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Finra Series-63 Exam - Topic 8 Question 18 Discussion

In which of the following scenarios will the investment adviser be subject to criminal fraud charges?
C) An adviser sells its shares of TweedleDee Corporation after issuing a report recommending the stock as a ''buy.''
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
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.

Finra Series-63 Exam - Topic 8 Question 18 Discussion

Actual exam question for Finra's Series-63 exam
Question #: 18
Topic #: 8
[All Series-63 Questions]

In which of the following scenarios will the investment adviser be subject to criminal fraud charges?

Show Suggested Answer Hide Answer
Suggested Answer: C

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.


by Starr at Jan 05, 2026, 05:16 AM

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Jesusita
2 months ago
B) is fine. Disclosure protects the adviser from fraud charges.
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Bok
4 months ago
C) is tricky. Selling after a buy recommendation feels wrong.
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Trina
4 months ago
I think D) makes sense. Advisers should be transparent always.
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Kris
4 months ago
A) is definitely fraud. No disclosure is a big deal.
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Tish
4 months ago
D) sounds too broad, not all cases are fraud.
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Mona
5 months ago
Wait, all of them? That sounds extreme!
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Bulah
5 months ago
C) seems sketchy too, but not sure it's fraud.
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Elinore
5 months ago
I disagree, B) is fine since they disclosed it.
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Patrick
5 months ago
A) is definitely fraud if they don't disclose ownership.
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Curt
5 months ago
Haha, trick question! The answer is clearly D. Advisers are crooks, every last one of them.
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Lorriane
5 months ago
Hmm, this is tricky. I'll go with B - disclosure is key.
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Vicki
6 months ago
D is the answer. Advisers can't recommend anything they have a stake in, period.
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Mendy
6 months ago
This question is a real head-scratcher. I'm going to go with C - selling after a recommendation is shady.
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Lashawn
6 months ago
B is the correct choice. As long as the ownership is disclosed, it's not considered fraud.
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Lavina
7 months ago
D is the right answer. Investment advisers must disclose any positions they have in securities they recommend.
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Aracelis
7 months ago
A is the correct answer. Failing to disclose a conflict of interest is considered fraud.
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Viola
7 months ago
I feel like D might be too broad. Just because an adviser has a position doesn't automatically mean they're committing fraud, right? It depends on the disclosure.
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Brittni
7 months ago
I remember a practice question that was similar to this, and it emphasized the importance of disclosure. So, I think A is the right answer, but I’m not confident about the others.
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Ciara
7 months ago
I'm not entirely sure about option C. Selling shares after a recommendation feels sketchy, but does it really count as fraud if they disclosed it?
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Juan
7 months ago
I think option A could definitely lead to criminal fraud since the adviser didn't disclose their ownership. It seems like a clear conflict of interest.
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Annmarie
8 months ago
I'm a bit confused on this one. The wording of the question is tripping me up. I think I need to re-read it a few times and really think through the different scenarios to figure out the right answer.
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Kimberlie
8 months ago
I'm pretty confident that the answer is D. Any recommendations on a security where the adviser has a position, whether disclosed or not, is considered criminal fraud. Gotta be super careful about conflicts of interest in this field.
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Theron
8 months ago
Okay, let me see if I can break this down. If the adviser disclosed their ownership, then that seems like it would be okay, right? But if they didn't disclose it, then that's a problem. I'm leaning towards A or D as the correct answer.
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Pete
8 months ago
Hmm, I'm not sure. I think it might depend on the specific laws and regulations around investment advisers and disclosures. I'll need to think this through carefully.
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Blondell
8 months ago
I think the key here is whether the adviser disclosed their ownership of the stock. If they didn't disclose it, then that seems like fraud to me.
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Danilo
2 months ago
So, option A seems like the clear choice for fraud.
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Coleen
2 months ago
Definitely! Transparency is crucial in these cases.
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Kristin
2 months ago
I agree, not disclosing ownership is a big red flag.
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