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NASAA Series 63 Uniform Securities Agent State Law Exam

6. Remedies and Administrative Provisions: practice questions

Our Series 63 bank has 35 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

Under section 408, which remedy requires the Administrator to go to court?

  1. A cease and desist order
  2. An injunction
  3. A summary suspension of a registration
  4. A denial of a registration
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B. An injunction — Section 408(b): the Administrator brings an action in court to enjoin the acts; the court grants injunctions, restraining orders or mandamus. Cease and desist orders are administrative.

Question 2

Under SIPC, what is the maximum protection for a customer's cash and securities at a failed member firm?

  1. $250,000, including up to $100,000 for cash
  2. $500,000, including up to $250,000 for cash
  3. $1,000,000, including up to $500,000 for cash
  4. $500,000 for cash plus unlimited securities
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B. $500,000, including up to $250,000 for cash — SIPC: the limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.

Question 3

A buyer purchased an unregistered, non-exempt security and still owns it. Under section 410(a), the buyer may recover:

  1. The price paid plus interest, costs and attorneys' fees, less income received
  2. Three times the price paid
  3. Only the difference between price paid and current value
  4. Punitive damages set by the Administrator, payable to the state and the buyer
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A. The price paid plus interest, costs and attorneys' fees, less income received — Section 410(a): the buyer may sue to recover the consideration paid with interest, costs and reasonable attorneys' fees, less income received, upon tender of the security.

Question 4

Which loss does SIPC protect against?

  1. Securities missing from an account when a member firm fails
  2. A fall in the market value of a customer's stocks
  3. Losses caused by an agent's bad advice or an unsuitable recommendation
  4. Losses from buying worthless stock
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A. Securities missing from an account when a member firm fails — SIPC protects the custody function: it restores customers' securities and cash when a member firm fails. It does not protect against declines in value or bad advice.

Question 5

Under section 409, a person convicted of willfully violating a rule or order cannot be imprisoned if the person proves:

  1. They made no profit
  2. They repaid the customer in full before the case was brought
  3. They had no knowledge of the rule or order
  4. It was a first offence
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C. They had no knowledge of the rule or order — Section 409(a): no person may be imprisoned for violating any rule or order if the person proves they had no knowledge of it. A fine is still possible.

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