FINRA Uniform Securities State Law Examination Series-63 Question # 63 Topic 7 Discussion
Series-63 Exam Topic 7 Question 63 Discussion:
Question #: 63
Topic #: 7
In which of the following scenarios will the investment adviser be subject to criminal fraud charges?
A.
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.
B.
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
C.
An adviser sells its shares of TweedleDee Corporation after issuing a report recommending the stock as a “buy.”
D.
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.
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.
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