Exam (elaborations) WILEY FINRA SERIES SECURITIES INSTITUTE OF AMERI

Exam (elaborations) WILEY FINRA SERIES SECURITIES INSTITUTE OF AMERI The Securities Act of 1933 1 The Prospectus 2 The Final Prospectus 2 Misrepresentations 3 The Securities Exchange Act of 1934 3 Net Capital Requirement 7 Customer Coverage 7 Fidelity Bond 8 The Insider Trading and Securities Fraud Enforcement Act of 1988 8 Firewall 9 The Telephone Consumer Protection Act of 1991 9 National Securities Market Improvement Act of 1996 10 vi Contents The Uniform Securities Act 11 The Uniform Prudent Investors Act of 1994 12 CHAPTER 2 DEFINITIONS OF TERMS 13 Security 13 Person 15 Broker Dealer 16 Pension Consultants 18 Investment Counsel 18 Form ADV 19 Investment Adviser Registration Database (IARD) 20 Investment Adviser Representative 20 Offer/Offer to Sell/Offer to Buy 23 Sale/Sell 23 Guarantee/Guaranteed 23 Contumacy 24 Federally Covered Exemption 24 Power of Attorney 24 Pretest 25 CHAPTER 3 REGISTRATION OF BROKER DEALERS, INVESTMENT ADVISERS, AND AGENTS 31 Registration of Broker Dealers and Agents 31 Agent Registration 32 Registering Broker Dealers 33 Financial Requirements 34 Broker Dealers on the Premises of Other Financial Institutions 34 Registering Agents 35 Canadian Firms and Agents 36 Investment Adviser Registration 37 The National Securities Market Improvement Act of 1996/The Coordination Act 37 Contents vii Investment Adviser Representative 38 Investment Adviser Registration 39 Capital Requirements 39 Exams 40 Advertising and Sales Literature 41 Brochure Delivery 42 Wrap Accounts 43 Pretest 45 CHAPTER 4 SECURITIES REGISTRATION, EXEMPT SECURITIES, AND EXEMPT TRANSACTIONS 49 Exempt Securities 49 Securities Registration 50 Registration of IPOs Through Coordination 50 Registration Through Notice Filing 51 Registration of Non-Established Issuers/Registration Through Qualification 51 Exempt Securities/Federally Covered Exemption 53 Exempt Transactions 54 Pretest 59 CHAPTER 5 PROFESSIONAL CONDUCT AND PROHIBITED AND FRAUDULENT ACTIONS 65 Fraud 65 Professional Conduct 66 Suitability 66 Market Manipulation 68 Customer Complaints 69 The Role of the Investment Adviser 69 Additional Compensation for an Investment Adviser 70 Agency Cross Transactions 70 Disclosures by an Investment Adviser 70 Investment Adviser Contracts 72 Private Investment Companies/Hedge Funds 72 Fulcrum Fees 72 Soft Dollars 73 Borrowing and Lending Money 74 Pretest 75 CHAPTER 6 THE STATE SECURITIES ADMINISTRATOR AND THE UNIFORM SECURITIES ACT 83 Actions by the State Securities Administrator 83 Cancellation of a Registration 84 Withdrawal of a Registration 85 Actions Against an Issuer of Securities 85 Rule Changes 85 Administrative Orders 85 Interpretive Opinions 87 Administrative Records 87 Investigations 88 Civil and Criminal Penalties 88 Jurisdiction of the State Securities Administrator 89 Administrator’s Jurisdiction over Securities Transactions 90 Radio Television and Newspaper Distribution 92 Right of Rescission 93 Statute of Limitations 93 Pretest 95 ANSWER KEYS 101 GLOSSARY OF EXAM TERMS 109 INDEX 175 viii Contents About the Series 63 Exam Congratulations! You are on your way to becoming a registered representative licensed to conduct securities business in all states that require the Series 63. The Series 63 exam will be presented in a 60-question multiple-choice format. Each candidate will have one hour and 15 minutes to complete the exam. A score of 72% or higher is required to pass. The Series 63 is as much a knowledge test as it is a reading test. The writers and instructors at The Securities Institute have developed the Series 63 textbook, exam prep software, and videos to ensure that you have the knowledge required to pass the test and to make sure that you are confident in the application of the knowledge during the exam. IMPORTANT EXAM NOTE The series 63 exam is based on the provisions of the Uniform Securities Act not on any of the amendments enacted by any particular state or state securities administrator. The Uniform Securities Act may be referred to as the USA or as the Act. Test takers should treat these terms as interchangeable. TAKING THE SERIES 63 EXAM The Series 63 exam is presented in multiple-choice format on a touch-screen computer known as the PROCTOR system. No computer skills are required, and candidates will find that the test screen works in the same way as an ordinary ATM. Each test is made up of 60 questions that are randomly chosen from a test bank containing several thousand questions. The test has a time limit of one hour and 15 minutes and is designed to provide enough time x WILEY SERIES 63 Exam Review 2016 for all candidates to complete the exam. Each Series 63 exam will have five additional questions that do not count towards the final score. The Series 63 comprises questions that focus on the following areas: State securities rules and regulations 36 questions 60% Ethical practices & fiduciary obligations 24 questions 40% TOTAL 60 questions 100% HOW TO PREPARE FOR THE SERIES 63 EXAM For most candidates, the combination of reading the textbook, watching the videos, and using the exam prep software is enough to successfully complete the exam. It is recommended that the candidate spend at least 30 hours preparing for the exam by reading the textbook, underlining key points, watching the video class, and completing as many practice questions as possible. We recommend that candidates schedule their exam no more than one week after completing their Series 63 exam prep. Test-Taking Tips □ Read the full question before answering. □ Identify what the question is asking. □ Identify key words and phrases. □ Watch out for hedge clauses, for example, except and not. □ Eliminate wrong answers. □ Identify synonymous terms. □ Be wary of changing answers. HOW MUCH HAS THE SERIES 63 EXAM CHANGED? Over the last several years, the Series 63 exam has been made significantly more challenging. The North American Securities Administrators Association (NASAA) has increased the percentage of the exam that concentrates on the National Securities Market Improvement Act of 1996. On April 1, 2002, NASAA increased the number of total questions on the exam by 20%, from 50 to 60. The passing score was increased to 72% on January 1, 2010. Each test will also contain practice questions that are not graded. WHY DO I NEED TO TAKE THE SERIES 63 EXAM? In order to conduct securities business, most states require that an agent successfully complete the Series 63, in addition to obtaining a Series 6, 7, or 62 registration. WHAT SCORE IS NEEDED TO PASS THE EXAM? A score of 72% or higher is needed to pass the Series 63 exam. ARE THERE ANY PREREQUISITES FOR THE SERIES 63? A candidate is not required to have any other professional qualifications prior to taking the Series 63 exam. HOW DO I SCHEDULE AN EXAM? Ask your firm’s principal to schedule the exam for you or to supply you with a list of test centers in your area. If you are not with a member firm, you may obtain a Form U10 from the North American Securities Administrators Association (NASAA) to make an appointment. The Series 63 exam may be taken any day that the exam center is open. WHAT MUST I TAKE TO THE EXAM CENTER? A picture ID is required. All other materials will be provided, including a calculator and scratch paper. HOW SOON WILL I RECEIVE THE RESULTS OF THE EXAM? The exam will be graded as soon as you answer your final question and hit the Submit for Grading button. It will take only a few minutes to get your About the Series 63 Exam xi xii WILEY SERIES 63 Exam Review 2016 results. Your grade will appear on the computer screen, and you will be given a paper copy from the exam center. If you do not pass the test, you will need to wait 30 days before taking it again. If you do not pass on the second try, you will need to wait another 30 days. If you fail a third time, you are required to wait six months to take the test again. About This Book The writers and instructors at The Securities Institute have developed the Series 63 textbook, exam prep software, and videos to ensure that you have the knowledge required to pass the test, and to make sure that you are confident in the application of the knowledge during the exam. The writers and instructors at The Securities Institute are subject-matter experts as well as Series 63 test experts. We understand how the test is written, and our proven test-taking techniques can dramatically improve your results. Each chapter includes notes, tips, examples, and case studies with key information, hints for taking the exam, and additional insight into the topics. Each chapter ends with a practice test, to ensure that you have mastered the concepts before moving on to the next topic. About the Test Bank This book is accompanied by a test bank of approximately 200 questions to further reinforce the concepts and information presented here. The access card in the back of this book includes the URL and PIN code you can use to access the test bank. This test bank provides a small sample of the questions and features that are contained in the full version of the Series 63 exam prep software. If you have not purchased the full version of the exam prep software with this book, we highly recommend it to ensure that you have mastered the knowledge required for your Series 63 exam. To purchase the exam prep software for this exam, visit The Securities Institute of America online at www.SecuritiesCE.com or call . About The Securities Institute of America The Securities Institute of America, Inc. helps thousands of securities and insurance professionals build successful careers in the financial services industry every year. Our securities training options include: • Onsite training classes. • Private tutoring. • Classroom training. • Interactive online video training classes. • State-of-the-art exam preparation software. • Printed textbooks. • Real-time tracking and reporting for managers and training directors. You can choose a securities training solution that matches your skill level, learning style, and schedule. Regardless of the format you choose, you can be sure that our securities training courses are relevant, tested, and designed to help you succeed. It is the experience of our instructors and the quality of our materials that make our courses requested by name at some of the largest financial services firms in the world. To contact The Securities In