Series 63 Practice Questions (2026) — Free Sample Questions with Answers

Answer: C

It may accept both new clients without registering in State B because it has no office there: Incorrect: with two more clients it would have six non-institutional State B clients, so the de minimis exemption would be lost even with no office.

It must register in State B now because it already has five State B clients: Incorrect: the pension plan is an institutional client and is not counted; Hollis Lane currently has only four counted clients.

It may accept one more client, but must register in State B before accepting the second: Correct. The de minimis exemption requires no place of business in the state and fewer than six non-institutional resident clients in 12 months. Institutional clients such as the pension plan are not counted. Four plus one is five, which still qualifies; a sixth individual client requires State B registration.

It must make a notice filing in State B because it is registered in another state: Incorrect: notice filing is the procedure for federal covered advisers; a state-registered adviser either qualifies for an exemption or registers.

An adviser with no place of business in a state is exempt there if it has fewer than six non-institutional resident clients in 12 months (institutional clients are not counted); the sixth such client triggers registration.

Answer: A

Corin's registration may be revoked, but Hartwell is not open to a failure-to-supervise sanction: Correct. The ground in USA §204(a)(2) is a broker-dealer's failure reasonably to supervise its agents. Hartwell had and followed reasonable procedures, so that ground is absent, while Corin's own willful violations support action against his registration in the public interest.

Hartwell's registration may be revoked, because a firm is strictly liable for its agents' violations: Incorrect: the Act does not make the firm strictly liable; the supervisory ground requires a failure of reasonable supervision.

Neither may be sanctioned until a customer has won a civil judgment against them: Incorrect: administrative action does not wait for civil litigation.

Hartwell may be sanctioned, but only if the customers suffered losses from the trades: Incorrect: customer loss is not an element; the question is whether supervision was reasonable.

A broker-dealer can be sanctioned for failing reasonably to supervise, not merely because an agent violated the Act; the agent's own violation is a separate ground against the agent.

Answer: B

Fairmont must register in State C before accepting either order: Incorrect: a firm with no place of business in a state may deal with an existing customer who is not a resident of that state and is only temporarily there.

Fairmont may accept the existing customer's order but must register in State C before opening the neighbor's account: Correct. Under the Act as amended, a broker-dealer with no place of business in a state is not a broker-dealer there when it deals only with institutions, other firms, or existing customers who are not residents of that state. The vacationing State A customer qualifies; the State C resident is a new, non-institutional resident customer, so registration is required first.

Fairmont may accept both orders because the customers called Fairmont: Incorrect: an unsolicited order is a transaction exemption from securities registration; it does not excuse the broker-dealer from registering.

Fairmont may accept both orders because it has no place of business in State C: Incorrect: lacking an office is only one condition; the exclusion also limits whom the firm may deal with, and a new State C resident is outside it.

With no place of business in a state, a broker-dealer may still serve its existing non-resident customers who are temporarily there, but it must register before dealing with that state's residents.

Answer: C

Gideon may accept the order because it is unsolicited: Incorrect: the unsolicited-order exemption relieves the transaction from securities registration; it does not exempt the agent from registration.

Gideon may accept the order because the shares are federal covered securities: Incorrect: federal covered status preempts registration of the security, not of the agent who sells it.

Gideon must be registered in State B before accepting the order: Correct. An agent must be registered in each state where he transacts business. The buyer is a State B resident, so the transaction occurs in State B; neither the unsolicited nature of the order nor the federal covered status of the shares excuses agent registration.

Only the broker-dealer must be registered in State B, not Gideon: Incorrect: registration of the firm does not cover its individual agents; each agent registers separately.

Exemptions for the security or the transaction never exempt a broker-dealer agent from registration in the customer's state.

Answer: C

She needs no securities registration because she is licensed to sell insurance products: Incorrect: an insurance license covers insurance products; a variable annuity is a security.

She needs securities registration only if the variable annuity is not a federal covered security: Incorrect: federal covered status relieves the product of state registration, not the person who sells it.

She must register as an agent of a broker-dealer to sell the variable annuities: Correct. A variable annuity is a security because its value depends on an underlying separate account, unlike a fixed annuity. Selling it is effecting securities transactions, so Iris must be registered as an agent through a broker-dealer in addition to holding her insurance license.

She may sell them without registration because insurance company securities are exempt: Incorrect: the insurance-company exemption does not exclude a salesperson from agent status, and variable annuities are investment company products.

Fixed annuities are insurance; variable annuities are securities, so selling them requires agent registration.

Answer: A

It is an exempt transaction; the insurance companies do not count toward the offeree limit: Correct. The 1956 Act's private placement exemption allows offers to no more than 10 persons in the state in 12 months, not counting institutional buyers, with investment intent and no commission for soliciting non-institutional buyers. Eight counted offerees is within the limit.

The offering is not exempt because offers were made to 11 persons, exceeding the offeree limit: Incorrect: institutional buyers such as insurance companies are excluded from the count.

The offering is not exempt unless the stock is listed on an exchange: Incorrect: listing would make the stock a federal covered security; it is not a condition of the private placement exemption.

The stock is an exempt security because it is offered privately: Incorrect: confuses an exempt transaction (how it is sold) with an exempt security (what it is).

The private placement exemption is a transaction exemption: no more than 10 non-institutional offerees in the state in 12 months, investment intent, and no commission for soliciting them.

Answer: D

She may still sue within 2 years, because a rescission offer does not affect her rights: Incorrect: a proper rescission offer that is not accepted in time bars the suit even within the 2-year period.

She may sue, but her recovery is limited to the amount Haldane offered: Incorrect: the effect of an unaccepted offer is to bar the suit, not to cap recovery.

She lost her right to sue only if she cashed the repurchase check: Incorrect: acceptance is the buyer's choice; it is her failure to accept within the deadline that bars the suit.

She lost her right to sue because she did not accept the offer within 30 days: Correct. USA §410(e) bars a buyer's suit if, before suit, the buyer received a written offer to refund the consideration paid plus interest, less income received, and failed to accept it within 30 days of receipt.

A buyer who receives a proper written rescission offer must accept within 30 days or lose the right to sue.

Answer: A

Give no personalized advice until both are registered or exempt in State B: Correct — under NASAA's internet interpretive order, general website content is not an offer in State B only if firewalls prevent individualized responses that effect transactions or give personalized advice until the firm and agent comply with State B's registration requirements.

Respond with recommendations, because the prospect initiated the contact: An unsolicited inquiry does not make personalized advice to a State B resident lawful without registration or an exemption.

Respond with recommendations if the reply repeats the website's legend: The legend protects general content only; an individualized response is still business in State B.

Respond with recommendations, if he limits them to funds registered in State B: Registering the securities in State B does not substitute for registering the agent and firm there.

Website content plus a legend is not an offer in another state, but a personalized reply to that state's resident requires registration or an exemption there.

Answer: B

Printing the relationship on the confirmation sent after the trade: Too late: the relationship must be disclosed before the customer enters into the contract.

Telling her before she orders, then in writing by completion: Correct — the NASAA Statement of Policy requires a broker-dealer that controls, is controlled by or is under common control with an issuer to disclose that relationship before entering into a contract and, if the disclosure is oral, to supplement it in writing at or before completion of the transaction.

Relying on the prospectus, which names the parent as the issuer: Prospectus disclosure does not relieve the firm of its own duty to disclose the control relationship to the customer.

Telling her orally after she orders, if she asks who owns the firm: The duty is affirmative and comes before the contract; the customer does not have to ask.

A firm selling securities of an affiliate must disclose the control relationship before the contract and confirm it in writing by completion.

Answer: B

lawful, because his registration in State A is in fact effective: True facts can still be framed unlawfully: the problem is the claim that the Administrator approved his qualifications, not the statement that he is registered.

unlawful, because registration is not an Administrator finding on his qualifications: Correct — USA §405: the fact that a person is registered is not a finding that the Administrator has passed on, recommended or approved that person, and representing otherwise to a prospect is unlawful. Whitaker may say he is registered; he may not turn registration into an endorsement.

lawful if he also gives the prospect his CRD number so the claim can be checked: Offering a way to verify registration does not cure a representation that the Administrator endorsed him.

unlawful only if he repeats the statement in writing or in an advertisement: §405 reaches oral representations to prospective customers as well as written ones.

An agent may truthfully state that he is registered, but may never represent that registration means the Administrator approved or vouched for him.

Answer: A

Delay the wire, notify the regulator and APS, and start a review: Correct. The NASAA model act lets a broker-dealer or adviser that reasonably believes exploitation is occurring delay a disbursement from an eligible adult's account, requires prompt notice to the state securities regulator and adult protective services, and calls for an internal review.

Delay the wire and alert only her trusted contact, to protect her privacy: Incorrect: the model act lets the firm notify a trusted contact, but it must also notify the securities regulator and APS.

Send the wire, then report the suspected exploitation to the regulator and APS: Incorrect: right notice, wrong order; once the firm reasonably suspects exploitation, the model act lets it hold the disbursement instead of sending the money first.

Refuse the wire indefinitely and close her account to limit the firm's liability: Incorrect: the model act permits a time-limited delay, not an open-ended refusal or account closure.

Under the NASAA model act, a firm that reasonably suspects exploitation of an eligible adult may delay a disbursement and must notify the securities regulator and APS.

Answer: A

Morrow violated the rules, because approval had to precede the sales: Correct — the NASAA Statement of Policy bars effecting transactions not recorded on the broker-dealer's books unless the firm authorizes them in writing before execution; after-the-fact notice and approval do not satisfy it.

Morrow complied, because she notified compliance in writing the next day: Notice must come, and written authorization be obtained, before the transactions.

Morrow complied, because the firm later said it had no objection: Later acceptance does not cure selling away without prior written authorization.

Morrow violated the rules only if the notes were not registered in State A: The wrong reason: the violation is selling away without the firm's prior written approval, whether or not the notes were registered or exempt.

Selling away is unethical unless the firm authorizes the transaction in writing before it occurs.

Answer: A

Sato violated the rules; Moss did not: Correct — a broker-dealer agent must have written discretionary authority before exercising discretion, while NASAA's adviser rule lets an IAR act on oral discretion if written authority is obtained within 10 business days after the first such trade; Moss obtained it four business days later.

Both Sato and Moss violated the rules: Applies the agent's prior-written requirement to the IAR, who has a short grace period under NASAA's adviser rule.

Neither Sato nor Moss violated the rules: Extends the adviser grace period to the broker-dealer agent, who needed written authority first.

Moss violated the rules; Sato did not: Reverses the two standards.

Agents need written discretion before trading; IARs may start on oral discretion but must get it in writing within 10 business days of the first trade.

Answer: C

Yes, if each referred client is told about the arrangement in writing: Disclosure does not make a split with an unregistered person permissible.

Yes, because accountants are excluded from the definition of investment adviser: The accountant exclusion concerns adviser registration; it does not let her share securities commissions.

No, because she is not registered as an agent of his broker-dealer or an affiliated firm: Correct — the NASAA Statement of Policy bars dividing or splitting commissions with anyone not registered as an agent of the same broker-dealer or of a broker-dealer under common control.

Yes, if the broker-dealer, rather than Thorne, pays her the referral fee: Routing the payment through the firm does not change that an unregistered person is sharing transaction-based compensation.

Commissions may be split only with agents of the same firm or a firm under common control.