acfe cfe-law practice test

Certified Fraud Examiner (CFE) - Law

Last exam update: Nov 18 ,2025
Page 1 out of 11. Viewing questions 1-15 out of 158

Question 1

Which of the following is the MOST ACCURATE statement about serf-regulatory organizations (SROs)
in the securities industry?

  • A. An SRO generally has sole regulatory authority over the securities industry in the jurisdiction in which it operates
  • B. In most jurisdictions. SROs are prohibited from participating in the resolution of disputes related to securities transactions
  • C. An SRO is a governmental entity that exercises regulatory authority over the securities industry in its jurisdiction
  • D. In some jurisdictions SROs establish the standards and rules under which members of the securities industry operate
Mark Question:
Answer:

D

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Question 2

Greta is convicted of white-collar crime. However, her sentence is suspended in return for her
promise of good behavior. Which of the following BEST describes Greta's sentence?

  • A. Determinate sentence
  • B. Probation
  • C. indeterminate sentence
  • D. Deferred prosecution agreement
Mark Question:
Answer:

B

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Question 3

Ramona is investigating Eugene for misconduct Ramona and Eugene both work for Elek-Tek, which
operates in a jurisdiction with evil laws for defamation, invasion of privacy and conflict of interest
During the investigation Ramona obtained ^formation that Eugene is cheating on his spouse Ramona
to a large group of Elek-Tek employees that Eugene was committing adultery, which turned out to be
true Which cause of action would give Eugene the BEST chance for success m a civil suit against
Ramona?

  • A. Conflict of interest
  • B. Defamation
  • C. Public disclosure of private facts
  • D. Slander
Mark Question:
Answer:

C

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Question 4

Which of the following is NOT required for a contract transaction or scheme to be classified as an
investment contract?

  • A. The expectation of making a profit
  • B. Profits derived solely from the investor's management activity
  • C. investment m a common enterprise
  • D. An investment of money or other asset
Mark Question:
Answer:

B

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Question 5

The same customer comes into a casino each day and deposits a large amount of cash into an
account but after very little gambling the customer withdraws the funds The casino employees
suspect that the customer may be engaged in money laundering activity Assuming that the anti-
money laundering (AML) regulations that govern the casino’s activities correspond to the Financial
Action Task Force (FATF) Recommendations the casino:

  • A. May, but is not required to file a report of suspicious transactions related to possible money laundering with appropriate authorities
  • B. May not file a report of suspicious transactions related to potential criminal activity with appropriate authorities
  • C. Is required to file a report of suspicious transactions with appropriate authorities because the employees suspect money laundering violations
  • D. Is required to file a cash transaction report for possible criminal activity with appropriate authorities because cash was involved
Mark Question:
Answer:

C

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Question 6

To determine if a misrepresentation in the offer or sale of any securities is material a fraud examiner
should answer which of the following questions?

  • A. "Did the person who made the representation believe that it was suitable for potential investors?"
  • B. "Was the misrepresentation made by an authorized individual?"
  • C. "Would a reasonable investor wish to know the information to make an informed decision?"
  • D. ''Did the person who made the representation intend to mislead potential investors?
Mark Question:
Answer:

C

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Question 7

Before her criminal trial for embezzlement Monique contacts witnesses against her and offers to pay
them if they change their stories Based on her actions the government would MOST LIKELY bring
additional charges against Monique for:

  • A. Obstruction of justice
  • B. Fraudulent misrepresentation
  • C. Conspiracy to influence the court
  • D. Judicial extortion
Mark Question:
Answer:

A

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Question 8

Which of the following statements about the International Organization of Securities Commissions
(IOSCO) s TRUE?

  • A. IOSCO is a self-regulatory organization for companies that have securities traded on international securities markets
  • B. IOSCO provides a forum for regular cooperation on banking supervisory matters affecting developing nations
  • C. IOSCO is an oversight body responsible for issuing and enforcing regulations that govern all international securities markets
  • D. IOSCO is recognized as the international standard-setter for securities markets
Mark Question:
Answer:

D

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Question 9

Ethan a U S resident, is running a Ponzi scheme As part of the scheme, he uses the U S mail system to
send promotional materials to potential victims in France If the US government decides to prosecute
Ethan, which of the following would provide the MOST LIKELY basis for the charges?

  • A. Mail fraud
  • B. Wire fraud
  • C. Insider trading fraud
  • D. Communications fraud
Mark Question:
Answer:

A

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Question 10

If Mary uses legal means to lower her tax bill through legitimate deductions and credits she is
engaging m tax evasion

  • A. True
  • B. False
Mark Question:
Answer:

B

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Question 11

A business files for bankruptcy with the goal of obtaining relief from creditors so that it can rearrange
its financial affairs and continue as a going concern. Which of the following describes this type of
bankruptcy proceeding?

  • A. Reorganization bankruptcy
  • B. Debt adjustment bankruptcy
  • C. Debt dismissal bankruptcy
  • D. Liquidation bankruptcy
Mark Question:
Answer:

A

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Question 12

Allison works for a government contractor She informs the government that her employer has been
submitting false claims to the government for payment Later it is discovered that Allison has
misappropriated more than $50,000 of her employer's money Alison qualifies as a whistleblower
entitled to anti-retaliation protection under the law because of her report to the government Which
of the following statements about Allison is CORRECT?

  • A. Allison cannot be fired for misappropriating funds from her employer
  • B. Allison cannot be fired for any reason
  • C. Alison cannot be fired for informing the government of her employee’s fraud
  • D. None of the above
Mark Question:
Answer:

C

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Question 13

Which of the following is NOT a legal element that must be shown to prove a claim for fraudulent
misrepresentation of material facts?

  • A. The victim relied on the misrepresentation
  • B. The defendant acted negligently
  • C. The defendant made a false statement (i, e., a misrepresentation of fact)
  • D. The victim suffered damages as a result of the misrepresentation
Mark Question:
Answer:

B

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Question 14

In jurisdictions that allow criminal bargaining agreements the defendant's counsel generally has the
discretion to determine whether a bargaining agreement is available to the defendant.

  • A. True
  • B. False
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Answer:

B

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Question 15

The MOST COMMON bankruptcy fraud scheme is:

  • A. Forged filing
  • B. A planned bustcut
  • C. A credit card bustout
  • D. Concealment of assets
Mark Question:
Answer:

D

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