For a licensing checkpoint quiz, treat the following as the opening fact pattern. Treat the facts as a straight Series 63 application question. An agent learns that a publicly traded company is about to announce a major merger. Before the announcement, the agent purchases shares of the company in several customer accounts and in his own personal account. Which prohibited practices has the agent committed?

Why D — Unauthorized transactions and trading on material nonpublic information

The agent has committed multiple violations. Trading on material nonpublic information (insider trading) is prohibited under both federal and state securities laws. Additionally, purchasing securities in customer accounts based on inside information without customer authorization constitutes unauthorized transactions. Under NASAA model rules and USA Section 502, both practices are dishonest and unethical. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.