Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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Mr. Noah Scruples is a registered representative with CanDo Broker-Dealers. A client calls and wants Noah to purchase shares of a mutual fund the client has read about. CanDo is not authorized by this particular fund to effect purchases or sales of the fund shares. Can Noah execute the order anyway?
  1. No. This would be considered money laundering, which is highly illegal.
  2. No. This is a prohibited practice known as selling away.
  3. No. This is a prohibited practice known as front running.
  4. Yes. Since this is an unsolicited trade, Noah can execute the transaction on behalf of his client.
Explanation
Answer: B - No. If CanDo is not authorized to effect purchases and sales of the fund, Noah would be engaged in the prohibited practice known as selling away if he were to execute the order. If his broker-dealer is not authorized to trade a security, Noah can’t either.
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