Dishonest and Unethical Business Practices

This section is the heart of the Series 63 exam. NASAA expects candidates to spot conduct that may not always look dramatic but still qualifies as dishonest or unethical under state securities law. The point is customer protection, not clever technicality.

The strongest approach is to ask whether the conduct hides important information, treats the customer unfairly, or places the firm’s or agent’s interest above the customer’s in a way state law is designed to stop.

Key Takeaways

• State-law unethical-practice rules are broad on purpose.
• Series 63 often tests unfair conduct that may fall short of obvious fraud language.
• If the fact pattern feels one-sided or hidden, treat it as a red flag.

Sample Exam Question

An agent omits a material fact because the customer did not ask about it directly. What is the strongest Series 63 conclusion?

A. The omission is acceptable because the customer failed to ask
B. The omission may still be dishonest or unethical because material information cannot be withheld that way
C. The omission matters only in a federal, not state, exam question
D. The omission is acceptable if the product performed well previously

Answer: B. Series 63 expects candidates to recognize that hiding material information can still be dishonest or unethical even if the customer did not ask the exact question.