions answered correctly is above the required minimum.

The Series 63 has 65 questions, of which 60 are scored and 5 are pretest items that do not count, and a candidate must answer at least 43 of the scored questions correctly. Forty-two scored answers fall one short, and the four pretest answers do not make up the gap. The total of 46 is irrelevant because the pretest items are not scored, and there is no requirement of perfection.NASAA Series 63 Exam Content Outline; testing parameters

A candidate fails the Series 63 for the third time on August 1. What is the earliest date for the fourth attempt?

• a.August 31, 30 days after the third failure, as the second wait was also 30 days.
• b.September 1, 30 days after the third failure, as for the first two retakes.
• c.February 1, six calendar months after the third failure, as the rule counts months.
• d.January 28, since the wait after a third failure is 180 days, not 30.✓

The waiting periods are 30 days after the first failure, 30 days after the second, and 180 days after the third and each later failure. Counting 180 days from August 1 gives January 28 of the next year. The 30-day periods apply only to the second and third attempts, and the longer wait is stated in days, not calendar months.NASAA Series 63 Exam Content Outline; retest waiting periods

A broker-dealer files a Form U4 to schedule a new hire for the Series 63, and FINRA registers him for the exam. What limits when he must take it?

• a.He must take it within the 120-day window FINRA opens once he is registered for the exam.✓
• b.He must take it within 30 days, because that is the period in which a hire may act without a license.
• c.He must take it within one year, because the Act requires renewal of an enrollment each calendar year.
• d.He may take it whenever he wishes, because the enrollment never expires once FINRA has registered him.

Once a candidate is registered for the exam, FINRA opens a 120-day testing window in which the candidate must schedule and take the examination. The enrollment does not stay open indefinitely, and the 30-day and calendar-year periods belong to other rules and have no connection to the testing window.NASAA Series 63 Exam Content Outline; testing window

After passing the Series 63, a new hire tells his manager he is now free to take orders from customers in State K, where his firm is registered. State K has not yet registered him as an agent. Is he correct?

• a.Yes, because the Series 63 is the only requirement that a state may impose on an agent applicant.
• b.No, because passing the exam does not by itself give him the right to do business in the state.✓
• c.Yes, because the firm's registration in State K covers any employee who has passed the required exam.
• d.No, because the exam result expires unless the candidate acts on it within thirty days of passing.

Passing the Series 63 satisfies the examination requirement only. It does not in itself give the right to do securities business in a state, and the applicant must still be registered there. The firm's registration does not extend to individuals who are not themselves registered as agents, a state may impose requirements beyond the exam, and the exam outline sets no thirty-day expiry on a passing result.NASAA Series 63 Exam Content Outline; testing parameters

A candidate fails the Series 63 and asks the test center what she got wrong. What information will she receive?

• a.Her results on each question she missed, so she can compare them with the study materials before retesting.
• b.Her overall score only, since the exam sponsors give no section-level information to a candidate who fails.
• c.Her score within each section, but not her score on individual questions or the text of any question.✓
• d.A copy of the questions she missed, because candidates who fail are entitled to review those items afterward.

A candidate who fails is told her scores within each section of the exam, but is not told her score on specific questions, and the text of questions is not disclosed because the questions are copyrighted material of NASAA. An overall score alone understates what she is given, and item-level feedback or copies of the questions are not provided.NASAA Series 63 Exam Content Outline; score reporting

On January 30, 2028, a broker-dealer submits the completed registration application for one of its agents. Nothing is pending against her, and the Administrator does nothing further. On what date does the registration take effect?

• a.At noon on March 1, 2028, the thirtieth day if February is counted as having only 28 days.
• b.At the moment of filing on January 30, 2028, because no denial order is in effect.
• c.At noon on February 29, 2028, the thirtieth day after filing in a leap year.✓
• d.At noon on February 28, 2028, because the day of filing is counted as day one of the thirty.

Under Section 202(a), a registration becomes effective at noon of the thirtieth day after the application is filed, unless an earlier date is set or an order is entered. Counting thirty days from January 30 gives January 31 as day one, so the thirtieth day is February 29, because 2028 is a leap year. Counting February as 28 days overshoots to March 1, counting the filing day as day one stops a day short on February 28, and effectiveness is not immediate merely because no denial order exists.Uniform Securities Act §202(a)

A broker-dealer's agent files an application on May 12. By order, the Administrator defers the effective date until noon of the thirtieth day after the filing of an amendment, and the agent files that amendment on May 20. When does the registration become effective?

• a.At noon on June 11, the thirtieth day after the original application was filed on May 12.
• b.At noon on May 20, because an amendment filed after a deferral order takes effect at once.
• c.At noon on June 21, the thirty-second day after the amendment, allowing time for the order.
• d.At noon on June 19, the thirtieth day after the amendment was filed on May 20.✓

Under Section 202(a) the Administrator may defer the effective date by order until noon of the thirtieth day after the filing of any amendment. May has 31 days, so 30 days after May 20 is June 19. June 11 would be the date without a deferral. No extra days are added, and the amendment restarts the period rather than making registration effective at once.Uniform Securities Act §202(a)

On October 5 an agent applies to withdraw his registration. On October 25 the Administrator institutes a proceeding to revoke it. Does the withdrawal take effect on November 4, 30 days after the application?

• a.No, because a proceeding was instituted within 30 days, so withdrawal takes effect as and when the Administrator orders.✓
• b.Yes, because the 30-day period runs from the date of the application, and a later proceeding cannot delay it.
• c.Yes, because a proceeding blocks the withdrawal only if it was begun before the application was filed.
• d.No, because the agent must wait for a full year after applying before withdrawal can ever take effect.

Withdrawal becomes effective 30 days after receipt of the application unless a proceeding to revoke or suspend is pending when it is filed or is instituted within 30 days afterward. The proceeding began 20 days after filing, so withdrawal becomes effective at the time and on the conditions the Administrator determines by order. A proceeding begun in the 30-day window does stop the automatic date, and the one-year period relates to proceedings after a withdrawal has become effective.Uniform Securities Act §204(e)

A registered agent has been declared mentally incompetent, and a court has appointed a conservator for her. May the Administrator cancel her registration, and on what basis?

• a.Yes, but only after the Administrator finds that the agent willfully violated the Act or one of its rules.
• b.No, because cancellation is available only if the agent has died or has been convicted of a felony.
• c.Yes, because adjudication of incompetence or control by a conservator is a basis for cancelling a registration.✓
• d.No, because only the agent's employer, and not the Administrator, may end an agent's registration.

Section 204(d) allows the Administrator to cancel a registration or application by order when the registrant is no longer in existence, has ceased doing business, is subject to an adjudication of mental incompetence or the control of a conservator or guardian, or cannot be located after reasonable search. No willful violation needs to be found. Death and felony convictions are not the only grounds, and the power belongs to the Administrator.Uniform Securities Act §204(d)

An agent's registration expires on December 31 and his firm files the renewal on January 10. On January 4 he accepted a customer's order. How is the January 4 order treated?

• a.It was unregistered activity only if the customer lives outside the state where the agent works.
• b.It was unregistered activity, because the registration expired on December 31 and had not been renewed.✓
• c.It was properly transacted, because an agent may continue acting while the firm's renewal is being prepared.
• d.It was properly transacted, because renewal filed within ten days of expiration relates back to December 31.

Every registration expires December 31 unless renewed, and it is unlawful to transact business as an agent unless registered. The agent was not registered between expiration and renewal, so the January 4 order was unregistered activity. The Act provides no relation-back and no grace period for renewal filings, and the customer's residence does not matter.Uniform Securities Act §201(a), (e)

An agent registered only in State A takes an unsolicited telephone call at her desk in State A from an existing customer who lives in State B and is calling from home. The customer asks to buy a stock, and she accepts the order on the call. Is State B's registration requirement involved?

• a.Yes, but only if the agent ever returns the call or sends a confirmation across the state line to the customer.
• b.No, because an unsolicited call places the transaction under the law of the state where the agent works.
• c.No, because State B's Act applies only to offers to sell that the agent initiates by calling someone in State B.
• d.Yes, because the customer's offer to buy was made in State B and accepted there, so State B's Act applies.✓

Section 414 applies the registration requirement when an offer to buy is made and accepted in the state. The customer's offer originates in State B, and the agent's acceptance is communicated to him while he is in State B, so State B's Act applies. The Act has no exemption for unsolicited orders, it covers offers to buy as well as offers to sell, and the acceptance is made on the call itself, not by a later callback.Uniform Securities Act §414(a), (c), (d)

A customer who lives in State B is travelling in State C. He telephones his agent, who works in State A, offers to buy shares, and the agent accepts on that call. A written confirmation then arrives at his home in State B. Does the confirmation make State B's Act apply on the basis of acceptance?

• a.Yes, because the Act measures acceptance by the customer's state of residence and not by his location.
• b.No, because a written confirmation can never be an acceptance, only an oral statement can be one.
• c.No, because acceptance had already been communicated to the customer outside State B, so it is not accepted in State B.✓
• d.Yes, because acceptance occurs where the written confirmation is received, and he lives in State B.

An offer is accepted in a state only if the acceptance is communicated to the offeror in that state and has not previously been communicated to the offeror, orally or in writing, outside the state. The agent's oral acceptance reached the customer in State C, so the later confirmation in State B does not create acceptance there. Residence is not the test, and a written communication can be an acceptance when it is the first one.Uniform Securities Act §414(d)

An agent is registered in States A and B. Her employer, a broker-dealer, is registered in State A but not in State B. She sells shares to a resident of State B. Is her State B registration sufficient?

• a.No, because an agent may be registered in only one state at a time under the Uniform Securities Act.
• b.Yes, because an agent who holds a registration in a state may sell there for any broker-dealer she chooses.
• c.No, because an agent's registration is ineffective when she is not associated with a broker-dealer registered there.✓
• d.Yes, because the employer's registration in State A is enough for all states in which she is registered.

Section 201(b) provides that an agent's registration is not effective during any period when she is not associated with a particular broker-dealer registered under the Act. The employer is not registered in State B, so the State B registration gives her no authority and the sale is unregistered activity there. An agent may hold registrations in several states, but each depends on the firm's own registration in that state.Uniform Securities Act §201(b)

From State A, an agent mails an offer to a prospect in State B. The prospect is away for three weeks, so the letter sits in his State B mailbox until he returns. When is the offer made in State B?

• a.Only when the prospect returns and reads it, because an offer cannot be made to someone who has not seen it.
• b.Not in State B at all, because a mailed offer is made only in the state where the sender mails it.
• c.Only when he responds, because an offer is made in the state where the response originates.
• d.When it is received at the place to which it is directed in State B, whether or not the prospect is there.✓

An offer is made in a state, whether or not either party is then present there, when it originates in the state or is directed to the state and received at the place to which it is directed or at any post office in the state. Delivery to his mailbox suffices, so his absence and his later reading do not matter. The offer is made in both states, so the sender's state is not the only one.Uniform Securities Act §414(c)

An agent registered only in State A works from a home office in State B and telephones prospects who all live in State A. Does State B require her to register?

• a.Yes, because the offers originate from State B, so State B's Act applies even though the prospects live elsewhere.✓
• b.No, because State B's Act protects only investors who live in State B and receive offers there.
• c.No, because an agent's home office is not a place of business unless customers visit it in person.
• d.Yes, but only if she telephones at least one prospect who happens to live in State B at the time.

An offer is made in a state when it originates from that state, whether or not either party is then present there. Her calls originate in State B, so State B's Act applies and she must be registered there. The protection of local residents is not the limit, the Act looks at where the offer originates and not at customer visits, and a State B prospect is not needed.Uniform Securities Act §414(c)(1)

A registered representative opens a margin account at another member firm on Monday. Her compliance officer gives written approval on Friday of the same week. Did she comply with Rule 3210?

• a.Yes, because written approval received within the same week satisfies the rule's consent requirement.
• b.Yes, because the rule requires only that the employer be notified of an account after it has been opened.
• c.No, because the rule bars any associated person from holding an account at another member firm.
• d.No, because the rule requires the employer member's prior written consent before the account is opened.✓

Rule 3210(a) prohibits an associated person from opening or establishing an account at another member or financial institution, in which securities transactions can be effected and she has a beneficial interest, without the prior written consent of her employer member. Approval given after the account was opened is not prior consent. The rule requires consent and not mere notice, and it does not forbid such accounts altogether.FINRA Rule 3210(a)

A representative's employer gives written consent for him to open an account at another member. When he opens the account, he does not tell the other firm that he works for a member. Which statement is correct?

• a.He violated the rule, but only if the account later shows trading in the securities of his own employer.
• b.He complied, because the employer's written consent is the only step the rule requires of him.
• c.He violated it, because he must tell the executing firm in writing of his association first.✓
• d.He complied, because the executing firm's duties arise only when his employer asks for statements.

Under Rule 3210(b), an associated person must, before opening the account, notify the executing member or other financial institution in writing of his association with the employer member. Employer consent under paragraph (a) is a separate requirement. The executing firm's duty to send duplicates under paragraph (c) depends on that notice, and the notice requirement does not depend on what is traded.FINRA Rule 3210(b)

A representative joins a member firm on January 20 and already holds an account at another member that he opened years earlier. What is the latest date for him to obtain his new employer's written consent and notify the other firm?

• a.January 30, which is ten calendar days after he becomes associated with the employer member.
• b.No deadline applies, because the account was opened before he became associated with the employer.
• c.March 21, which is sixty calendar days after he becomes associated with the employer member.
• d.February 19, which is 30 calendar days after becoming associated with the employer member.✓

Supplementary Material .01 covers an account opened before the association. Within 30 calendar days of becoming associated, the person must obtain the employer's written consent to maintain the account and notify the other firm in writing. Thirty days after January 20 is February 19. Ten and sixty days are not in the rule, and the pre-existing account does not escape the requirement.FINRA Rule 3210.01

A representative's spouse opens an account at another member firm using the spouse's own earnings. The representative contributes nothing and has no trading authority. How does Rule 3210 treat the account?

• a.The rule does not apply, because a spouse is a separate person and the associated person has no interest in the account.
• b.The rule applies only if the account is at her own employer, because the rule governs accounts held by spouses at the member.
• c.She is presumed to have a beneficial interest, but can rebut it by showing her employer no economic benefit and no control over it.✓
• d.The presumption cannot be rebutted, because every spouse's account is conclusively treated as the representative's own.

Supplementary Material .02 presumes that the associated person has a beneficial interest in an account held by her spouse. For a spouse or a qualifying child, the presumption need not apply if she demonstrates to her employer's reasonable satisfaction that she derives no economic benefit from and exercises no control over the account. The presumption exists, so the rule is not simply inapplicable, but it is rebuttable and not conclusive.FINRA Rule 3210.02(a)

A representative's 27-year-old son lives in his own apartment, supports himself, and holds a brokerage account at another member firm. The representative has no authority over it. Is she presumed to have a beneficial interest in the son's account?

• a.No, because he does not live in her household or depend on her financially, and she has no control over the account.✓
• b.No, because the presumption applies only to accounts held by the associated person's spouse and by no one else.
• c.Yes, because any related individual's account is presumed to belong to the associated person under the rule.
• d.Yes, because a child's account is always presumed to be the parent's, whatever the child's age or living arrangement.

A child's account is presumed to be the associated person's only if the child resides in the same household or is financially dependent on the associated person, or if she controls the account under the other paragraphs. The son satisfies none of these, so there is no presumption. Age alone is not the test, relatives in general are covered only where she has control, and the presumption extends beyond spouses.FINRA Rule 3210.02(b)

A representative holds trading authority over her widowed mother's account at another member firm, and her mother pays for her own living costs. Under Rule 3210, what is the representative's position?

• a.She is presumed to have an interest only if she also contributes materially to her mother's financial support.
• b.She is presumed to have a beneficial interest, because the account belongs to a related individual whose account she controls.✓
• c.She has no presumed interest, because her mother is financially independent and does not live in her household.
• d.She has no presumed interest, because only a spouse or a child counts as a related person under the rule.

Supplementary Material .02(c) presumes a beneficial interest in an account held by any other related individual over whose account the associated person has control. Her trading authority is control, so the support and household tests that apply to children are not needed. Related persons are not limited to spouses and children, and material financial support is the separate test in paragraph (d) for individuals who are not related.FINRA Rule 3210.02(c)

A representative opens an account at a mutual fund company that can hold only shares of open-end investment companies registered under the Investment Company Act. Does he need his employer's consent under Rule 3210?

• a.Yes, because mutual fund companies are not members and so are covered as other financial institutions.
• b.Yes, because every account at a financial institution other than his own employer needs written consent.
• c.No, because the rule applies only to accounts that are held at a bank or at an insurance company.
• d.No, because accounts limited to redeemable shares of registered investment companies are excluded from the rule.✓

Supplementary Material .03 excludes transactions in, and accounts limited to, redeemable securities of registered investment companies, along with unit investment trusts, municipal fund securities, Section 529 plans and variable contracts. This account holds only that kind of security. Non-member institutions can be covered by the rule, which is why the exclusion matters, and the rule is not confined to banks and insurers.FINRA Rule 3210.03

A representative asks his employer's consent to open an account at a non-member investment adviser that can effect securities transactions. What should the employer member consider in deciding on consent?

• a.Whether it can obtain, on written request, duplicate confirmations and statements directly from that institution.✓
• b.Whether the account will be used for margin, because margin accounts alone need the employer's consent.
• c.Nothing, because the rule applies only to accounts at other FINRA member firms and not to advisers.
• d.Whether the adviser is registered with the SEC, because only SEC-registered advisers can hold accounts.

Rule 3210 reaches accounts at any other financial institution, which includes investment advisers, banks, insurance companies and non-member broker-dealers. For a non-member institution, Supplementary Material .04 directs the employer to consider how far it can obtain duplicate confirmations and statements directly from that institution when deciding whether to consent. The rule is not limited to members, and it does not distinguish between margin and cash accounts.FINRA Rule 3210.04, .05

A member firm pays an unlicensed consultant a share of the commissions on accounts he solicits and persuades to trade through the firm. The consultant is not registered as a broker-dealer. What is the problem under Rule 2040?

• a.The payments are prohibited only if the consultant is a U.S. resident, since foreign consultants are exempt.
• b.The payments are allowed provided that the firm discloses the consultant's fee to each customer in writing.
• c.The payments are barred if his activities and the payments require him to register as a broker-dealer.✓
• d.There is no problem, because the member pays out of its own revenue and not from the customer's account.

Rule 2040(a)(1) bars payment of commissions, fees or other compensation to a person who is not registered as a broker-dealer but who, by reason of receiving such payments and the related activities, is required to be registered. Transaction-based pay for soliciting accounts is a classic indicator. Paying from the firm's own revenue does not change this, customer disclosure is not a cure, and the foreign finder exception has specific conditions rather than a blanket exemption.FINRA Rule 2040(a)(1)

A representative is retiring. The proposed agreement with his member firm would pay him continuing commissions on his customers' accounts, and would let him keep servicing those accounts and call on the customers. Does the arrangement satisfy Rule 2040(b)?

• a.Yes, because he may service the accounts if he is retiring, so long as the firm remains responsible for them.
• b.No, because continuing commissions may never be paid to someone who has stopped being a registered representative.
• c.Yes, because commissions to a retiring representative are not limited by the rule if the contract is in writing.
• d.No, because the contract must prohibit the retiree from soliciting new business, opening accounts, or servicing the accounts.✓

Rule 2040(b) allows continuing commissions to a retiring registered representative only under a bona fide contract, made in good faith while he was registered, that among other things prohibits soliciting new business, opening new accounts, or servicing the accounts that generate the payments. This contract permits servicing, so it fails. Payments after retirement are permitted when those conditions are met, so a flat bar is wrong, and a written contract is necessary but not enough.FINRA Rule 2040(b)(1)(A)