Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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AllTime Investment Advisers advertises that its phones are manned 24/7, so that a client “doesn’t have to lie awake all night worrying about a financial problem.” In fact, AllTime does have a answering service that answers calls in the evenings and on the weekends when its offices are closed. The service informs the caller of the firm’s business hours, which will be the earliest opportunity the caller will have to talk to an investment adviser representative. Is this a violation of any securities laws?
  1. No. It’s not a violation of any securities laws, but the firm probably won’t retain many clients this way.
  2. Yes. The Uniform Securities Act prohibits investment advisers from making deceptive statements in the solicitation of clients as well as in advising clients.
  3. No. The firm’s phones are manned 24/7, so it hasn’t lied.
  4. It depends. If, before a client signs a contract with the firm, it is made clear that investment adviser representatives are not, in fact, available to him 24/7, then AllTime is in the clear.
Explanation
Answer: B - Yes. The Uniform Securities Act prohibits investment advisers from making deceptive statements in the solicitation of its clients, so when AllTime suggests in its advertisements that a client will be able to talk to someone who can relieve his worries, AllTime has violated the law and is guilty of fraud.
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