FINRA Uniform Securities Agent State Law Examination Sample Questions:

1. Under the NASAA Model Rules, which of the following must an investment adviser provide its clients with at least once a year?

A) the total amount of commissions or other compensation that the investment adviser received or expects to receive in connection with agency cross transactions performed for the client during the period
B) both A and B
C) the total number of agency cross transactions completed for the client during the period
D) the number of any complaints that each of its investment adviser representatives has received during the period

2. Noah Aull is an investment adviser representative with Canto Investment Advisers. A client has called and told Noah that he heard about a firm that had recently completed an IPO at a party he had attended that weekend and instructed Noah to purchase shares of the company, which was now trading on the OTC Bulletin Board. Noah did some research and felt the company was far too risky an investment for this client, so he did not execute the trade. This turned out to be fortunate for his client since the firm became insolvent within six months of its IPO.
Has Noah done anything wrong?

A) Yes. Noah is guilty of making an unauthorized transaction and could have his license revoked.
B) Yes. Noah is guilty of misappropriation and could have his license revoked.
C) No. Noah did what he is hired to do-manage his clients' accounts to the best of his ability.
D) Yes. Noah is guilty of not following a client's instructions and could have his license revoked.

3. Which of the following would be considered an "issuer" transaction?

A) None of the above is an "issuer" transaction.
B) Maria purchases 500 shares of Dodge and Cox's International Fund, a mutual fund investing in foreign securities.
C) Jacob calls his broker and places an order to purchase 100 shares of Hasbro, Inc. on the open market.
D) Kim sells an AT&T bond she holds that still has three years remaining to maturity.

4. on No: 9
Rich Writewell wants to begin publishing an independent weekly financial newsletter that will provide investment recommendations as well as other financial news items to the general public. Rich hopes that his newsletter will achieve nationwide circulation within a few months.
Which of the following statements is true?

A) Rich will have to register as an investment adviser only if he sells this newsletter to the public. If the publication is to be distributed free of charge, he will not have to register.
B) Rich will not have to register as an investment adviser since he is publishing a legitimate financial newsletter for distribution to the general public.
C) Rich will have to register as an investment adviser since his publication will include investment recommendations.
D) Rich may be exempt from registering as an investment adviser if he is a lawyer, accountant, engineer, or teacher. Otherwise, he will have to register.

5. Ari Gaunt is employed by a small state-registered broker-dealer and has recently received notification that his application to be a registered agent of the state has been accepted. Now that he is licensed to execute transactions for the firm's clients, Ari has a batch of business cards printed up, with a picture of himself on the right-hand side of the card. Underneath the picture is the caption, "State-Approved Agent." Will Ari be violating any securities laws if he distributes these business cards?

A) No. His registration with the Administrator of the state has been accepted, so he is entitled to call himself a "State-Approved Agent."
B) Yes. It is a violation of a securities law to suggest that he has been approved by the state Administrator.
C) No. However, he may be violating company policy of the broker-dealer he works for by designing his own cards.
D) Yes. Agents are not permitted to include a picture of themselves on their business cards.

Solutions: