A solo adviser in Ohio crosses $110 million in assets and wants to know whether to file with the SEC or his state Administrator. The answer changes the form, the filing system, the supervision regime, and even which regulator can sue him.
The Uniform Securities Act is NASAA's model statute that states adopt to harmonize their securities laws, written so that fraud reachable in one state can be reached the same way in any other. Nearly every Series 66 question on registration starts with whether the person fits a regulated definition. Get the definition wrong and the rest of your answer is wrong.
NASAA, the North American Securities Administrators Association, is the umbrella body of state Administrators that drafts the model rules. The "Uniform" in Uniform Securities Act traces directly to NASAA's coordinating role.
An investment adviser is any person who, for compensation, engages in the business of advising others about the value of securities or the advisability of investing in securities. Three prongs: compensation, business activity, securities advice.
Common mistakes
- Confusing exclusion with exemption. An excluded person never meets the IA definition. An exempt person meets the definition but is excused from registration. The lawyer who occasionally mentions a stock to a client is excluded: she is not in the business of giving securities advice.
- Picking $100M as the federal-registration trigger. $100M is the minimum AUM that permits federal registration. The actual mandatory trigger to switch from state to federal is $110M. The deregistration floor for already-federal advisers is $90M.
- Treating an issuer's representative as always being an agent. An individual representing an issuer in a transaction in an exempt security (US Treasuries, municipals, bank issues) or in an exempt transaction is not an agent. The exemption is real and tested heavily.
Bottom line
- An IA needs all three prongs (compensation, business, securities advice) before the definition attaches; missing any one means it does not
- Federal/state IA split: under $90M is state-only, $100M+ is SEC-permitted, $90-100M is optional, with a $110M trigger to switch up and a $90M floor to switch back
- Form ADV Part 1 (firm data), Part 2A (brochure), Part 2B (supplement), Part 3 (Form CRS retail) filed electronically on IARD; annual updating amendment due within 90 days of fiscal year end, material changes within 30 days
- Custody triggers a qualified custodian, quarterly direct client statements, and an annual surprise audit, except in narrow safe-harbor cases
Exam shortcut
LATE for IA exclusions: Lawyers, Accountants, Teachers, Engineers when securities advice is incidental and uncompensated. Memorize the four professions; the additional common exclusion (BD with incidental advice and no special compensation) needs separate recall. The 90/110 buffer for federal/state advisers: $110M trigger up, $90M floor down. If the question asks when a state-registered adviser must federal-register, the answer is $110M, not $100M.
The full lesson (about 4,047 words, 27 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- D19
- D20
- D21
- D22
- D23
- D24
- D25
- D26
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