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← Series 63: Remedies & Administrative Provisions
Series 63 practice questioneasyDefinition of Fraud under USA Section 501

Which conduct is prohibited in connection with an offer, sale, or purchase under the Uniform Securities Act's antifraud provision?

  1. AOnly a misstatement that causes a completed financial loss
  2. BA device to defraud, a material misstatement or omission, or an act operating as fraud or deceit✓ Correct answer
  3. COnly conduct that has already produced a criminal conviction
  4. DOnly a written misstatement in a registered offering
Explanation

Why B — A device to defraud, a material misstatement or omission, or an act operating as fraud or deceit

USA Section 101 prohibits employing a device, scheme, or artifice to defraud; making an untrue statement of material fact or omitting a material fact needed to make statements not misleading; and engaging in an act, practice, or course of business that operates as fraud or deceit. Civil, administrative, and criminal proceedings can have different knowledge or willfulness requirements.

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