Series 63

Business Practices - Introduction

Though there are some portions of the Business Practices section of the test that can get a little confusing, a bit of common sense here can take you a long way. When thinking about fraudulent activity, simply ask yourself, "is this ethical?" If you come up with a common sense answer of no, you have most likely answered the question!

Exam Tips and Tricks
The USA specifically defines "fraud" as:
An attempt by any person, individual or entity "in connection with the offer, sale or purchase of a security, directly or indirectly:
  1. to employ a device, scheme or artifice to defraud;
  2. to make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
  3. to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person."
Let\'s just say, for simplicity\'s sake, that fraud is comprised of lying, cheating and stealing!

The USA also states that the above definition "applies to any securities offer, sale or purchase, including offers, sales or purchases involving registered, exempt or federal covered securities."

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