Series 63 practice questioneasyExempt Transactions — Unsolicited Brokerage Transactions
For a licensing checkpoint quiz, treat the following as the opening fact pattern. Treat the facts as a straight Series 63 application question. 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 extra setup is just noise; the controlling state-law rule stays the same.
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