Skip to main content
ExamWize
Sign up

Series 66 · 45% of the exam

Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices practice questions

10 free Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices questions for the Uniform Combined State Law Exam (Series 66) exam, each with the correct answer and an explanation for every option.

Start the questionsFree 10-question Series 66 quiz

What this domain covers

The largest Series 66 domain at 45%: the Uniform Securities Act, NASAA model rules and the relevant federal laws, covering who must register, what is exempt, how the Administrator enforces the law and which business practices are unethical.

Exam weight
45%
On a real exam
≈ 50 questions
In our bank
267 questions

Topics that come up most

  • Definitions and exclusions for broker-dealers, agents, investment advisers and IARs
  • Registration requirements, federal covered advisers and NSMIA
  • Exempt securities and exempt transactions
  • Administrator powers, civil liability and criminal penalties
  • Unethical practices, fiduciary duty, custody, discretion and adviser fees

How to study it

Draw a grid of the four regulated persons showing who counts as each, who is excluded and who registers with the state or the SEC. Many questions come down to whether a person or transaction fits a definition or an exemption.

Sample Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices questions

Try each one before opening the answer. Original questions written to the official exam objectives.

  1. Question 1

    State-registered advisers file Form ADV electronically through:

    • AEDGAR
    • BIARD
    • CTRACE
    • DACATS
    Show answer and explanation

    Answer: B) IARD

    • AIncorrect. That's for company filings.
    • BCorrect. The Investment Adviser Registration Depository.
    • CIncorrect. That's bond trade reporting.
    • DIncorrect. That's for account transfers.

  2. Question 2

    Under the Uniform Securities Act, can an individual be registered as a broker-dealer?

    • AOnly if the individual has no clients
    • BNo, only corporations can be broker-dealers
    • CNo, individuals can only be agents of firms that are registered
    • DYes, a sole proprietor can be a broker-dealer
    Show answer and explanation

    Answer: D) Yes, a sole proprietor can be a broker-dealer

    • AIncorrect. That isn't the rule.
    • BIncorrect. Individuals can.
    • CIncorrect. A sole proprietor can be a broker-dealer.
    • DCorrect. A "person" includes individuals.

  3. Question 3

    Under the Uniform Securities Act, may the Administrator share information with the SEC and other states?

    • AOnly with the registrant's consent
    • BNo, all information stays in the state
    • COnly with a court order
    • DYes, to cooperate in enforcement
    Show answer and explanation

    Answer: D) Yes, to cooperate in enforcement

    • AIncorrect. That isn't required.
    • BIncorrect. Sharing is allowed.
    • CIncorrect. That isn't required.
    • DCorrect. Cooperation is allowed.

  4. Question 4

    Under the Uniform Securities Act, when acting on an agent's registration application, the Administrator may:

    • ASet the commission rates the agent may charge on client transactions
    • BSentence the agent to imprisonment for a prior willful violation of the Act
    • CGrant the registration subject to conditions, such as heightened supervision
    • DDeny the registration solely because the applicant lacks industry experience
    Show answer and explanation

    Answer: C) Grant the registration subject to conditions, such as heightened supervision

    Besides granting or denying a registration, the Administrator may grant it subject to conditions or limitations. The Administrator cannot impose criminal sentences or deny registration solely for lack of experience.

    • AIncorrect. The Administrator may act against unreasonable charges as an unethical practice, but has no power to set an agent's commission rates when granting registration.
    • BIncorrect. Prison terms for willful violations come only from a court in a criminal case. The Administrator's powers are administrative and civil.
    • CCorrect. The Act lets the Administrator condition or limit a registration rather than deny it outright, for example by requiring heightened supervision.
    • DIncorrect. The Act bars denial based solely on lack of experience if the applicant is qualified by training, knowledge or both.

  5. Question 5

    An investment adviser's client agreement includes a provision under which the client agrees to waive the adviser's compliance with the state securities act and the Investment Advisers Act of 1940. How is this provision treated?

    • AIt is void, and including it is an unethical business practice
    • BIt is enforceable if the client separately signs and initials it
    • CIt is enforceable if it is also disclosed in Form ADV Part 2A
    • DIt is enforceable for clients who meet the qualified client test
    Show answer and explanation

    Answer: A) It is void, and including it is an unethical business practice

    Any contract term that binds a client to waive compliance with the Advisers Act or the state securities act is void under Advisers Act §215(a), and NASAA treats such a term as an unethical practice. A signature, disclosure or the client's financial status does not change this.

    • ACorrect. Section 215(a) of the Advisers Act voids any condition, stipulation or provision binding a person to waive compliance with the Act or its rules. NASAA's model rule on unethical business practices treats putting such a waiver in an advisory contract as unethical.
    • BIncorrect. A signature or initials cannot make a waiver of compliance with securities law valid. The statute voids the provision no matter how the client agrees to it.
    • CIncorrect. Disclosure does not cure the problem. A provision that waives compliance with the Act is void, and listing it in the brochure can still mislead clients about their legal rights.
    • DIncorrect. Qualified client status matters for performance-based fees. It does not let an adviser get clients to waive compliance with the securities laws.

  6. Question 6

    An IAR plans a paid outside business activity. The IAR should:

    • AKeep it private if it's unrelated to securities
    • BDisclose it to the firm and report it as required
    • CAsk clients to approve it instead of the firm
    • DRegister the business as an adviser in every state where it operates
    Show answer and explanation

    Answer: B) Disclose it to the firm and report it as required

    • AIncorrect. Disclosure is still required.
    • BCorrect. Outside activities must be reported.
    • CIncorrect. The firm must know.
    • DIncorrect. That isn't always required.

  7. Question 7

    A customer agreement clause waiving compliance with the state securities act is:

    • ABinding if notarized
    • BBinding
    • CVoid
    • DBinding for seniors
    Show answer and explanation

    Answer: C) Void

    • AIncorrect. It's void.
    • BIncorrect. It's void.
    • CCorrect. Such waivers are void.
    • DIncorrect. It's void.

  8. Question 8

    An agent's application leaves out a personal bankruptcy filed two years ago. If the omission was willful, the Administrator may:

    • ANot act, since bankruptcy isn't a crime
    • BDeny the registration for a false or misleading application
    • CAct only if the bankruptcy was over $1 million
    • DAct only after a court approves a finding of fraud
    Show answer and explanation

    Answer: B) Deny the registration for a false or misleading application

    • AIncorrect. The omission is the issue.
    • BCorrect. Willful omissions are grounds.
    • CIncorrect. Amount isn't the test.
    • DIncorrect. The Administrator decides.

  9. Question 9

    Under Rule 144, restricted securities of a reporting company may generally be resold after holding them for:

    • ASix months
    • BTwo years for every company
    • CTen days
    • DNo time at all
    Show answer and explanation

    Answer: A) Six months

    • ACorrect. Non-reporting issuers require one year.
    • BIncorrect. That's an older rule.
    • CIncorrect. That's too short.
    • DIncorrect. A holding period applies.

  10. Question 10

    An UTMA custodian must:

    • ATrade on margin to grow the account faster before the minor reaches adulthood
    • BUse the assets for the custodian's own bills
    • CManage the assets prudently for the minor's benefit
    • DReturn the assets to the donor on request
    Show answer and explanation

    Answer: C) Manage the assets prudently for the minor's benefit

    • AIncorrect. Margin isn't allowed.
    • BIncorrect. That's prohibited.
    • CCorrect. The minor owns the assets.
    • DIncorrect. Gifts are irrevocable.

Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices: FAQs

How much of the Series 66 exam is Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices?

Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices is 45% of the Series 66 exam by the official exam guide's weighting, which on a 110-question form works out to roughly 50 questions. The real exam's exact split varies by form.

What does the Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices domain cover?

The largest Series 66 domain at 45%: the Uniform Securities Act, NASAA model rules and the relevant federal laws, covering who must register, what is exempt, how the Administrator enforces the law and which business practices are unethical.

How should I study Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices for Series 66?

Draw a grid of the four regulated persons showing who counts as each, who is excluded and who registers with the state or the SEC. Many questions come down to whether a person or transaction fits a definition or an exemption.

Where can I practise more Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices questions?

This page has 10 free Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices questions with answers. The ExamWize Series 66 question bank has 267 questions in this domain. Every practice exam result breaks your score down by domain, and Review Mode re-drills the questions you missed.

Other Series 66 topics

Also: 15 free questions across all topics, the Series 66 cheat sheet and the study guide.

Get Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices exam-ready

The full Series 66 bank has 267 Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices questions. Timed practice exams match the real exam's length and domain weights, every result shows your score per domain, and Review Mode re-drills the questions you missed.

See the full Series 66 practice examsTake the free diagnostic

Not affiliated with NASAA; questions are original, written from the official exam outline, and never copied from the real exam.