Series 63 Series 63 full analysis: what the $39 report shows

A real question from the full analysis

This is how each question you miss appears in the report. The question, the right answer, the explanation and the source are real. The answer shown as yours is an example, not anyone's data.

A SIPC-member broker-dealer fails. A customer's account held stocks that had fallen 40% before the failure because of poor recommendations, plus a commodity futures contract. What does SIPC protection address?

• A Return of securities and cash held at the firm, up to limits, not the losses or futures
• B Restoration of the 40% decline caused by the poor recommendations
• C Every asset in the account, including the futures contract, with no dollar limit applied
• D Cash balances only, up to a limit of $500,000 per customer

Example answer, marked sure: B · Correct answer: A

A is correct. SIPC protects customers of a failed member firm by restoring custody of securities and cash held at the firm, up to $500,000 per customer, including a $250,000 limit for cash. SIPC states that it does not protect against the decline in value of securities or losses caused by bad investment advice, so B is wrong, and it does not cover commodity futures contracts, with limited exceptions, so C is wrong. D reverses the limits: $500,000 is the total, and cash is capped at $250,000. The Series 63 outline places the scope of SIPC coverage under remedies. Remember: SIPC replaces missing assets, not lost value.

Readiness by domain uses the weights of the real exam: Regulation of Broker-Dealers 12%, Regulation of Broker-Dealer Agents 13%, Ethical Practices and Obligations 25%, Communication with Customers and Prospects 20%, Regulation of Securities and Issuers 9%, Regulation of Investment Advisers 5%, Regulation of Investment Adviser Representatives 5%, Remedies and Administrative Provisions 11%.