🏦LTB
← Series 63: Regulation of Investment Advisers
Series 63 practice questionhardInvestment Adviser Representatives — Administrator's Disciplinary Powers

An IAR registered in State X is charged with fraud in State Y but has not yet been convicted. The State X Administrator learns that the IAR failed to disclose this charge on her application. Which action is the Administrator permitted to take under the Uniform Securities Act?

  1. ATake no action until the IAR is convicted in State Y.
  2. BImmediately revoke the IAR's registration without a hearing, since the omission constitutes fraud.
  3. CSuspend the IAR's registration only after providing notice, an opportunity for a hearing, and written findings of fact.✓ Correct answer
  4. DIssue a cease and desist order and bar the IAR from associating with any investment adviser in the state permanently, without further proceedings.
Explanation

Why C — Suspend the IAR's registration only after providing notice, an opportunity for a hearing, and written findings of fact.

According to the USA (Section 412), the Administrator may suspend or revoke a registration for willful omission of a material fact. However, due process requires that the Administrator provide notice, an opportunity for a hearing, and written findings of fact before taking such action. Immediate revocation without a hearing (A) or permanent barring without due process (D) exceed the Administrator’s authority, and waiting for a conviction (C) is not required.

Turn it into reps

Reading one answer is not the same as being ready

Lucky the Banker is a free practice app with 646+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.

Practice Series 63 freeSeries 63 exam guide
Related Regulation of Investment Advisers questions