Interviews - Dave

Location: California
Age: Mid-30s
Profession: Broker
College major: Finance

The Study Method
Dave is a securities professional who took the exam twice in the last 10 years. While making a temporary career change, his license expired, and he was forced to take the exam a second time. Consequently, he had a little bit of an advantage while studying, as he had some clue as to what to expect on the exam. Overall, he felt the experience was positive and did not study countless hours. Dave's study time was average, and his experience is one that the average securities professional should be able to identify with.

Exam Question Recall

  • Sharing gains and losses with clients. He recalls that knowing the difference between full and limited discretionary authority is a good thing to know.
     
  • Who can a broker borrow money from? The answer is no one, unless the person (a client) is specifically engaged in the regular business of lending, i.e., a mortgage banker or loan professional.
     
  • Dave remembered a question pertaining to whether a spouse of a client whose name is not listed on the account can enter orders or withdraw funds from an account while their significant other is away. The answer is no. The spouse of an account holder cannot enter an order, or withdraw money if he or she is NOT listed as a signer on an account.
     
  • Dave also recalled a question about whether an investment adviser can own a stock while issuing a report or advice concerning the equity. The answer would be no, unless there is specific disclosure of such. In addition, it would be unethical (and fraudulent) for an investment adviser to issue a report recommending buying a security, while he/she is selling the equity in his/her own account.
     
  • He recommended that prospective Series 63 candidates know terms like pegging, painting the tape and churning.

 

Look Out!
Pegging:

The practice of buying large amounts of an underlying commodity or security close to the expiration date of a derivative. This is done to encourage a favorable move in market price.
An investor writing a put option would practice pegging so that he or she will not be required, due to lowering prices, to purchase the underlying security or commodity from the option holder. The goal is to have the option expire worthless so that the premium initially received by the writer is protected.
Painting the Tape:
An illegal action by a group of market manipulators buying and/or selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual volume.
After causing a movement in the security, the manipulators hope to sell at a profit.
Churning:
An unethical practice employed by some brokers to increase their commissions by excessively trading in a client\'s account. This practice violates the NASD (now known as FINRA) Fair Practice Rules. It is also referred to as "twisting".

A period of heavy trading with few sustained price trends and little movement in stock market indexes. Another negative result for the client is being stuck with higher tax bills.

 

  • There was a question about what to do with a complaint, should a customer issue one. The answer would be an agent should immediately notify his/her compliance department, which should then expressly reply to the customer.
     
  • Dave also remembered a question regarding suitability.

Exam Tips and Tricks
The SEC defines suitability as:

When a broker recommends that a client buy or sell a particular security, that broker must have a reasonable basis for believing that the recommendation is suitable for the client. In making this assessment, the broker must consider the client\'s risk tolerance, other security holdings, financial situation (income and net worth), financial needs and investment objectives.

 

  • There could also be a question on fictitious quotes and whether they are fraudulent. The answer is yes; they are fraudulent - and also a violation of the USA.

Final Words of Advice
While Dave did not study too much for the exam (one week as he recalled), he thought it would be wise for those planning on taking the test to spend much more time preparing. He also recommended taking as many practice exams as possible.

He stated, "Going into the test confidently will help immensely ... if you find yourself sweating it before you begin, chances are you are not well prepared."

We agree Dave!

Vicki


Related Articles
  1. Insurance

    Tips For Passing The Series 6 Exam

    Find out what you can do during the test to make sure you get a passing score.
  2. Options & Futures

    Broker Or Trader: Which Career Is Right For You?

    A day in the life of a broker or trader is an exciting and varied one. Find out how to decide between these two financial professions.
  3. Career Education & Resources

    How Hard are the CFA Exams?

    Learn about the difficulty of the CFA exams with a description of the tests, some statistics on pass rates and suggestions that can help you pass the exams.
  4. Professionals

    Introduction To The Series 65 Exam

    The Series 65 is required in many states in order to be a fee-based advisor. Find out what it is and whether you need it.
  5. Financial Advisors

    Tips on Passing the CFA Level I on Your First Attempt

    Obtain valuable tips and helpful study instructions that can help you pass the Level 1 Chartered Financial Analyst exam on your first attempt.
  6. Professionals

    The Series 79 Exam: What It Is And When You Need It

    If you're getting into the field of investment banking, you'll need to know all about the Series 79.
  7. Options & Futures

    Brokers: Do You Want To Sell Stocks Or Insurance?

    Know the difference between working as a broker or an insurance rep.
  8. Professionals

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  9. Professionals

    Pass Your CFA Exams on the First Try

    Become one of the elite who pass these exams by using these simple study methods.
  10. Professionals

    8 Ethical Guidelines For Brokers

    We examine the less obvious ethical dangers faced by a broker, and help you avoid trouble in ethical gray zones.
RELATED TERMS
  1. Series 86/87

    An exam administered by the Financial Industry Regulatory Authority ...
  2. Series 26

    A securities license entitling the holder to register as a limited ...
  3. Series 14

    An exam administered by the Financial Industry Regulatory Authority ...
  4. Series 66

    An exam administered by the Financial Industry Regulatory Authority ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Dividend Selling

    A dishonest broker tactic that involves convincing a client to ...
RELATED FAQS
  1. What certification series does one need to be a bond broker?

    One major requirement before one can become a bond broker is to pass the General Securities Representative Exam, commonly ... Read Answer >>
  2. I gave an answer on the test from my study guide that was scored wrong on the Series ...

    Learn more about potential causes of differences between the Series 63 exam and study guide questions. Find out how new questions ... Read Answer >>
  3. How many people fail the series 63 exam every year?

    How many stock brokers failed the Series 63 exam before they passed successfully? Here is what you need to know before taking ... Read Answer >>
  4. Does NASAA or anyone else give out the series 63 exam questions?

    Find out about studying for the Series 63 exam and how new exam questions are developed by finance professionals. Learn about ... Read Answer >>
  5. How is the Series 63 exam set up?

    Find out how the Series 63 exam is structured and how new test bank questions are written. Learn more about how to study ... Read Answer >>
  6. I have passed the Series 63 and FINRA Series 7, but would like to become licensed ...

    Becoming an investment adviser representative requires more examination than just taking the FINRA Series 63 exam. See what ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center