Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

Start a Study Session Sign up for Question of the Day
In which of the following scenarios will the investment adviser be subject to criminal fraud charges?
  1. An adviser owns the stock of TweedleDee Corporation and has issued a report recommending the stock as a “buy” without disclosing the fact that it owns the stock.
  2. An adviser owns the stock of TweedleDee Corporation and has issued a report recommending the stock as a “buy,” disclosing the fact that it owns the stock
  3. An adviser sells its shares of TweedleDee Corporation after issuing a report recommending the stock as a “buy.”
  4. all of the above. It is considered criminal fraud for an investment adviser to make any recommendations on a security in which it has or plans to have a position.
Explanation
Answer: C - An adviser that sells its shares of TweedleDee Corporation after issuing a report recommending the stock as a “buy” is subject to criminal fraud charges for willfully deceiving its clients. The adviser who recommends the stock as a buy without disclosing the fact that it owns the stock is engaging in a prohibited activity for non-disclosure, but would be unlikely to face criminal fraud charges.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz