Series 63 practice questionhardProhibited Practices — Scenario
Agent Robert guarantees a new client that her $100,000 investment will grow to at least $150,000 within one year. When the account loses value, the client sues. Which prohibited practice has Robert committed?
- AChurning
- BSelling away
- CGuaranteeing a customer against loss in a securities transaction✓ Correct answer
- DFront-running
Explanation
Why C — Guaranteeing a customer against loss in a securities transaction
Under USA Section 502 and NASAA model rules, guaranteeing a customer against loss or guaranteeing a specific return on a securities investment is a prohibited practice. Securities investments inherently carry risk, and no agent may promise a guaranteed outcome. Robert's promise of growth to $150,000 constitutes a prohibited guarantee.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,051+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Regulation of Broker-Dealers & Agents questions
- An agent learns that a publicly traded company is about to announce a major merger. Before the announcement, the agent…
- Agent Kelly recommends that a 78-year-old retired widow invest her entire life savings in speculative penny stocks.…
- Agent Priya opens a joint investment account with her customer, Mrs. Chen. Priya contributes 20% of the capital but…
- A broker-dealer deposits a customer's funds into the firm's general operating account. This is an example of:
- An agent borrows $5,000 from a customer to pay personal expenses. Under the USA, this practice is:
- Under what circumstances may an agent share in the profits or losses of a customer's account?
- Agent Mike sells interests in a private real estate fund to his brokerage clients without informing his employing…
- An agent executes a trade in a customer's account without the customer's prior knowledge or authorization and without…