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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardBroker-Dealer Registration — Administrator Authority

For a mock NASAA exam, assume the administrator is testing this exact point. Assume the administrator is testing the cleanest state-law answer. The state Administrator may require a registered broker-dealer to post a surety bond. Which of the following is TRUE regarding this requirement?

  1. AThe bond amount is fixed at $25,000 for all broker-dealers
  2. BOnly broker-dealers with fewer than 10 agents must post a bond
  3. CThe Administrator may determine the amount based on the firm's financial condition and business activities✓ Correct answer
  4. DThe bond requirement applies only to out-of-state broker-dealers
Explanation

Why C — The Administrator may determine the amount based on the firm's financial condition and business activities

Under USA Section 202(d), the Administrator has the authority to require broker-dealers to post surety bonds and may set the bond amount based on the financial condition of the applicant and the nature of its business. This flexible approach allows the Administrator to calibrate the requirement to the actual risk posed by the firm. State-law analysis leads to the same conclusion despite the alternate scenario.

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