Free NASAA Series 63 (Uniform Securities Agent State Law Examination) Regulation of Investment Adviser Representatives Practice Questions
Regulation of investment adviser representatives on the NASAA Series 63 exam covers registration and licensing requirements, exemptions, termination procedures, and the distinction between state and federal registration.
Sample Questions
Question 1
Easy
Under the Uniform Securities Act, which of the following best describes an investment adviser representative (IAR)?
Solution
A is correct. The Uniform Securities Act defines an IAR as a partner, officer, director, or other individual associated with an investment adviser who makes recommendations or otherwise gives investment advice, manages accounts or portfolios, determines which recommendations should be made, solicits advisory services, or supervises employees who perform those functions.
Question 2
Medium
Marcus is employed by Beacon Advisory, a state-registered investment adviser. His role is limited to preparing client performance reports, reconciling trade confirmations, and supervising a team of three IARs who provide securities advice. Under the Uniform Securities Act, Marcus:
Solution
C is correct. The Uniform Securities Act defines an investment adviser representative to include any individual employed by an investment adviser who supervises other employees who make securities recommendations or render advice. Because Marcus supervises IARs who provide securities advice, he falls within the IAR definition and must register, even though he does not personally advise clients.
Question 3
Hard
Marcus is an investment adviser representative of a state-registered investment adviser. He maintains a place of business only in State A. During the past 12 months he has solicited and accepted 7 individual retail clients who reside in State B (where he has no place of business) and 4 individual retail clients who reside in State C (where he has no place of business). Under the Uniform Securities Act, in which state(s) must Marcus register as an IAR?
Solution
B is correct. Apply the USA rules in sequence. First, an IAR must register in any state where the IAR has a place of business, so Marcus must register in State A. Second, for states where the IAR has no place of business, the de minimis exemption applies if the IAR has directed communications to no more than 5 non-institutional clients in that state in the prior 12 months. In State B, Marcus has 7 retail clients, which exceeds the 5-client threshold, so he must register there. In State C, he has only 4 retail clients and no place of business, so he qualifies for de minimis and is not required to register. The result is registration in States A and B only.