Free Series-63 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

The settlement date is the date that the buyer must pay for the securities purchased. For stocks and

bonds other than U.S. Treasury securities, this date is the third business day after the trade. For U.S.

Treasuries and options that sell on exchanges, the settlement date is the next business day.

As defined by the Uniform Securities Act, an exempt security is one that need not be registered in

the state in which it is sold. Selections A and D describe exempt transactions. Although securities

issued by financial institutions, such as banks, are exempt securities, not all securities that a bank

purchases and sells qualify as exempt securities. Private placements may also be exempt

transactions, but there are other stipulations that must be met.

As a director of the firm, Larry would automatically be registered as an investment adviser

representative of MoeMoney Investment Advisers. Although directors and officers of the firm are

automatically registered as investment adviser representatives, Mary, as a sales representative,

would have to apply for her own registration. Curly does not need to be registered since he performs

only clerical duties.

If a fund has either Selection I or Selection II, an agent cannot tell a client it is “no load.” If the fund

has either a front-end load, a contingent deferred sales load, or both, the client must be told that the

fund has a load. If the 12b-1 fees on a fund are 0.25% or less of the annual average net assets, it is

not considered to be a load fund.

To say a security is “exempt” means only that the security is exempt from state registration

requirements. It is not exempt from the state’s anti-fraud laws and may or may not be part of an

exempt transaction. That is defined by the transaction.

The bond’s registration is effective for one full year from the effective date of the registration.

Once an issuer has registered securities with the state, the documentation supplied in that

registration statement can be incorporated into the registration statement for future securities the

issuer wants to offer for sale by reference only for a period of five years.

Investment advisers may not use testimonials of satisfied clients to solicit new clients. They may

provide past stock picks, as long as they provide a complete list, that compilation period for the list is

at least a year, and as long as they are careful to note that past performance is no guarantee of future

performance. They can also offer freebies, such as a free initial consultation or a free financial

planning kit, as long as these are indeed offered “free,” with no obligation on the part of the client.

In advertising his services, Big Bo can list the names of the players he’s advising only if he has their

written permission to do so. Under both NASAA Model Rules and the Investment Adviser Act of

1940, an investment adviser representative may not use client testimonials in their advertisements,

regardless of whether the testimonials are willingly provided and uncompensated.

The Uniform Securities Act (USA) provides a model for states to follow when formulating their own

securities laws. It does not, itself, contain any laws.

If Layered issues a bond with warrants attached that give the holder the right to buy shares of its

common stock, Layered must register all three securities. The bond is being offered for sale with the

warrants attached, so both the bond and the warrant are being offered for sale and must be

registered.

Furthermore, the Uniform Securities Act stipulates that the “sale or offer for sale of the right” to buy

another security “is considered to include an offer of the other security.” Therefore, offering the

warrant for sale is effectively an offer to sell the stock as well, so the stock must be registered.

If a person has had its license revoked by the Administrator of the state and has appealed the

decision to a court of law, that person must notify the Administrator of the state that it has appealed

the decision, but that person is considered to have a revoked license until the courts rule otherwise

and may not continue “business as usual.”

MyTrades falls under the definition of “broker-dealer,” as defined by the Uniform Securities Act since

Nathan Newmoney is engaged in trading on his own account. The USA defines a broker-dealer as any

person that conducts securities transactions on its own account or for others. Both Juan and

Michaela are “agents” under the USA definition, and agents are specifically excluded from the

definition of a broker-dealer. Marge is also excluded from the definition since she is a loan officer at a

bank.

Cal has done nothing unethical if his recommendation that a client sell his shares in the Alpha Fund

and buy shares of the Omega Fund is due to the fact that the Alpha Fund has been performing poorly

relative to other funds in the same category. While past performance is no guarantee of future

performance, a client may not want to hang on to a fund that isn’t returning as much as its

competition.

A “notice filing” refers to the filing by a federal covered investment adviser of forms filed with the

SEC along with a consent to service of process with the state Administrator. The notice filing must be

accompanied by the requisite state filing fee as well.

Registration by qualification, in its simplest form, requires the issuer to supply voluminous amounts

of information about both the firm and its directors, officers, and major shareholders. The state

Administrator also has the authority to require even more documentation. It is the least favorite

method of registration for obvious reasons.

Under the 2002 Uniform Securities Act, registration by coordination allows securities that are not

federal covered securities to be registered simultaneously with the SEC and with the states in which

the securities will be offered for sale. Federal covered securities are exempt from state registration

and are required to submit only a notice filing with the Administrator of the state. This is not the

same as registration by coordination.

None of the statements is true because securities issued by highly regulated industries, such as the

railroad industry are exempt from registration with both the SEC and the states.

When Ina receives notice of her license suspension, she can make a written request that a hearing on

the issue be scheduled within fifteen business days of her request. She cannot continue working with

clients unless the Administrator vacates the order until final determination because her license is still

suspended pending final determination. If, after the hearing, the order still stands, Ina can file an

appeal of the suspension with a court of law if she does so within 60 days.

Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial

reports more frequently than four times a year. Under the Securities and Exchange Act of 1934,

individual states are prohibited from imposing more stringent requirements than those already

required by the SEC, and the SEC requires quarterly reporting. Therefore, a state may not require that

a broker-dealer or investment adviser file monthly reports with it.