Series 63 – Uniform Securities Agent State Law Exam Administrative Provisions and Remedies 2 — Questions and Answers
Question 1: Under the USA, what is the purpose of a 'cease and desist' order?
- To permanently revoke a registrant's license
- To require a person to stop engaging in a practice that violates the USA, pending a full hearing (Correct answer)
- To impose a fine for past violations
- To initiate criminal proceedings against a violator
Correct answer: To require a person to stop engaging in a practice that violates the USA, pending a full hearing
A cease and desist order requires an immediate halt to an ongoing violation while full administrative proceedings are pending.
Question 2: Under the USA, can the Administrator issue a summary suspension of a registration without prior notice or hearing?
- No, a hearing is always required first
- Yes, if the Administrator finds it in the public interest and for the protection of investors (Correct answer)
- Only with court approval
- Only if criminal charges have already been filed
Correct answer: Yes, if the Administrator finds it in the public interest and for the protection of investors
The Administrator may summarily suspend a registration without prior hearing if it is necessary in the public interest and for investor protection, but must promptly provide notice and opportunity for a hearing.
Question 3: Under the USA, what is the 'right of rescission' for purchasers of securities sold in violation of the registration requirements?
- The right to demand the seller repurchase the securities at current market value
- The right to void the transaction and recover the purchase price plus interest, less income received (Correct answer)
- The right to exchange the securities for registered securities of equal value
- The right to sue the Administrator for failure to prevent the illegal sale
Correct answer: The right to void the transaction and recover the purchase price plus interest, less income received
The right of rescission allows investors to void an illegal sale and recover the purchase price plus interest at the legal rate, minus any income received from the investment.
Question 4: Under the USA, a buyer who receives an offer of rescission from a seller must exercise or reject the offer within how many days?
- 15 days
- 30 days
- 60 days (Correct answer)
- 90 days
Correct answer: 60 days
Under the USA, a buyer must accept or reject an offer of rescission within 30 days of receiving it, or the right is lost.
Question 5: Under the USA, which of the following may the Administrator NOT do without a prior hearing?
- Issue a subpoena for records
- Conduct an investigation
- Permanently revoke a registration (Correct answer)
- Examine the books and records of a registrant
Correct answer: Permanently revoke a registration
Permanent revocation of a registration requires prior notice and the opportunity for a hearing; only summary suspension can be done without prior hearing in urgent cases.
Question 6: Under the USA, who may bring a civil action to enforce the provisions of the Act in addition to private investors?
- Only private investors with demonstrated losses
- The Administrator through the state Attorney General (Correct answer)
- Only federal regulators such as the SEC
- Only FINRA on behalf of registered members
Correct answer: The Administrator through the state Attorney General
The Administrator may direct the Attorney General to bring civil enforcement actions to enjoin violations and seek other civil remedies under the USA.
Series 63 – Uniform Securities Agent State Law Exam Administrative Provisions and Remedies 2
Under the USA, what is the purpose of a 'cease and desist' order?