Series 63 – Uniform Securities Agent State Law Exam Administrative Provisions and Remedies 1 — Questions and Answers
Question 1: What is the statute of limitations for bringing a civil action under the USA?
- One year from discovery or two years from the transaction, whichever comes first
- Two years from discovery or three years from the transaction, whichever comes first (Correct answer)
- Five years from the transaction regardless of discovery
- Three years from discovery with no outer limit
Correct answer: Two years from discovery or three years from the transaction, whichever comes first
Under the USA, civil actions must be brought within two years after discovery of the facts or three years after the transaction, whichever expires first.
Question 2: What is the maximum criminal penalty for a willful violation of the USA?
- $1,000 and/or 1 year imprisonment
- $5,000 and/or 3 years imprisonment (Correct answer)
- $10,000 and/or 5 years imprisonment
- $50,000 and/or 10 years imprisonment
Correct answer: $5,000 and/or 3 years imprisonment
The maximum criminal penalty for a willful violation of the USA is a $5,000 fine and/or up to three years imprisonment.
Question 3: Under the USA, the Administrator may issue a 'stop order' to do which of the following?
- Require an agent to stop soliciting new clients
- Suspend or revoke the effectiveness of a securities registration (Correct answer)
- Order a broker-dealer to stop trading on margin
- Freeze a firm's net capital requirements
Correct answer: Suspend or revoke the effectiveness of a securities registration
A stop order suspends or revokes the effectiveness of a securities registration statement when the Administrator finds grounds to do so.
Question 4: Which of the following is a civil remedy available to an investor defrauded under the USA?
- Rescission of the transaction and recovery of the purchase price plus interest less income received (Correct answer)
- Only recovery of actual damages without interest
- Only injunctive relief to prevent future violations
- Recovery limited to the amount of commission paid
Correct answer: Rescission of the transaction and recovery of the purchase price plus interest less income received
Defrauded investors may sue for rescission, recovering the purchase price plus interest at the legal rate, less any income received, plus reasonable attorney fees.
Question 5: Before revoking a registration under the USA, the Administrator must provide what to the registrant?
- A final warning with a 90-day cure period
- Prior notice and an opportunity for a hearing (Correct answer)
- A written explanation of the basis for revocation only
- Approval from a state court judge
Correct answer: Prior notice and an opportunity for a hearing
Due process requires that the Administrator provide prior notice and an opportunity for a hearing before revoking a registration.
Question 6: Under the USA, the Administrator may deny registration to an applicant for which of the following reasons?
- The applicant lacks five years of experience in the securities industry
- The applicant has been convicted of a securities-related felony within the past 10 years (Correct answer)
- The applicant has not passed FINRA exams
- The applicant is over 65 years of age
Correct answer: The applicant has been convicted of a securities-related felony within the past 10 years
A prior conviction for a securities-related felony is grounds for the Administrator to deny a registration application under the USA.
Series 63 – Uniform Securities Agent State Law Exam Administrative Provisions and Remedies 1
What is the statute of limitations for bringing a civil action under the USA?