Series 63 practice questionmediumCivil Liabilities — Seller's Defense
On a final review set, the question is presented in this context. Assume the administrator is testing the cleanest state-law answer. An agent sold an unregistered security to a client. In a civil action by the client, the agent claims he did not know the security was unregistered. This defense is:
- AValid — the agent is not liable if he was unaware of the registration status
- BValid only if the agent can prove the broker-dealer told him the security was registered
- CInvalid — liability for selling unregistered securities is absolute regardless of the seller's knowledge✓ Correct answer
- DValid only if the agent has fewer than 2 years of experience in the industry
Explanation
Why C — Invalid — liability for selling unregistered securities is absolute regardless of the seller's knowledge
Under USA Section 410(a), liability for selling unregistered, non-exempt securities is a strict liability provision. The seller's lack of knowledge that the security was unregistered is not a defense. However, Section 410(b) does provide a defense of not knowing for fraud-based claims. The exam trick is the framing, not the underlying Uniform Securities Act rule.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 646+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Remedies & Administrative Provisions questions
- During a registration workshop, the instructor adds this setup first. Assume the administrator is testing the cleanest…
- In a remedial practice session, the fact pattern is framed this way. Assume the administrator is testing the cleanest…
- For a licensing checkpoint quiz, treat the following as the opening fact pattern. Assume the administrator is testing…
- A training manager asks you to analyze the following USA issue. Assume the administrator is testing the cleanest…