NASAA Series 66 Uniform Combined State Law Exam
4. Laws, Regulations and Guidelines, incl. Prohibition on Unethical Business Practices: practice questions
Our Series 66 bank has 135 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.
Question 1
Under the Uniform Securities Act, which employee of a state-registered adviser is an investment adviser representative?
- An employee who solicits new advisory clients for the firm
- A clerk who processes account forms
- An IT technician who maintains the firm's servers and trading software
- A receptionist who schedules client meetings
Show the answer
A. An employee who solicits new advisory clients for the firm — Section 401(g) covers individuals who give advice, manage accounts, determine recommendations, solicit or sell advisory services, or supervise those who do. Clerical staff are not IARs.
Question 2
Under the Uniform Securities Act, the optional statute of limitations for criminal prosecution is:
- Two years after discovery
- Three years after the sale
- Five years after the alleged violation
- Ten years after the date of the alleged violation
Show the answer
C. Five years after the alleged violation — Section 409(a) (bracketed text): no indictment may be returned more than five years after the violation.
Question 3
A broker-dealer must check new customers against the list of Specially Designated Nationals maintained by:
- The Office of Foreign Assets Control (OFAC)
- FINRA
- The state Administrator
- The SEC's Division of Examinations and Division of Enforcement
Show the answer
A. The Office of Foreign Assets Control (OFAC) — OFAC, in the Treasury Department, administers sanctions; firms must block transactions with listed persons.
Question 4
An employee of a broker-dealer who only answers phones and takes no orders is:
- An investment adviser representative
- An agent
- A broker-dealer
- Not an agent
Show the answer
D. Not an agent — Clerical and administrative staff who do not effect or try to effect securities transactions are not agents.
Question 5
SEC Rule 15c3-3 (the customer protection rule) requires a broker-dealer to:
- Lend out customer securities without consent to raise the firm's capital
- Hold all customer assets at the Federal Reserve
- Guarantee customers against investment losses
- Keep control of customers' fully paid securities and a reserve for their cash
Show the answer
D. Keep control of customers' fully paid securities and a reserve for their cash — 15c3-3 protects customer assets by segregation and a special reserve bank account, so they can be returned if the firm fails.