Series 63 practice questionhardCivil Liabilities — Measure of Damages
An investor purchased 500 shares of XYZ Corp at $20 per share based on fraudulent misrepresentations by her agent. She received $500 in dividends and later sold the shares at $12 per share. What is the maximum amount she can recover under the USA?
- A$4,000 (the loss on the sale)
- BThe difference between the purchase price plus interest and the sale proceeds, minus the $500 in dividends✓ Correct answer
- C$3,500 (the loss on the sale minus dividends received)
- D$10,000 (the original purchase price)
Explanation
Why B — The difference between the purchase price plus interest and the sale proceeds, minus the $500 in dividends
Under USA Section 410(a), if the buyer no longer owns the security, the measure of damages is the purchase price plus interest from the date of purchase, minus income received on the security and minus the sale proceeds. The buyer recovers the net economic loss adjusted for interest and income.
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.
Related Remedies & Administrative Provisions questions
- An agent sold an unregistered security to a client. In a civil action by the client, the agent claims he did not know…
- A client purchased a security based on material misrepresentations made by her agent. If the client still owns the…
- An agent and his employing broker-dealer both participated in a fraudulent securities sale. Under the USA, the client…
- Under the USA, what is the statute of limitations for a civil action brought by a buyer against a seller who sold…