NASAA Series 63 (Uniform Securities Agent State Law Examination) Glossary
25 essential terms and definitions for NASAA Series 63 (Uniform Securities Agent State Law Examination). Each definition is written for exam preparation, covering the concepts as they are tested on the 2026 syllabus.
A
- Administrator
- The Administrator is the state securities regulator with jurisdiction over agents, broker-dealers, investment advisers, IARs, and securities offerings within the state. The Administrator may suspend, revoke, or condition registrations and bring civil and administrative actions.
- Agent (Uniform Securities Act)
- An agent is an individual representing a broker-dealer or issuer in effecting securities transactions. Agents must register in each state where they conduct business unless an exemption applies.
B
- Blue Sky Laws
- Blue sky laws are state-level securities laws that regulate the offer and sale of securities to protect investors from fraud. The Uniform Securities Act is the model that most state Blue Sky regimes draw from.
- Broker-Dealer (State Definition)
- Under the Uniform Securities Act, a broker-dealer is any person engaged in the business of effecting securities transactions for the accounts of others or for the broker-dealer's own account. Banks, agents, and certain issuers are excluded from the definition.
C
- Cease and Desist Order
- A cease and desist order is an administrative order directing a person to stop a specified activity. Administrators commonly use these orders when a violation of state securities law is occurring or threatened, with or without prior hearing.
- Churning
- Churning is excessive trading in a customer account to generate commissions for the agent, without regard for the customer's interests. It is prohibited as a manipulative or fraudulent act under state and federal securities laws.
- Commingling
- Commingling is improperly mixing customer funds or securities with the firm's own. It is a prohibited practice that destroys the segregation that customer property requires under both state and federal rules.
- Customer Identification Program (CIP)
- A customer identification program is an anti-money-laundering requirement that firms verify the identity of new customers before opening accounts. It is part of broader Bank Secrecy Act compliance.
D
- Discretionary authority is the customer's written permission allowing the agent to determine which securities to buy or sell without prior consent for each transaction. The grant must be in writing and is subject to specific Administrator and FINRA approval rules.
E
- Effective Registration
- Effective registration is the status of a securities registration after the waiting period expires or the Administrator otherwise grants effectiveness. It permits the securities to be offered or the agent to act in the state.
- Exempt Security
- An exempt security is one that does not require state registration. The category includes US government and agency securities, municipal securities, securities issued by certain regulated entities (banks, insurance companies), and securities listed on major exchanges.
- Exempt Transaction
- An exempt transaction is one that does not require state registration regardless of the security involved. Examples include isolated non-issuer transactions, sales to institutional buyers, and certain private placements.
F
- Federal Covered Security
- A federal covered security is one whose state registration is preempted because federal regulation already governs. The category includes securities listed on major exchanges, investment company securities, and securities sold under SEC Rule 506 of Regulation D.
- Fiduciary Duty
- Under the Uniform Securities Act, investment advisers and their representatives owe a fiduciary duty to clients: to act in the client's best interest, to disclose material conflicts, and to seek best execution. Broker-dealers operate under the lower suitability standard plus Reg BI for retail recommendations.
- Form U4
- Form U4 is the Uniform Application for Securities Industry Registration filed by broker-dealers, exchanges, and states. It captures the agent's employment history, disclosure events, and qualification examinations and is updated for material changes.
- Form U5
- Form U5 is the Uniform Termination Notice filed when an agent's registration with a broker-dealer ends. It must be filed within 30 days of termination and triggers any required disclosures.
- Fraud
- Under state securities law, fraud is the intentional misrepresentation or omission of a material fact in the offer, sale, or purchase of a security. The state antifraud provisions apply regardless of whether the security or transaction is exempt from registration.
I
- Investment Adviser (State)
- An investment adviser is a person engaged in the business of advising others on securities for compensation. Smaller advisers register with each state where they have a place of business or significant client base; larger advisers register with the SEC.
- Investment Adviser Representative (IAR)
- An IAR is an individual employed by an investment adviser who makes recommendations, manages accounts, or solicits new advisory business. IARs are registered at the state level even if their employing adviser is federally covered.
N
- Net Capital Requirement
- The net capital requirement is the minimum net capital broker-dealers must maintain to ensure financial stability. The federal SEC rule governs, but state regulators may examine for compliance and act on violations.
- Non-Exempt Security
- A non-exempt security must be registered with the state Administrator (or qualify for a transactional exemption) before being offered or sold to residents. The registrant chooses among notification, coordination, or qualification methods.
- Notice Filing
- Notice filing is the simplified state filing made for federal covered securities and certain investment-company products. States may charge fees but cannot block the offering because federal registration preempts substantive state review.
R
- Registration by Coordination
- Registration by coordination is the state registration method available when concurrent federal registration is in effect under the Securities Act of 1933. The state effectiveness date is coordinated with the federal effectiveness.
- Registration by Qualification
- Registration by qualification is the most rigorous state-only registration method, used when neither notification nor coordination is available. The Administrator conducts substantive review and may impose conditions on the offering.
S
- Selling Away
- Selling away is an agent's engagement in private securities transactions outside the supervision of the employing broker-dealer. It is prohibited unless prior written notice is given and the firm authorizes the transaction.