Free NASAA Series 63 (Uniform Securities Agent State Law Examination) Ethical Practices and Obligations Practice Questions
Ethical practices and obligations on the NASAA Series 63 exam cover fiduciary duty, suitability, conflicts of interest, insider trading prohibitions, privacy regulations, and the duty to act in the best interest of clients.
238 questions87 easy94 medium57 hard2026 syllabus
Sample Questions
Question 1
Easy
A state-registered investment adviser may do all of the following EXCEPT:
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Correct Answer: A
Solution
A is correct. Client assets must be segregated and held with a qualified custodian. Commingling client securities with the firm's own assets and pledging them to secure a firm loan is a prohibited use of customer property. The other three actions are permitted ways to handle client assets and authority.
Question 2
Medium
All of the following constitute prohibited conduct by an agent EXCEPT:
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Correct Answer: C
Solution
C is correct. Recommending a fund whose 12b-1 compensation is disclosed to the client and approved by the firm is permissible because the conflict is disclosed and supervised. Borrowing from a customer who is not a lending institution, selling away from the firm without authorization, and churning are each prohibited practices.
Question 3
Hard
Under the Uniform Securities Act and NASAA model rules, all of the following firm practices are permissible EXCEPT:
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Correct Answer: A
Solution
A is correct. An agent may share in a customer's account only with the firm's written approval and in proportion to the capital each party contributes; sharing without the firm's authorization is prohibited. Delaying a disbursement on a reasonable belief of exploitation, exercising same-day time-and-price discretion, and promptly forwarding a third-party check to the custodian are each permitted.
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