Free NASAA Series 63 (Uniform Securities Agent State Law Examination) Regulation of Securities and Issuers Practice Questions
Regulation of securities and issuers on the NASAA Series 63 exam covers registration by coordination, qualification, and filing, as well as exempt securities, exempt transactions, and the registration process for securities offerings.
Sample Questions
Question 1
Easy
The antifraud provisions of the Uniform Securities Act apply to which of the following?
Solution
A is correct. The antifraud provisions of the Uniform Securities Act apply to any offer or sale of a security in the state, regardless of whether the security is registered, exempt, or federal covered, and regardless of whether the transaction is exempt. Registration exemptions never exempt an issuer, agent, or broker-dealer from antifraud liability.
Question 2
Medium
Which of the following is MOST likely NOT a security under the Uniform Securities Act?
Solution
Choice B is correct because a fixed annuity issued by an insurance company is not a security under the Uniform Securities Act or under federal securities law. In a fixed annuity, the insurer guarantees a specified payment stream and absorbs all investment risk — the contract holder does not bear market risk or rely on the investment skills of another party to generate returns. Because the policyholder's return is fixed and guaranteed by the insurer, the instrument does not meet the definition of a security or satisfy the Howey test's requirement that profits depend on the efforts of others. Fixed annuities are regulated as insurance products, not securities.
Question 3
Hard
Hillcrest Investment Corp. registered securities in State M by qualification. The registration became effective on March 1. In State M, the effective date of a registration by qualification occurs when:
Solution
Choice B is correct because under the Uniform Securities Act, a registration by qualification becomes effective when the state Administrator enters an order declaring it effective. Registration by qualification does not become effective automatically by the passage of time; it requires affirmative action by the Administrator. This distinguishes it from registration by coordination, which can become effective concurrently with the federal registration.