Practice Quiz

FINRA Series 7

Category - Series 7

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A registered representative privately assures a customer that a certain stock will double within 18 months. During this period the stock the stock performs as predicted. Which of the following statements is true?
  1. the commentary was permissible because the stock advanced as the registered representative forecast
  2. this is a violation because the SEC requires all information about stock prices to be publicly announced
  3. this statement constituted a form of fraud prohibited under the Securities Exchange Act of 1934
  4. the comment is permissible only if the representative had been registered with the SEC under the Investment Advisors Act of 1940
Explanation
Answer: C - this statement constituted a form of fraud prohibited under the Securities Exchange Act of 1934. Such statements are fraudulent when rendered even if future events result in their accuracy.
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