FINRA Uniform Securities Agent State Law Examination Sample Questions:

1. Which of the following would fall under the definition of "agent," as defined by the Uniform Securities Act
(USA)?

A) Freedom broker-dealers executes the purchase and sale of securities for its customers.
B) TrustUs Bank has a subsidiary operation that sells mutual funds to the public.
C) None of the above would fall under the definition of "agent," as defined by the Uniform Securities Act
(USA.)
D) Joe works as an administrative assistant for broker-dealer GetErDone, doing data entry, filing client
forms that contain confidential information, and directing calls to registered representatives of the firm.

2. Which of the following are examples of the prohibited practice of manipulation in the securities markets?
I. Broker-Dealer Joker is unhappy with its investment in the stock of a speculative firm and engages
another broker-dealer to purchase a large number of shares from it, with the unofficial agreement to buy
back those shares, offer more shares which the second broker-dealer will purchase, and so on.
II. Broker-Dealer Joker has a large short position in the stock of a certain corporation. Joker offers a
bonus to its agents who effect sale transactions in the stock.
III. A client calls Broker-Dealer Joker with a request to purchase 20 bonds issued by Massachusetts
Institute of Technology (MIT.) The bonds are currently selling for their par value of $1,000. Knowing this,
Joker offers to sells the client the bonds for $120 per $100 of par, or $1,200 per $1,000 bond.

A) I, II, and III
B) I and II only
C) I only
D) I and III only

3. Mr. Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and
arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to
market, GetErDone Broker-Dealers is part of the selling group, which handles the sale of the stock to the
public. In this scenario, which party is the broker?

A) HiGrowth Corporation
B) Mr. Bigwig
C) GetErDone Broker-Dealers
D) BigFee Investment Bankers

4. George Geek is a computer programmer who tired of working for others and started his own company. He
convinced forty investors that he could design software that would rival Microsoft, and sold them each a
1 0% partnership interest in his firm for $25,000. He designed and printed up the partnership certificates
himself. George told the investors that he had a product that was on the verge of being marketable and
that when it did-within the next two months-revenues would pour into the company, and he would begin
paying dividends. He told them they could expect a 20% return on their money this year, with even higher
returns in the years to come. As it turned out, George wasn't quite the programmer he thought he was,
and he wasn't able to get all the bugs out of the program to make it marketable within the promised two
months. Within a year, George had tired of the project and was too busy picking up chicks in his new
Corvette when he wasn't on the island of St. Bart overseeing the construction of his new beach
mansion-and picking up chicks. His activities, of course, were financed by the extremely generous
"salary" he paid himself from the investors' monies. Under the Uniform Securities Act, do the investors
have any civil claims against George?

A) Yes. They can sue George for the return of their original investment, plus interest. George would also
have to pay their court costs and attorneys' fees and any amounts assessed by the court for "pain and
suffering" on the parts of the clients.
B) Yes. They can sue George for the return of their original investment, plus interest. George would
C) No. It wasn't George's fault that he was unable to do what he promised. Even if it wasn't for
D) No. The Uniform Securities Act only involves securities laws and partnership interests are not

5. You are a registered agent with a broker-dealer. One of your clients visits you and wants you to sell some
of the U.S. government bonds she owns and purchase shares of a specific aggressive growth mutual fund
for her with the proceeds. Your client is a mentally-competent, 84-year-old woman but, based on your
other knowledge of her situation, you believe it to be an unwise move. You should

A) advise her that you don't believe this is in her best interest, but execute the required transactions if she
insists.
B) nod politely, but not execute the transactions since they are not in her best interest.
C) call the mutual fund and tell them that they must convince this client that an investment in their fund is
not in her best interest, under penalty of law.
D) turn the matter over to your supervisor.

Solutions: