Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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Which of the following conditions is necessary for an act involving securities fraud to be considered criminal and subject to criminal penalties?
  1. The act extended across state lines.
  2. The perpetrator willfully committed the fraudulent act.
  3. The victim(s) lost a combined total of at least $25,000 because of the act.
  4. The Administrator decides to send the case to criminal court.
Explanation
Answer: B - In order for an act of fraud to be considered criminal, the perpetrator must have willfully committed the fraudulent act. In this case, the Administrator will probably ask the court to impose criminal penalties, but an Administrator can’t cause an act of fraud to be criminal by sending it to the criminal court system. If an agent misleads a customer regarding the returns to be expected on an investment but hasn’t deliberately done so, it is still fraud, but not criminal fraud, regardless of how much the victims lost.
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