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FINRA Uniform Securities Agent State Law Examination Sample Questions:

Question 1

Broker-dealer Nebulous opted to withdraw its registration with the state. Six months later, the Administrator finds that Nebulous had been engaged in fraudulent securities transactions.
Which of the following statements is true?

A. The Administrator has five years from the discovery of the misdeed to take disciplinary action, so Nebulous will have to be on the lookout for a long time to come.
B. The Administrator can take disciplinary action against Nebulous for up to one year, so Nebulous is in trouble.
C. The Administrator is only able to take disciplinary action if the misdeeds are discovered within three months of the effective date of the withdrawal, so Nebulous slipped by this time.
D. The Administrator is unable to take disciplinary action against Nebulous because the self-initiated withdrawal became effective 30 days after the application was filed.

Question 2

Under the Uniform Securities Act, which of the following does not need to be included when filing to register a security issue with the state?

A. copies of the underwriter agreements
B. a copy of any indenture applying to the security being registered
C. a copy of the firm's articles of incorporation and bylaws, or the equivalent
D. All of the above documents must be included when filing to register a security with the state.

Question 3

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

A. the client has been a customer of the firm for at least 6 months.
B. the broker-dealer already has a margin agreement signed by the client in hand.
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 4

Assuming there is not a stop order or a proceeding pending, under the registration by coordination process a security's registration with the state becomes effective:

A. only when it is approved by the state Administrator, who will review the registration documentation upon notification that SEC approval has been granted.
B. immediately after approval by the SEC as long as the registration statement has been on file for at least
20 days or the Uniform Securities Act has provided an exemption to this waiting period.
C. immediately subsequent to approval by the SEC, regardless of how long the registration statement has been on file.
D. only when it is approved by the state Administrator, regardless of whether it has been approved by the SEC.

Question 5

Shady Corporation's executives are concerned over the firm's steadily declining stock price and decide to do something about it. They each decide to make significantly large purchases of their firm's stock in order to stabilize and hopefully even to drive up its price, reasoning that they can sell the stock for the higher price down the road and profit from the transaction. You are a broker-dealer for the firm's executives.
Are Shady's executives planning to do anything illegal?

A. No. As long as they follow the rules and report their purchases to the SEC, it is not illegal for them to purchase shares of their firm's stock.
B. No. It's a win-win. They are using their own money to buy stock of their firm, and this can help drive the stock price up and put profits in their pockets.
C. Yes. To purchase shares of their own company is considered to be illegal insider trading.
D. Yes. Although it is not illegal for them to purchase shares of their firm's stock, they cannot do so in order to try to manipulate the price of the stock.

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