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FINRA Uniform Securities Agent State Law Examination Sample Questions:

Question 1

Which of the following scenarios would not be considered a "sale," as defined by the Uniform Securities Act (USA)?
I. Yoshito owned shares of Minnow Corporation and received shares of Whale Corporation from Whale when it merged with Minnow.
II. Olivia's uncle, an agent with SecureMoney Brokers, sold Olivia ten call options on the stock of Microsoft.
III. Hans purchased a bond of Indebted Corporation that had detachable warrants and subsequently sold the warrants.
IV. Tom pledged some shares of stock he owned personally to secure a business loan for his company.

A. Neither II nor III would be considered sales.
B. Neither I nor IV would be considered sales.
C. Neither III nor IV would be considered sales.
D. Neither I nor II would be considered sales.

Question 2

You had the misfortune of working as a registered agent for an unscrupulous broker-dealer. You weren't privy to any of it, but apparently, your broker-dealer was guilty of some fraudulent activities and has had his license revoked. In this instance,

A. you can simply find another broker-dealer to hire you and have your license transferred to him.
B. you are no longer a licensed agent with the state and must reapply for a license in order to work for another broker-dealer.
C. the state Administrator will assign you and any other affected agents to work for other broker-dealers registered with the state.
D. you must wait until the broker-dealer's day in court before you can work in the securities industry again because the Administrator will want to be certain that you knew nothing of it.

Question 3

AllTime Investment Advisers advertises that its phones are manned 24/7, so that a client "doesn't have to lie awake all night worrying about a financial problem." In fact, AllTime does have a answering service that answers calls in the evenings and on the weekends when its offices are closed. The service informs the caller of the firm's business hours, which will be the earliest opportunity the caller will have to talk to an investment adviser representative.
Is this a violation of any securities laws?

A. No. The firm's phones are manned 24/7, so it hasn't lied.
B. It depends. If, before a client signs a contract with the firm, it is made clear that investment adviser representatives are not, in fact, available to him 24/7, then AllTime is in the clear.
C. No. It's not a violation of any securities laws, but the firm probably won't retain many clients this way.
D. Yes. The Uniform Securities Act prohibits investment advisers from making deceptive statements in the solicitation of clients as well as in advising clients.

Question 4

According to the NASAA Model Rules, a broker-dealer is not permitted to allow a customer to engage in margin transactions unless

A. the broker-dealer already has a margin agreement signed by the client in hand.
B. the client has been a customer of the firm for at least 6 months.
C. the client has a net worth of at least $500,000.
D. the broker-dealer receives a margin agreement signed by the client promptly after the client's first margin transaction.

Question 5

A broker-dealer of commodity futures contracts has been profiting by trading for its own account either before or after executing a client's trade on the same commodity, depending on which will be most advantageous.
Under the Uniform Securities Act, the broker-dealer is guilty of

A. fraud.
B. unauthorized transactions.
C. churning.
D. nothing. The Uniform Securities Act (USA) deals only with securities, and a commodity futures contract is not a security.

Solutions: