Series 63 practice questioneasyExempt Transactions — Unsolicited Brokerage Transactions
For a licensing checkpoint quiz, treat the following as the opening fact pattern. Read it as a Uniform Securities Act issue rather than a federal-law issue. An unsolicited brokerage transaction is exempt from state registration. Which condition must be met for this exemption to apply?
- AThe customer must initiate the transaction without any solicitation by the broker-dealer✓ Correct answer
- BThe broker-dealer must recommend the security to the customer
- CThe security must be listed on a national exchange
- DThe transaction must involve fewer than 25 purchasers
Explanation
Why A — The customer must initiate the transaction without any solicitation by the broker-dealer
Under USA Section 402(b), the unsolicited brokerage transaction exemption applies when a customer initiates the order without any solicitation or recommendation from the broker-dealer. The key factor is that the broker-dealer did not solicit the transaction. The broker-dealer simply executes the customer's unsolicited order as an agent. The exam trick is the framing, not the underlying Uniform Securities Act rule.
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