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Series 63: Remedies & Administrative Provisions
Series 63 practice questionhardSale to Third Party — Damages

An investor who bought an unregistered security sells it to an unrelated third party before discovering the violation. What is the investor's most likely civil remedy under the USA?

  1. ANo civil remedy, as the investor no longer owns the security
  2. BRecover the difference between original purchase price and resale price, plus statutory interest✓ Correct answer
  3. CRecover the full original purchase price plus statutory interest
  4. DRecover only statutory interest accrued
Explanation

Why BRecover the difference between original purchase price and resale price, plus statutory interest

If the security is sold to a third party, damages are typically the difference between purchase and resale price, plus statutory interest, per USA Section 410(a)(3). Full rescission is unavailable since the investor can't return the security.

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