Uniform Securities Agent State Law (Series 63) Practice Exam

In what scenario is an unsolicited transaction most likely to occur?

1. When an investor approaches a broker to initiate a purchase

2. When regulators mandate a sale of a security

3. When the issuer contacts the investor directly

4. When a market analyst provides a recommendation

The correct answer is: When an investor approaches a broker to initiate a purchase

An unsolicited transaction most commonly occurs when an investor approaches a broker to initiate a purchase. In this scenario, the investor has taken the initiative to express interest in a specific security, which reflects their independent decision-making and interest in the investment. This distinguishes it from other scenarios where there might be external influence or direction. In contrast, regulatory mandates typically require actions that are not considered unsolicited, as the broker must comply with the orders from regulatory bodies. Similarly, when an issuer directly contacts an investor, it suggests a promotional effort that could lead to a solicited transaction. Lastly, when a market analyst provides a recommendation, it could influence the investor, but again, the action taken by the investor in purchasing would not classify as unsolicited since they may be reacting to that advice. Hence, the nature of unsolicited transactions lies in the investor's proactive pursuit of the investment rather than responding to solicitation.