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← Series 63: Regulation of Securities & Issuers
Series 63 practice questionhardhard - preemption and state action

An agent sells a municipal bond from a different state to a retail client. The bond is found to have material omissions in its disclosure. Which BEST describes the actions available to the Administrator?

  1. AThe Administrator may enforce anti-fraud provisions but cannot require registration.✓ Correct answer
  2. BThe Administrator may force immediate registration of the bond.
  3. CThe Administrator may ban all out-of-state municipal bond sales.
  4. DThe Administrator may neither enforce anti-fraud nor registration requirements.
Explanation

Why A — The Administrator may enforce anti-fraud provisions but cannot require registration.

States retain anti-fraud authority (USA 409) over all securities sold in their state, even if registration isn't required. Registration cannot be required for municipal bonds. Blanket bans or no enforcement are incorrect.

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