About the Series 63 Exam

The Series 63 qualifies an individual to be a limited registered representative.

Exam Topic Breakdown:

Business Practices 35%
Securities 25%
Administrative Provisions & Other Remedies - 10%
Registration of Persons - 30%

Key Facts To Know

The Administrator has the authority under the Uniform Securities Act to:
- Issue stop orders
- Issue denial orders
- Issue cease and desist orders in anticipation of a violation
NOT Issue injunctions

The following business practices are prohibited:
- Recommending transactions based on material, inside information
- Disclosing the identity and affairs of a client in the absence of a court order
- Deliberately failing to follow a customer's explicit instructions to sell a security
- Front-running (An adviser putting his/her orders before his clients after being instructed)

"Selling away" is raising capital for your own ventures without consulting your employer. This act is prohibited because you did not give your employer an opportunity to supervise your actions. Note: This act is not illegal, just "prohibited practice"

All written customer complaints must be brought to the attention of your employer.

A registered representative may split commissions with her secretary only if the secretary is a registered as an agent.

When an representative buys a security which is unsuitable for a client this is an "unauthorized trade"

Any material facts must be disclosed to a client. Omitting or misstating such material facts is unlawful and fraudulent.

Being listed on the NYSE does not mean an investment is more secure. Unless guaranteed by the U.S. Government or a large state with adequate financial resources.

Failing to state all facts about a security is okay. You need only to state the material facts about a security, not ALL the facts.

The major effect of NSMIA is that it eliminated the need for dual registration for most securities. NSMIA reduced the state's powers and created a new class of securities called "federal covered" securities.

Don't just presume someone as a rich person. You need to get the net worth, the income level, and the investment objectives of this client before making recommendations.

If a security is exempt, the security does not have to be registered and can be solicited.

As a registered representative, you should consider suitability before recommending any transaction.

The definition of "investment contract" as a result of the Howey Decision is that the instrument in question displays which of the following characteristics?

An investment advisory firm is established as a partnership. If the partnership admits three new members having a minority interest, this event must be disclosed to clients promptly.

An analyst should disclose his ownership in thinly traded issued securities a few days before issuing positive reports on those companies, or he could be suspected of market manipulation.

Just remember that the 12b-1 fee can't exceed 0.25% (25 basis points) of "average net assets" if the fund wants to call itself "no-load"

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License