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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 with $200M+ AUM and advisers in 15+ states may register with the SEC regardless of AUM.
Investment advisers register with the SEC at $110M+ AUM (federal covered) and with the state under $100M AUM, with a $10M buffer between.
USA §410 imposes up to 3 years imprisonment and $5,000 in penalties 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
4 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 in 12 months, with no general solicitation or retail commissions.
Communications to 25 or fewer retail investors in 30 days count as correspondence; more than that becomes retail communication needing pre-approval.
Commercial paper is exempt if maturing within 9 months, denominations of $50,000+, with a top-3 NRSRO rating.
Regulation of Broker-Dealers
5 items
A state-registered adviser with custody must maintain a minimum net worth of $35,000 or post an equivalent surety bond.
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.
Regulation of Securities and Issuers
1 item
Under the USA, state securities registrations are effective for 1 year, and registration by coordination requires a minimum of 10 days on file with the state.
Remedies and Administrative Provisions
1 item
Under the USA, a registration withdrawal becomes effective 30 days after filing, and the Administrator retains jurisdiction for 1 year afterward.
Communication with Customers and Prospects
2 items
Form ADV Part 2A annual updates are due within 120 days of fiscal year-end and disclose material disciplinary events from the past 10 years.
Broker-dealers must retain communications for 3 years while state-registered IAs retain them for 5 years, with the first 2 years easily accessible.
Ethical Practices and Obligations
8 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.
Performance-based fees require a qualified client with at least $1.4M AUM with the adviser OR at least $2.7M net worth excluding primary residence.
Receiving a client check payable to a third-party qualified custodian and forwarding it within 3 business days is NOT custody.
Under the 5% Policy, markups above 5% are presumptively excessive, though the actual test is fair and reasonable.
A turnover ratio above 4 is presumptive churning for a conservative account, while above 6 is presumptive for any account.
Under the USA, registration may be denied for any felony conviction in the past 10 years or a securities/theft/fraud misdemeanor in that same period.
Under ITSFEA, insider-trading civil penalties reach 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.
