Free NASAA Series 66 (Uniform Combined State Law Examination) Laws, Regulations, and Guidelines Practice Questions
Laws, regulations, and guidelines on the NASAA Series 66 exam cover the Uniform Securities Act, Investment Advisers Act of 1940, state and federal registration, fiduciary duty, ethical practices, and enforcement provisions.
Under the Uniform Securities Act, all of the following are exempt SECURITIES EXCEPT:
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Correct Answer: A
Solution
A is correct. A transaction by an executor or administrator is an exempt TRANSACTION, not an exempt security; it describes how a sale is effected rather than a category of instrument. The question asks for exempt securities, so this is the exception. United States government securities, securities of a national bank, and securities of a recognized foreign government such as a Canadian province are all classes of exempt securities.
Question 2
Medium
Which of the following items MUST be disclosed in an investment adviser's Form ADV Part 2A (the Brochure)?
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Correct Answer: D
Solution
Choice D is correct because Form ADV Part 2A is the narrative brochure that investment advisers must deliver to clients. It must describe the adviser's advisory business, types of clients, methods of analysis and investment strategies, material risks of those strategies, fees and compensation, disciplinary information, other business activities, code of ethics, brokerage practices, account review procedures, client referral arrangements, custody practices, investment discretion, proxy voting policies, and financial information.
Question 3
Hard
A state-registered investment adviser's practices comply with NASAA Model Rules in all of the following respects EXCEPT:
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Correct Answer: D
Solution
D is correct. A substantial prepayment under NASAA rules is a fee of more than $500 collected six or more months in advance, and an adviser that collects such a prepayment must include an audited balance sheet in its brochure. A $1,000 fee for nine months exceeds both the dollar and time thresholds, so omitting the audited balance sheet violates the rule. By contrast, delivering the brochure at least 48 hours before contracting, maintaining $35,000 net worth while holding custody, and charging a performance fee to a client with $1.1 million under management (a qualified client) each comply with the Model Rules.
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