FINRA Series_63 : Uniform Securities Agent State Law Examination

Cassie Clueless has recommended that a client purchase shares of a mutual fund prior to its ex-dividend
date, so that the client will receive the dividends when they are distributed. In which of the following
situations might this recommendation be justifiable and not in violation of NASAA rules?
I. The investor has refused to provide Cassie any information regarding his investment goals.
II. The investor is a young professional with an investment goal of long-term capital appreciation.
III. The investor is a retiree in a low tax bracket and needs current income to augment her social security
check.

• A. III only
• B. I and II only
• C. I only
• D. It is always in violation of NASAA rules to recommend that a client purchase shares of a mutual fund
  prior to its ex-dividend date.

A hypothecation agreement refers to

• A. a document signed by a client indicating that he or she understands that some of the charts and
  examples presented in a broker-dealer's advertising literature are based on hypothetical trades.
• B. an agreement wherein a client gives his broker-dealer discretion to purchase securities that the
  broker-dealer deems appropriate in whatever quantity the broker-dealer feels appropriate and at a time
  and price the broker-dealer believes is a good deal.
• C. an agreement that a client must sign prior to executing any short sales with the broker-dealer.
• D. an agreement signed by a client who is executing a margin transaction that allows the broker to hold
  the margined securities in street name as collateral for the loan.

Needy Investment Advisers, LLC needs a loan. One of its wealthier clients has offered to lend the firm the
money at the prime rate of interest. A promissory note is drawn up stipulating the terms of the loan. Based
on these facts,

• A. Needy is in violation of securities laws by acting as an issuer of securities.
• B. Needy will be in violation of securities laws unless a waiver of compliance form is signed by the client
  and submitted to the administrator.
• C. Needy is in violation of securities laws only if the face value of the note is for $50,000 or more.
• D. Needy is not in danger of violating any securities laws since the loan was unsolicited and has been
  properly executed via a promissory note.

Big Bo is an investment adviser representative who has a lot of the members of a well-known professional
football team as clients. In advertising his services, Big Bo can

• A. list the names of the players he's advising as long as he lists the names of all his other clients, too.
• B. list the names of the players he's advising as long as he doesn't provide any other specifics, such as
  the amount each one has invested with him.
• C. use testimonials from any of the players who willingly provide them without compensation.
• D. list the names of the players he's advising as long as he has their written permission to do so.

While on vacation in Colorado, Massachusetts resident Ms. Jetset meets Mr. Snow, a registered
representative with a Colorado broker-dealer, on a ski lift and accepts a dinner engagement with him later
that evening, during which he obtains her cell phone number. A week later, while she is lounging around
in her Florida beach condo, he calls and interests her in a local software company that is selling its
preferred stock to investors and encourages her to buy it. Ms. Jetset tells Mr. Snow she'll think about it
and calls him after she returns to her home in Massachusetts to tell him to buy the stock for her and sends
him a check via express mail. Later, Ms. Jetset learns that the preferred stock certificate that she received
is-and always was-a worthless piece of paper, and that, in fact, no such company ever existed. Which
state Administrator has jurisdiction in this instance?
I. the Administrator of the state of Colorado
II. the Administrator of the state of Florida
III. the Administrator of the state of Massachusetts

• A. I and II only
• B. I only
• C. I, II, and III
• D. I and III only