Free NASAA Series 63 (Uniform Securities Agent State Law Examination) Regulation of Broker-Dealers Practice Questions
Regulation of broker-dealers on the NASAA Series 63 exam covers state registration, exemptions, minimum financial requirements, recordkeeping obligations, and supervision of agents.
Sample Questions
Question 1
Easy
Under the Uniform Securities Act, a broker-dealer's registration in a state generally:
Solution
B is correct. Under the Uniform Securities Act, registration of a broker-dealer (as well as agents and investment advisers) expires on December 31 of each year and must be renewed annually by paying the renewal fee and filing any required materials. Registration becomes effective at noon of the 30th day after filing a complete application (absent Administrator action).
Question 2
Medium
Horizon National Bank operates a securities department that executes stock trades for its customers as part of its banking services. Under the Uniform Securities Act, the bank is MOST likely:
Solution
Choice A is correct because the Uniform Securities Act expressly excludes banks and trust companies from the definition of broker-dealer. Banks are subject to their own regulatory framework (federal banking regulators), and the state securities acts do not impose broker-dealer registration requirements on them. This exclusion applies regardless of the type or volume of securities transactions the bank executes.
Question 3
Hard
A state Administrator is reviewing the supervisory practices of registered broker-dealers. The Administrator sends a notice reminding firms that proper agent supervision is a mandatory compliance obligation. Which of the following BEST describes a broker-dealer's supervisory responsibility under the Uniform Securities Act?
Solution
Choice D is correct because the Uniform Securities Act requires broker-dealers to designate and maintain a qualified compliance officer responsible for supervising the activities of each agent. The BD can be held liable for agent misconduct if it fails to reasonably supervise the agent, even if it lacked actual knowledge of the specific violation. Reasonable supervision is an affirmative obligation.