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All Series 63 Limits
Series 63 Limits and Thresholds
Regulation of Investment Advisers
5 items
The de minimis exemption requires no place of business in the state AND 5 or fewer non-institutional clients during the preceding 12 months.
Pension consultants advising on $200M+ in qualifying plan assets and advisers required to register in 15+ states may register with the SEC regardless of regulatory AUM.
Under the ordinary AUM rules, SEC registration is required at $110M+ AUM and optional starting at $100M, creating a $10M entry buffer; an SEC registrant may remain registered down to $90M. Exceptions apply.
USA §409 imposes, upon conviction, up to 3 years imprisonment and/or a $5,000 fine for willful registration violations.
USA registration becomes effective at noon on the 30th day after a complete application is filed, absent Administrator action.
Regulation of Investment Adviser Representatives
6 items
The customer must sign the options agreement within 15 days after options account approval by a ROP.
Under USA §402(b)(9), a private placement is limited to 10 noninstitutional offerees per state in any 12 months, with no general solicitation or retail commissions.
Written or electronic communications to 25 or fewer retail investors in any 30 days count as correspondence; more than that is retail communication, generally requiring pre-use principal approval, subject to exceptions.
Commercial paper is exempt if maturing within 9 months, denominations of $50,000+, with a top-3 NRSRO rating.
Under Rule 203A-3, a federal IAR has more than 5 non-qualified natural-person clients who also make up more than 10% of total clients.
For the state IAR institutional-client exemption, an employee benefit plan counts as institutional only with at least $1 million in assets.
Regulation of Broker-Dealers
7 items
Unless a qualifying custody exception applies, a state-registered adviser with custody must maintain minimum net worth of $35,000; a bond alternative depends on applicable state rules.
Civil liability under USA Section 410 must be brought within the earlier of 2 years from discovery or 3 years from sale.
The NASAA vulnerable-adult act applies at age 65, allowing firms to delay disbursements up to 15 business days (extendable to 25).
OSJs and supervising branches must be inspected at least annually, while non-supervising branches require inspection at least every three years.
Willful USA violations carry up to a $5,000 fine and/or 3 years imprisonment, with a 5-year criminal statute of limitations.
Ordinary BD state registration expires December 31 unless renewed, while Canadian limited-registration renewals must be filed before December 1.
Under FINRA Rule 3110, each registered representative and principal must attend a compliance interview or meeting at least annually.
Regulation of Agents of Broker-Dealers
4 items
Under federal existing-assignment relief, the customer's account must be open at least 30 days and assigned to the agent at least 14 days before the trade.
Federal pending-application relief for an agent lasts until the earlier of 60 days after filing or notice of denial or a stay for cause.
FINRA Form U4 amendments are generally due within 30 days of learning the facts, but statutory-disqualification amendments within 10 days of occurrence.
Form U4 requires disclosure of written customer complaints within 24 months alleging $5,000+ damages, and settlements of $15,000+ since May 18, 2009.
Regulation of Securities and Issuers
6 items
USA state securities registrations are effective for 1 year, or longer while the nonexempt distribution continues, except during a stop order. Registration by coordination needs at least 10 days on file with the state.
The only security exemptions revocable under USA §402(c) are the exchange-listed, nonprofit, and employee benefit-plan ones, and never retroactively.
After a written hearing request on a USA §306 summary stop order, the matter must be set for hearing within 15 days of receipt, though the hearing need not finish then.
Under USA §401(h)(2), oil, gas, or mining participation certificates are securities treated as having no issuer.
Fixed annuities are excluded from the security definition by USA §401(m); variable annuities are denied the insurer exemption by §402(a)(5).
For Rule 506 offerings, a state may require Form D, consent to service, and fees no later than 15 calendar days after the first sale in the state.
Remedies and Administrative Provisions
3 items
USA: withdrawal generally effective 30 days after application receipt. Administrator may start suspension/revocation proceedings for willful violations within 1 year after effective withdrawal.
Service of process through the Administrator requires leaving a copy at its office, sending notice by registered mail, and filing an affidavit of compliance.
A bona fide publication published in-state isn't an offer there only if more than two-thirds of its circulation was outside the state in the preceding 12 months.
Communication with Customers and Prospects
7 items
Form ADV Part 2A annual updating amendments are due within 90 days of fiscal year-end. Specified disciplinary events are presumed material for 10 years; older events must still be disclosed if material.
A BD's issuer control relationship must be disclosed before contracting; if oral, written disclosure must follow at or before completion of the transaction.
Under USA §401(e), "guaranteed" means guaranteed as to payment of principal, interest, or dividends, not protection of market value.
Under USA §405, registration never means the Administrator passed on qualifications, recommended the registrant, or found filings true and complete.
Under FINRA Rule 2210, a static retail communication needs registered principal approval before the earlier of first use or filing with FINRA.
Under NASAA's 1997 Internet order, a general web posting isn't transacting business in a state if it has a legend, firewall procedures, only general info and, for an agent or IAR, disclosed affiliation and firm approval.
BD business communications: ≥3 years; state IA advertising: ≥5 years from fiscal year-end of last dissemination. 1st 2 years: BD records easily accessible; IA records at the principal office.
Ethical Practices and Obligations
10 items
An IA or IAR may exercise oral discretion for 10 business days after the first discretionary trade before written authority is required, while a BD agent needs written authority before the first discretionary trade.
The qualified-client dollar tests for performance-based fees are at least $1.4M AUM with the adviser OR more than $2.7M net worth excluding primary residence.
Receiving a client check payable to a third-party qualified custodian is NOT custody if the adviser forwards it within 3 business days of receipt and keeps the required records.
FINRA's mark-up policy uses 5% as a guide, not a rule or presumption; a mark-up must be fair and reasonable based on all relevant factors, and a lower mark-up can still be unfair.
Annualized turnover ratios of 4 or 6 may indicate excessive trading, but neither is a universal presumption of churning; evaluate the account's objectives and circumstances.
Under the USA, registration may be denied in the public interest for any felony conviction in the past 10 years or a misdemeanor involving securities or the securities business in that period.
Federal insider-trading penalties include civil penalties up to 3 times (treble) the profit gained or loss avoided, with criminal penalties up to 20 years prison and $5 million fines for individuals.
A cost-to-equity (break-even) ratio above 20% means the account must earn that much annually just to cover commissions and fees.
A broker-dealer SAR is generally mandatory for suspicious activity of at least $5,000, while a CTR covers physical cash exceeding $10,000.
A FINRA Rule 2165 hold lasts up to 15 business days, extendable by 10 after review and 30 more if reported to a state regulator, agency, or court.
