NASAA Series 63 — All Questions

An Administrator learns that FINRA completed an examination of a registered broker-dealer last month. What does Section 203(e) say about the Administrator's own examination authority?

• a.The Administrator may cooperate only with the administrators of other states, not with federal or industry bodies.
• b.The Administrator may still examine and may cooperate with the SEC, other states and industry bodies to avoid duplication.✓
• c.The Administrator must treat the FINRA examination as a substitute for any examination of the firm's records.
• d.The Administrator cannot examine the firm until a stated period has passed since the other examination ended.

Section 203(e) gives the Administrator authority to examine required records at any time. To avoid unnecessary duplication, he may, insofar as he deems practicable, cooperate with other states' administrators, the SEC, and registered national securities exchanges and associations. Cooperation is discretionary, not an obligation to defer, it is not limited to other states, and no waiting period suspends his own power.Uniform Securities Act §203(e)

Under Section 204(c), the Administrator summarily suspends an agent's registration pending a proceeding. Besides the agent, whom must the Administrator promptly notify of the order and the reasons for it?

• a.Every customer the agent served in the state during the previous year.
• b.The agent's employer, or the prospective employer if there is one.✓
• c.The administrator of every other state where the agent is registered.
• d.The SEC and the association of which the employing firm is a member.

Section 204(c) requires the Administrator, on entering a summary order, to notify the registrant and, if the registrant is an agent or investment adviser representative, the employer or prospective employer, that the order has been entered, why, and that a hearing will be set within 15 days of a written request. It does not require notice to customers, other states or the SEC.Uniform Securities Act §204(c)

A state requires registered investment advisers to furnish certain information to clients. An adviser delivers the disclosure documents it prepared under the Investment Advisers Act of 1940. May that satisfy the state requirement?

• a.Yes, automatically and in full, because federal disclosure always replaces the state requirement.
• b.No, a state requirement must be met with a separate document prepared for that state.
• c.Yes, but only when the adviser is a federal covered adviser exempt from state registration.
• d.Yes, to the extent the Administrator determines in his discretion, in whole or in part.✓

Section 203(b) lets the Administrator require information to be furnished to clients and prospective clients, and says that to the extent he determines in his discretion, information that complies with the Investment Advisers Act and its rules may be used in whole or partial satisfaction. The credit is therefore discretionary, so it is neither automatic nor barred, and it does not depend on federal covered adviser status, since the section addresses registered advisers.Uniform Securities Act §203(b)

Wells Consulting charges clients one fee for tax, insurance and estate planning, and as an integral part of that service it recommends specific securities. Under the Uniform Securities Act, Wells is:

• a.Not an investment adviser, because its securities advice is only one part of a broader planning service.
• b.An investment adviser only if it bills the clients separately for the securities advice that it gives.
• c.Not an investment adviser unless it also manages client accounts or holds custody of client securities.
• d.An investment adviser, because it gives securities advice for compensation as part of a business.✓

Section 401(f) includes financial planners and others who, as an integral component of other financially related services, provide investment advisory services for compensation as part of a business. Wells fits that language, so bundling the advice into a planning fee does not take it outside the definition. Managing accounts or having custody is not required, and a separate fee for the advice is not required either.Uniform Securities Act §401(f)

Marcus advertises that he will give securities advice for a fee, but he has not yet had a paying client. Is he an investment adviser under the Uniform Securities Act?

• a.Yes, but only if he also executes trades for clients and receives commissions on them.
• b.No, he becomes an investment adviser only once a client has paid him for his advice.
• c.Yes, the definition covers a person who holds himself out as giving advice for compensation.✓
• d.No, because the definition reaches only persons who give their advice through published newsletters.

Section 401(f) covers not only persons who engage in advising for compensation, but also financial planners and other persons who hold themselves out as providing investment advisory services to others for compensation. Marcus's advertising is a holding out, so he is an adviser before his first client pays. Publication is only one way of advising, and executing trades or earning commissions is not part of the test.Uniform Securities Act §401(f)

Professor Vance teaches finance at a college and also sells subscriptions to a monthly list of recommended stocks. Does the exclusion for teachers keep her out of the investment adviser definition?

• a.No, because only a lawyer, accountant or engineer qualifies, and a teacher does not qualify.
• b.Yes, because anyone employed as a teacher is excluded whatever other services she sells to the public.
• c.No, the exclusion covers only advice incidental to teaching, and a paid list of picks is not.✓
• d.Yes, because the exclusion applies whenever the advice is published and is not tailored to one client.

Section 401(f)(3) excludes a lawyer, accountant, engineer or teacher whose performance of advisory services is solely incidental to the practice of his profession. Selling a subscription list of stock picks is a separate paid business, not something incidental to teaching, so she is an adviser. Holding a teaching job alone does not exclude her, publication is not the test, and teachers are named in the exclusion.Uniform Securities Act §401(f)(3)

A registered broker-dealer's agent gives portfolio advice to a customer and charges a separate monthly fee for it, on top of the usual commissions. Does the exclusion for broker-dealers and their agents apply?

• a.Yes, because a fee charged for advice is treated as commission income of the broker-dealer that employs him.
• b.No, the exclusion applies only if the advice is solely incidental to brokerage and no special compensation is received.✓
• c.Yes, because the advice is given to a customer who already holds a brokerage account with that same firm.
• d.Yes, because the firm is registered as a broker-dealer, which is enough to exclude its agents from the definition.

Section 401(f)(4) excludes a broker-dealer or its agent only when the advisory services are solely incidental to the conduct of its business as a broker-dealer and no special compensation is received for them. A separate monthly fee is special compensation, so the exclusion is lost. Registration as a broker-dealer is not enough, the fee is not treated as commission income, and a customer relationship does not matter.Uniform Securities Act §401(f)(4)

Lowell publishes a bona fide financial newsletter and, for an extra fee, reviews individual subscribers' portfolios and tells each what to buy or sell. As to the portfolio reviews, Lowell is:

• a.An investment adviser, because the advice rests on each client's specific situation.✓
• b.Excluded as a publisher, because the reviews are simply an extension of the newsletter he publishes.
• c.Excluded as a publisher, because he is paid by his subscribers rather than through commissions.
• d.An investment adviser only if he also has custody of the securities that the subscribers hold.

Section 401(f)(5) excludes the publisher of a bona fide newsletter or financial publication only if it does not consist of advice based on the specific investment situation of each client. Portfolio reviews are exactly that kind of personalized advice, so the exclusion does not reach them. Being an extension of the newsletter, being paid by subscribers, and lacking custody do not change the result.Uniform Securities Act §401(f)(5)

Which authority may exclude additional persons from the Uniform Securities Act's definition of investment adviser, and on what ground?

• a.The Administrator, but only for persons who have already registered with the SEC as advisers.
• b.The SEC, by order, for any adviser whose clients are all institutions; the state has no such power.
• c.The Administrator, by rule or order, for persons that the definition was not intended to reach.✓
• d.The Administrator, by rule or order, for any person who agrees to file annual reports.

Section 401(f)(7) lets the Administrator, by rule or order, designate other persons not within the intent of the subsection as excluded from the definition. The power belongs to the state Administrator rather than the SEC, it is based on the definition's intent rather than prior federal registration, and a promise of annual reports is not the stated ground.Uniform Securities Act §401(f)(7)

Brightwater Advisory has $105 million of assets under management, is registered with its home state, and fits no exemption from the SEC registration prohibition. May it register with the SEC?

• a.Yes, but only if it advises a registered investment company or will have clients in 15 states.
• b.No, it must stay with its state, because SEC registration is open only at $110 million or above.
• c.No, it must register with the SEC, because assets of at least $100 million require SEC registration.
• d.Yes, it may but need not, because assets from $100 million to under $110 million fall within the buffer.✓

Under Rule 203A-1(a)(1), an adviser with assets under management of at least $100 million but less than $110 million may, but is not required to, register with the SEC. At $105 million Brightwater is inside that range, so the choice is its own. The mandatory line is $110 million, an adviser to a registered investment company is a separate path, and the 15-state rule is another.Advisers Act §203A(a); Rule 203A-1(a)(1)

An SEC-registered adviser reports $95 million of assets under management in its annual updating amendment. It fits no exemption. What must it do?

• a.Withdraw and register with its home state, because the buffer protects only advisers that are growing.
• b.Switch to state registration within 90 days, since its assets are below the $110 million buffer.
• c.Nothing, because it need not withdraw until its assets under management fall below $90 million.✓
• d.Withdraw and register with its home state, because assets below $100 million require state registration.

Rule 203A-1(a)(1) lets an SEC-registered adviser stay registered until its assets under management drop below $90 million. At $95 million the adviser is inside the buffer between $90 million and $110 million, so no withdrawal is required. Falling below $100 million alone does not trigger one, the buffer does not depend on growth, and the 90-day period applies to switching up to the SEC, not leaving it.Rule 203A-1(a)(1)

Calloway Advisors has $60 million of assets under management and is registered in its home state, which examines advisers. If it stayed state-registered it would have to register in 16 states. May it register with the SEC?

• a.Yes, because a mid-sized adviser required to register in 15 or more states may register with the SEC.✓
• b.Yes, but only if it also advises a registered investment company or a business development company.
• c.No, because an adviser with less than $100 million of assets under management cannot register with the SEC.
• d.No, because the 15-state provision is available only to advisers with at least $100 million of assets.

Section 203A(a)(2)(A) bars SEC registration for a mid-sized adviser, with an exception: if by effect of that bar the adviser would be required to register with 15 or more states, it may register with the SEC. Calloway's 16 states meet the test. The $100 million figure is the top of the mid-sized range, not a requirement for the exception, and advising a registered fund is a separate exception.Advisers Act §203A(a)(2)(A)

Hollis Associates advises employee benefit plans on selecting money managers, for plans with aggregate assets of $230 million, but it manages no securities portfolios. Does it qualify for SEC registration?

• a.No, because plan assets count toward the threshold only if the plans are governmental plans.
• b.Yes, as a pension consultant to benefit plans with aggregate assets of at least $200 million.✓
• c.No, because without $100 million of assets under management it must register with its home state.
• d.Yes, but only if the plans' assets total at least $500 million when advice is cumulated.

Rule 203A-2(a) exempts a pension consultant, meaning an adviser to ERISA, governmental or church plans, from the prohibition on SEC registration if the plans for which it gave advice have an aggregate value of at least $200 million. Hollis meets that with $230 million, regardless of its assets under management. The count is not limited to governmental plans, and the threshold is not $500 million.Rule 203A-2(a)

Dunmore, an SEC-registered adviser with a December 31 fiscal year end, reports in its annual updating amendment for the year ended December 31, 2025 that it is no longer eligible for SEC registration. By what date must it file Form ADV-W?

• a.April 30, 2026, which is just 120 days out.
• b.December 31, 2026, which is one year out.
• c.March 31, 2026, which is just 90 days out.
• d.June 29, 2026, which is 180 days out.✓

Rule 203A-1(b)(2) requires an SEC-registered adviser that reports it is not eligible for SEC registration to file Form ADV-W within 180 days of its fiscal year end. Counting 180 days from December 31, 2025 reaches June 29, 2026. Ninety days is the period for annual updating amendments and for a state adviser to apply to the SEC, 120 days is used for brochure delivery and the new-adviser exemption, and a full year is not a period in the rule.Rule 203A-1(b)(2)

Cedar Point Advisors is registered with its state. On March 10, 2026 it files an annual updating amendment to Form ADV reporting that it is eligible for SEC registration and relies on no exemption from registration. By what date must it apply for SEC registration?

• a.April 9, 2026, because the rule allows 30 days to apply.
• b.June 8, 2026, which is 90 days after that filing was made.✓
• c.September 6, 2026, because the full 180 days is allowed.
• d.July 8, 2026, because the rule allows 120 days to apply.

Rule 203A-1(b)(1) requires a state-registered adviser to apply for SEC registration within 90 days of filing an annual updating amendment reporting that it is eligible. March 10 plus 90 days is June 8 (21 days to March 31, 30 in April, 31 in May, 8 in June). The 120-day and 180-day periods belong to other rules, and 30 days is not a period in this rule.Rule 203A-1(b)(1)

An SEC-registered adviser has a June 30 fiscal year end. By what date must it file the annual updating amendment to its Form ADV?

• a.September 28, because the amendment is due within 90 days of fiscal year end.✓
• b.October 28, because the amendment is due within 120 days of the fiscal year end.
• c.July 30, because the amendment is due within 30 days of the fiscal year end.
• d.December 27, because the amendment is due within 180 days of the fiscal year end.

Rule 204-1(a)(1) requires an adviser to amend its Form ADV at least annually, within 90 days of the end of its fiscal year. From June 30, 90 days ends on September 28 (31 days in July, 31 in August, 28 in September). The 120-day period concerns delivery of brochure updates to clients, the 180-day period concerns withdrawing from SEC registration, and 30 days is not a deadline here.Advisers Act Rule 204-1(a)(1)

An SEC-registered adviser has a June 30 fiscal year end, and its brochure has material changes since its last annual updating amendment. By what date must it deliver the annual brochure update to clients?

• a.September 28, which is 90 days after year end.
• b.December 27, i.e. 180 days from then on.
• c.July 30, which is 30 days after year end.
• d.October 28, counting 120 days from June 30.✓

Rule 204-3(b)(2) requires an adviser, annually within 120 days after the end of its fiscal year and without charge, to deliver to each client either a current brochure or a summary of material changes that offers the brochure, if there are material changes since the last annual updating amendment. From June 30 that is October 28. Ninety days is the filing deadline for the amendment, not the delivery deadline.Advisers Act Rule 204-3(b)(2)

An SEC-registered adviser sells subscriptions to a model-portfolio service that gives only impersonal advice, for $420 a year. Must it deliver a Form ADV brochure to a subscriber?

• a.No, but only if the subscriber is a qualified client who has also waived delivery in writing.
• b.Yes, but only annually, within 120 days after the end of the adviser's fiscal year, if there are changes.
• c.Yes, a brochure must be delivered to every client before or at the time of entering the advisory contract.
• d.No, because the client receives only impersonal advice for which the adviser charges less than $500 per year.✓

Rule 204-3(c)(1)(ii) excuses brochure delivery to a client who receives only impersonal investment advice for which the adviser charges less than $500 per year. At $420 the subscriber falls within that exception. The delivery-at-contract requirement is the general rule that this exception overrides, the annual delivery relates to material changes for clients who are owed a brochure, and no written waiver or qualified client status is involved.Advisers Act Rule 204-3(c)(1)(ii)

A state securities administrator receives complaints that an SEC-registered adviser defrauded clients in the state. May the Administrator investigate and bring an enforcement action?

• a.Yes, but only after the SEC has formally referred the matter to the state in writing.
• b.No, because the SEC has exclusive jurisdiction over every adviser that is registered with it.
• c.No, unless the adviser also has a place of business in the state and is licensed by it.
• d.Yes, a state keeps its authority to act against fraud or deceit by the adviser.✓

Section 203A(b)(2) of the Advisers Act preserves the power of a state securities commission to investigate and bring enforcement actions for fraud or deceit against an investment adviser or a person associated with one, even when the adviser is registered with the SEC. The preemption of state registration is not exclusive jurisdiction, and neither an SEC referral nor a local office is a condition.Advisers Act §203A(b)(2)

Oakridge Advisers has no place of business in this state and had three clients residing here during the past twelve months. Does the state's prohibition on fraudulent conduct still apply to Oakridge's dealings with those clients?

• a.Yes, the de minimis provision excepts the state's antifraud provisions, so those still apply.✓
• b.Yes, but only if at least one of the three resident clients is not an institutional investor.
• c.No, because an adviser with fewer than six resident clients is entirely outside the state's adviser law.
• d.No, because only the SEC may enforce antifraud rules against an adviser not registered here.

Section 222(d) of the Advisers Act bars a state from requiring registration or compliance with its adviser law for an adviser that has no place of business in the state and fewer than six resident clients in the preceding 12 months, but it carves out any provision prohibiting fraudulent conduct. Oakridge stays subject to the state's antifraud provisions, so it is not wholly outside the law. The SEC has no exclusive role, and the clients' type does not matter.Advisers Act §222(d)

A state requires investment adviser representatives of SEC-registered advisers to register. For which such representatives may a state do so?

• a.Only representatives who have a place of business located in the state.✓
• b.None, because federal law preempts every state registration of them.
• c.All who have a client residing in the state, wherever the representative works.
• d.Only representatives whose adviser has its principal office in the state.

Section 203A(b)(1)(A) preempts state registration of SEC-registered advisers and their supervised persons, except that a state may license, register or otherwise qualify any investment adviser representative who has a place of business in that state. A client's residence does not create a place of business, the employer's location is not the test, and the preemption has the stated exception.Advisers Act §203A(b)(1)(A)

Mara is a supervised person of an SEC-registered adviser. Of her 90 clients, 7 are natural persons who are not qualified clients, and she meets regularly with all of her clients. Under Rule 203A-3, is she an investment adviser representative?

• a.Yes, because the 10% test counts all natural-person clients, including qualified clients.
• b.No, because a supervised person needs 25 or more natural-person clients to be classified.
• c.No, because 7 of her 90 clients is about 7.8%, which is not more than 10% of her entire client base.✓
• d.Yes, because she has more than five natural-person clients and meets with them regularly.

Rule 203A-3(a)(1) makes a supervised person an investment adviser representative only if more than five of her clients are natural persons other than qualified clients and those natural persons are more than 10% of her clients. Mara passes the first test with 7 but fails the second, since 7 of 90 is about 7.8%. Regular contact is only a condition of exclusion, qualified clients are not counted, and 25 is not a number in the rule.Advisers Act Rule 203A-3(a)(1)

Ryan, a supervised person of an SEC-registered adviser, is assigned 40 non-qualified natural-person clients out of 200, but he does not on a regular basis solicit, meet with or communicate with them. Under Rule 203A-3, is he an investment adviser representative?

• a.No, because only supervised persons with discretionary authority over accounts can be so classified.
• b.Yes, because the exclusion for lack of client contact applies only to supervised persons with no clients.
• c.Yes, because he is assigned more than five natural-person clients, who are more than 10% of the total.
• d.No, because he does not regularly solicit, meet with or communicate with the adviser's clients.✓

Rule 203A-3(a)(1) is met on the numbers, since 40 clients exceed five and 40 of 200 is 20%. But paragraph (a)(2) says that, despite that, a supervised person is not an investment adviser representative if he does not on a regular basis solicit, meet with or otherwise communicate with the adviser's clients. The exclusion does not depend on having no clients, and discretionary authority is not part of the test.Advisers Act Rule 203A-3(a)(2)

A state-registered investment adviser's registration is cancelled. The following week its registered investment adviser representative, Dev, keeps advising the firm's clients. What is the status of Dev's registration?

• a.It remains effective for 30 days, enough time for him to find a new registered employer.
• b.It remains effective, because a representative's registration belongs to him and not to his employer.
• c.It remains effective until December 31, when all registrations expire unless renewed.
• d.It is not effective while he is not employed by an investment adviser registered under the act.✓

Section 201(d) provides that the registration of an investment adviser representative is not effective during any period when he is not employed by an investment adviser registered under the act. With the firm's registration cancelled, Dev has no registered employer, so he cannot act. Expiration on December 31 is a separate rule, the registration is tied to the employer, and the act has no 30-day grace period.Uniform Securities Act §201(d)

At a state-registered adviser, Teo never talks to clients or manages accounts, but he decides which securities recommendations the firm's advisers will give to clients. Is Teo an investment adviser representative?

• a.No, because he is an employee rather than a partner, officer or director of the investment adviser.
• b.Yes, but only if he is paid a commission based on the securities that his clients buy or sell.
• c.No, because he must deal directly with clients or manage their accounts to be a representative.
• d.Yes, because he determines which recommendation or advice regarding securities should be given to clients.✓

Section 401(g) includes among the functions that make an individual associated with a registered adviser a representative determining which recommendation or advice regarding securities should be given. Teo does that, so direct client contact or account management is not required. The definition covers employees as well as partners, officers and directors, and commission pay is not an element.Uniform Securities Act §401(g)

At a state-registered adviser, the chief financial officer handles payroll and tax filings and has no role in advice, accounts or soliciting clients. Is she an investment adviser representative?

• a.Yes, because every officer of a registered investment adviser is an investment adviser representative.
• b.Yes, because she is employed by an adviser that is registered or required to be registered.
• c.No, because the definition includes only individuals who are not officers of the investment adviser.
• d.No, because even an officer is a representative only if she performs one of the listed functions.✓

Section 401(g) covers a partner, officer, director or other employee of a registered adviser who also does something on the list: gives recommendations or advice, manages accounts, determines the advice to be given, solicits or sells advisory services, or supervises people who do those things. The chief financial officer does none of them, so holding an office or working for a registered firm is not enough, and officers are not excluded by the definition.Uniform Securities Act §401(g)

Ana, a supervised person of an SEC-registered adviser, has 36 clients, 8 of them natural persons who are not qualified clients. Four of those 8 do not live in the United States, and Ana does not count them, as Rule 203A-3 permits. Is she an investment adviser representative?

• a.No, because only 4 countable natural-person clients remain, not more than five.✓
• b.No, because natural persons count only if each holds at least $1 million with the adviser.
• c.Yes, because the non-resident exclusion applies to the 10% test but not to the count of five.
• d.Yes, because 8 natural persons exceed five and make up more than 10% of her 36 clients.

Rule 203A-3(a)(4) says supervised persons need not count clients who are not residents of the United States. Without the four non-residents, Ana has 4 natural-person clients, which is not more than five, so paragraph (a)(1) is not satisfied. Counting all eight would give a different result, but the exclusion covers the count of five as well as the percentage, and no minimum asset level appears in the rule.Advisers Act Rule 203A-3(a)(4)

A corporation's sales officer is paid a commission to sell the company's own promissory notes to individual investors. The notes mature in 180 days, come in $100,000 denominations, and carry the second-highest rating from a nationally recognized rating organization. Must the officer register as an agent?

• a.No, because an employee who sells only the employer's own securities is outside the agent definition, whatever the security.
• b.Yes, because a person paid commission to sell securities to individual investors is an agent unless the buyers are all institutions.
• c.No, because notes that meet the maturity, denomination and rating tests are exempt, so the issuer's own representative is excluded.✓
• d.Yes, because only securities issued or guaranteed by governments or banks can be sold by an issuer's staff without registration.

Section 401(b) excludes an issuer's representative who effects transactions in securities exempt under Section 402(a)(10). That exemption covers notes maturing within nine months, issued in denominations of at least $50,000 and rated in one of the three highest categories, and these notes meet every test. The commission and the individual buyers do not change the result. The exclusion is not limited to government or bank securities, and it is not a blanket rule for an issuer's own securities, because most exempt categories are not covered by it.Uniform Securities Act §401(b); §402(a)(10)

A manufacturer's sales representative is paid a commission to sell the manufacturer's twelve-month promissory notes to individuals. The notes are issued in $100,000 denominations and carry a top rating from a nationally recognized rating organization. What is the representative's status?

• a.An agent only if the notes are also sold in another state, because the Act applies solely to interstate selling.
• b.Not an agent, because the denomination and rating tests are met, and maturity is not a condition of the exemption at all.
• c.An agent, because notes maturing after nine months fall outside Section 402(a)(10), so the exclusion is unavailable.✓
• d.Not an agent, because notes sold in $100,000 pieces are institutional-size sales that need no registered salesperson.

The commercial paper exemption in Section 402(a)(10) requires all three conditions together: maturity within nine months, denominations of at least $50,000 and a top-three rating. A twelve-month maturity fails the first, so the notes are not exempt and the representative falls outside the Section 401(b) exclusion; the commission leaves the individual squarely inside the agent definition. Denomination size alone creates no exclusion, and a sale made in the state is covered whether or not another state is also involved.Uniform Securities Act §401(b); §402(a)(10)

An issuer's employee is paid a commission to sell the issuer's common stock, listed on the New York Stock Exchange, to retail customers in the state. The stock is exempt from registration under Section 402(a)(8). Must the employee register as an agent?

• a.No, because the commission is paid by the issuer rather than by a broker-dealer, so no agency relationship exists.
• b.No, because listed stock is a covered security, and the registration provisions of the Act do not reach those who sell it.
• c.Yes, because the issuer exclusion reaches only certain exempt securities, and exchange-listed stock is not one of them.✓
• d.No, because a security that is exempt from registration may be sold by an issuer's representative with no agent registration.

Section 401(b) excludes an issuer's representative only for securities exempt under clauses (1), (2), (3), (10) and (11) of Section 402(a), plus certain exempt transactions. Listed securities fall under clause (8), which is outside that list, so the employee who sells them for commission is an agent. Exemption of the security from registration is a separate question from whether the seller must register. Covered-security status limits what a state may require of the security, not of its sellers, and an agent may represent an issuer, so the payer being the issuer changes nothing.Uniform Securities Act §401(b); §402(a)(8)

A religious congregation issues bonds to finance a new building and engages a paid fundraiser to sell them to the public in the state for a commission. The bonds are exempt from registration as securities of a not-for-profit religious organization. What is the fundraiser's status?

• a.Not an agent, because the securities are exempt from registration, and so are the people who sell them for a commission.
• b.An agent, because the issuer exclusion does not extend to securities exempt as nonprofit under Section 402(a)(9).✓
• c.Not an agent, because fundraising for a religious issuer is a charitable function and not a commercial securities sale.
• d.An agent only if the bonds are sold to buyers who are not members of the congregation that issued them.

Section 401(b) excludes issuer representatives only for clauses (1), (2), (3), (10) and (11) of Section 402(a), and the nonprofit exemption is clause (9). A paid fundraiser who sells nonprofit bonds is therefore an agent, and the commission confirms that the work is a securities sale. Exempting a security from registration does not exempt the seller from registering, the issuer's purpose does not alter the seller's function, and the buyers' membership is irrelevant to the definition.Uniform Securities Act §401(b); §402(a)(9)

A corporation will start an employee profit-sharing plan involving an investment contract on November 1. It wants staff who administer the plan to stay outside the agent definition under Section 402(a)(11). What is the latest date for written notice to the Administrator?

• a.October 1, because notice is due thirty days before the start and the start date counts as day one.
• b.October 2, since notice is due thirty days before inception and October has 31 days.✓
• c.December 1, because notice may be filed up to thirty days after the plan has already begun.
• d.October 31, because notice is due by the end of the calendar month before the plan begins.

Section 402(a)(11) exempts the investment contract only if the Administrator is notified in writing thirty days before the inception of the plan. Counting back from November 1, thirty days earlier is October 2, because October has 31 days. October 1 would be early but compliant, so it is not the latest date. A month-end deadline appears nowhere in the Act, and notice after the plan begins is the lapse the provision is meant to prevent.Uniform Securities Act §402(a)(11); §401(b)

The human resources director of a private company sells newly issued company shares to current employees, and the company pays her a one-percent commission on every sale. How does the commission affect her status?

• a.She is an agent, because a sale to employees is excluded only when no commission is paid.✓
• b.She is not an agent, because her main duties are administrative and the selling is incidental to her position.
• c.She is an agent only if a broker-dealer, not the issuer that employs her, is the one who pays the commission.
• d.She is not an agent, because her buyers are employees of the issuer who already know the business well.

Section 401(b) excludes an issuer's representative who deals with existing employees, partners or directors only if no commission or other remuneration is paid, directly or indirectly, for soliciting any person in the state. The one-percent commission removes the exclusion, so she is an agent. The buyers' familiarity with the company is not part of the test, an issuer's payment counts as much as a broker-dealer's, and incidental selling that earns transaction pay is still selling.Uniform Securities Act §401(b)

At an issuer's call center, a caller phones prospects, describes the offering and its price, and urges them to buy. A registered agent later takes each order, and the caller never accepts one. Is the caller an agent?

• a.Yes, because attempting to effect sales makes her an agent, even if someone else completes the order.✓
• b.Yes, but only if the caller is paid compensation that is tied directly to the orders that result.
• c.No, because only the individual who accepts the order and completes the sale is an agent under the Act.
• d.No, because the caller only generates leads for the registered agent who takes and completes each order.

Section 401(b) defines an agent as an individual who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales. Describing the offering and urging a purchase is an attempt to effect a sale, so the caller must be registered. Completing the order is not required, the registered agent's involvement does not cover the caller, and the definition has no requirement of transaction-based pay.Uniform Securities Act §401(b)

An issuer's officer personally offers newly issued notes to eight individuals in the state during one twelve-month period. All eight buy for investment, and no one is paid for soliciting. The officer receives only a salary. Is the officer an agent for this offering?

• a.No, because the offers are exempt under Section 402(b), so an issuer's representative making only them is excluded.✓
• b.Yes, because every individual who offers securities to people in the state must register before the first offer.
• c.Yes, because the limited-offering exemption permits no more than five offerees in any twelve-month period of selling.
• d.No, because an officer of an issuer is excluded from the agent definition whatever the securities or the buyers.

Section 401(b) excludes an issuer's representative who effects transactions exempt under Section 402(b). Section 402(b)(9) exempts offers to not more than ten persons in the state in twelve months when buyers purchase for investment and no commission is paid for soliciting, and eight buyers satisfy it. The permitted number is ten, not five. An officer is an agent only if he otherwise falls within the definition, so the exclusion rests on the exempt transaction rather than on the title.Uniform Securities Act §401(b); §402(b)(9)

A representative is named in a consumer-initiated arbitration claim filed in 2024 alleging unsuitable recommendations, which settles for $14,000. A second consumer-initiated sales-practice arbitration claim filed in 2025 settles for $15,000. How many settlements require a yes answer on Form U4?

• a.One, because each matter stands alone and only the $15,000 settlement meets the $15,000 threshold.✓
• b.None, because a settlement is reportable only when an arbitration award is also entered against him.
• c.Two, because the combined total of $29,000 exceeds the reporting threshold for settlements of claims.
• d.Two, because every settlement of a sales-practice claim is reportable, whatever amount is paid.

For arbitration claims filed on or after May 18, 2009, Question 14I(4)(a) asks about a settlement of $15,000 or more. Each claim is tested separately, so the $14,000 settlement falls short and the $15,000 settlement meets the threshold exactly. Settlements are not added together, and the form sets a dollar floor for settlements. The award prong, which applies regardless of amount, is a separate prong, so a settlement does not need an award.Form U4 (Rev. 05/2009), Question 14I(4)(a)

Within the past 24 months a representative received two unsettled written customer complaints. One alleges sales practice violations and claims $4,000 in damages. The other alleges that she forged a client's signature on a withdrawal form and states no dollar amount. How must she answer Question 14I(3)?

• a.Yes, but only for the forgery complaint, since the sales-practice complaint is below the damages limit.✓
• b.Yes, because both complaints are reportable within 24 months whatever the amount claimed in each one.
• c.No, because neither complaint has settled, produced an award, or claimed damages of more than $5,000.
• d.Yes, but only because of the sales-practice complaint, since forgery allegations are asked about elsewhere.

Question 14I(3) asks about written consumer complaints in the past 24 months that either allege sales practice violations and claim compensatory damages of $5,000 or more, or allege forgery, theft, misappropriation or conversion of funds or securities. The forgery allegation qualifies with no dollar threshold, while the $4,000 claim is under $5,000. A pending or unsettled status does not matter for this question, and forgery sits within the same question.Form U4 (Rev. 05/2009), Question 14I(3)

An applicant filed a personal bankruptcy petition twelve years ago. Seven years ago a corporation he controlled filed a bankruptcy petition because of events that occurred while he controlled it. How must he answer Question 14K?

• a.Yes, but only if the corporation's creditors were not paid in full when the case was finally closed.
• b.No, because the question concerns only the applicant's own filings, and his personal petition is too old to count.
• c.Yes, because bankruptcy filings must be disclosed on Form U4 no matter how long ago they occurred.
• d.Yes, because an organization he controlled filed within the past ten years, though his own petition did not.✓

Question 14K covers the past ten years and includes an organization's bankruptcy based on events that occurred while the applicant exercised control over it. The corporation's filing seven years ago is inside that period, so the answer is yes. His own petition twelve years ago is outside it. The question is not limited to personal filings, it is not open-ended in time, and it asks about the filing rather than the recovery of creditors.Form U4 (Rev. 05/2009), Question 14K

Twenty years ago an applicant was charged with a felony. The charge was dismissed, and no conviction or plea resulted. How should he answer Question 14A(1)(b), which asks whether he has ever been charged with a felony?

• a.Yes, but only if the felony involved securities, fraud, or the wrongful taking of property.
• b.Yes, because the question asks whether he was ever charged, and dismissal does not remove that.✓
• c.No, because charges that are more than ten years old no longer need to be reported at all.
• d.No, because only felony convictions and guilty or no-contest pleas must be reported on the form.

Question 14A(1)(b) asks whether the applicant has ever been charged with any felony, with no time limit and no requirement of conviction. Dismissal does not change the fact of the charge. Convictions and pleas are asked about in a separate part of the same question, the ten-year period belongs to Question 14K rather than 14A, and the securities, fraud or property qualifier belongs to the misdemeanor question, 14B.Form U4 (Rev. 05/2009), Question 14A(1)(b)

Fifteen years ago an applicant pled guilty to misdemeanor shoplifting. Last year she was convicted of misdemeanor reckless driving. How should she answer Question 14B(1)(a), which concerns certain misdemeanor convictions?

• a.Yes, because both misdemeanors are reportable, as the question reaches any misdemeanor conviction.
• b.Yes, because shoplifting is a wrongful taking of property, and the driving offense is not covered here.✓
• c.No, because the shoplifting plea is more than ten years old and the question reaches back only that far.
• d.No, because only misdemeanors connected with the securities business are covered by the question.

Question 14B(1)(a) covers a conviction or plea to a misdemeanor involving investments or an investment-related business or any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit one of these. Shoplifting is a wrongful taking of property, and a guilty plea counts. Reckless driving is not on the list. The question is not limited to securities offenses, and it asks whether she has ever been convicted, not about a ten-year period.Form U4 (Rev. 05/2009), Question 14B(1)(a)

An applicant has an unpaid tax lien against her and a separate court judgment that she paid in full two years ago. Which statement about Question 14M, concerning unsatisfied judgments or liens, is correct?

• a.She answers no, because a tax lien is reported only if the lienholder is a bonding company.
• b.She answers yes, because both items must be reported until ten years have passed from their dates.
• c.She answers no, because the question applies only to judgments that arose from investment-related activity.
• d.She answers yes for the unpaid lien, since the question reaches only unsatisfied judgments and liens.✓

Question 14M asks whether there are any unsatisfied judgments or liens against the applicant. The unpaid tax lien is unsatisfied, so the answer is yes, and the judgment paid in full is not within the question. The question is not limited to investment-related judgments, it has no ten-year window, and it does not depend on a bonding company, which is the subject of Question 14L.Form U4 (Rev. 05/2009), Question 14M

A representative resigned after her firm alleged that she had wrongfully taken customer funds. No regulator or court ever brought a proceeding. How should she answer Question 14J?

• a.Yes, because resigning after allegations of wrongfully taking property is reportable even without a proceeding.✓
• b.Yes, but only if the firm also reported the allegation to regulators on its own Form U5 filing for her.
• c.No, because a resignation is voluntary, and only a discharge from the firm is disclosed by this particular question.
• d.No, because the allegation was never proven in any regulatory or court proceeding against the representative.

Question 14J asks whether the applicant has ever voluntarily resigned, been discharged or been permitted to resign after allegations accusing her of, among other things, fraud or the wrongful taking of property. The answer depends on the allegation and the departure, not on a proceeding or proof. A voluntary resignation is expressly included, and the question does not depend on what the firm filed.Form U4 (Rev. 05/2009), Question 14J(2)

A representative learns on March 3 that a customer has filed a written complaint alleging that she forged a signature. The complaint changes an answer previously reported on her Form U4, and no statutory disqualification is involved. By what date must the Form U4 be amended?

• a.March 31, which is the end of the calendar month in which she learned of the facts about the complaint.
• b.May 2, which is sixty days after the date on which she first learned of the facts about the complaint.
• c.December 31, which is the next date on which her registration in the state comes up for annual renewal.
• d.April 2, which is thirty days after the date on which she learned of the facts that changed her answer on the form.✓

FINRA By-Laws Article V, Section 2 requires an amendment to the Form U4 to be filed within 30 days of learning of the facts that give rise to it. Counting from March 3, March has 28 more days to March 31 and two more reach April 2, so the thirtieth day is April 2. The deadline is not tied to month-end, is not 60 days, and is not deferred to renewal.FINRA By-Laws, Art. V, §2(c); Form U4 Section 15D

On June 1 an agent leaves Firm One, where she was registered in States A and B. On June 15 Firm Two files her Form U4 requesting registration in States A, B and C and includes the temporary registration acknowledgment. What may she do?

• a.Request it in no state, since it is available only to applicants who have never been registered before.
• b.Request it in all three states, since the acknowledgment covers every jurisdiction listed on the form.
• c.Request it in States A and B and act there as soon as Firm Two has filed her Form U4 online.
• d.Request temporary registration only in States A and B, and act only after CRD says it is granted.✓

Section 15C allows temporary registration only in jurisdictions where the applicant was registered with her prior firm within the previous 30 days. June 15 is 14 days after June 1, so States A and B qualify but State C does not. She may not engage in activity requiring registration until she receives notice from CRD or IARD that temporary registration has been granted. Prior registration is what makes the request available, not a bar, and filing alone confers no authority.Form U4 (Rev. 05/2009), Section 15C

A broker-dealer hires an applicant who has worked for several firms during the past eight years. The firm's signatory completes the firm representations on the Form U4. How far back must the firm have communicated with the applicant's previous employers?

• a.The past eight years, to match the length of the applicant's actual securities experience.
• b.The past three years, with the persons contacted and the dates of contact documented.✓
• c.The past five years, to match the period covered by the applicant's residential history.
• d.The past ten years, to match the period covered by the applicant's employment history.

The firm representations in Section 15B state that the firm has communicated with all of the applicant's previous employers for the past three years and has documentation on file with the names of the persons contacted and the date of contact. The five-year and ten-year periods are the form's residential and employment history periods, which are different requirements, and the look-back does not stretch to the applicant's full experience.Form U4 (Rev. 05/2009), Section 15B

A firm files one amendment to a representative's Form U4 that changes only her residential address. It files a second amendment that adds a new customer complaint to a disclosure reporting page. For which amendment must the representative give her own signed acknowledgment?

• a.Only the second, because her acknowledgment is needed when an amendment changes Section 14 or a disclosure reporting page.✓
• b.Neither, because the firm's signatory may give the acknowledgment for the individual on all amendments.
• c.Only the first, because a change to personal information may be made on the form only with her consent.
• d.Both, because the individual must personally acknowledge every amendment filed on her behalf, whatever it changes.

Section 15D must be completed on any amendment that changes information in Section 14 (the disclosure questions) or on any disclosure reporting page. The address-only amendment needs only the firm's amendment representations in Section 15E. The form does not require her acknowledgment for every change, and the firm does not sign in her place for disclosure changes.Form U4 (Rev. 05/2009), Sections 15D and 15E

An applicant seeks registration only as an investment adviser representative, in states that require fingerprint cards, and is not also applying to become a broker-dealer representative with that firm. How does Form U4 handle his fingerprints?

• a.He submits the card to FINRA, which forwards it to every state, because states do not collect fingerprint cards.
• b.He submits the card to the SEC, which processes it and posts the result to each state in which he applies.
• c.He submits no card, because adviser representatives are exempt under the permissive exemptions in Rule 17f-2.
• d.He affirms he applies only as an investment adviser representative and sends the fingerprint card to the states directly.✓

Section 2 contains an option for applicants applying only as investment adviser representatives and not also as broker-dealer representatives with that firm. Such an applicant either applies only in jurisdictions with no fingerprint card requirement or submits the appropriate card directly to the jurisdictions for processing under their rules. Routing through FINRA is for broker-dealer registration. The Rule 17f-2 exemptions are separate, narrow federal exceptions, and the form never routes this card to the SEC.Form U4 (Rev. 05/2009), Section 2

A registered representative's employment with a broker-dealer ends on September 12. When must the firm submit the Form U5, and what must it give the former representative?

• a.The firm must file by September 30, the end of the month, and give the individual a copy when he asks.
• b.The firm must file by October 12 and give the individual a copy within the same 30-day period.✓
• c.The firm must file by December 11, which is ninety days after the end of his employment with the firm.
• d.The firm must file by September 22 and send the individual a copy only if he requests one in writing.

A Form U5 must be submitted within 30 days of the individual's employment end date, and the firm must also give the individual a copy within 30 days. Thirty days after September 12 is October 12. A ten-day deadline, a month-end deadline and a ninety-day deadline have no basis in the filing requirements, and the copy to the individual is not conditioned on a request.FINRA Form U5 filing requirements

An agent's registrations were terminated by a Form U5 filed last January. Fourteen months later she moves to a new apartment and has not joined another firm. What is her obligation regarding her residential address?

• a.She need not report it, because her obligations to regulators ended when the firm filed the Form U5 last January.
• b.She must report it, because she remains subject to regulators' jurisdiction for at least two years after the termination date.✓
• c.She must report it only if the move is to another state, because the regulators with jurisdiction are state agencies.
• d.She must report it, but only until six months after termination, a period that has already passed by now.

Individuals remain subject to the jurisdiction of the regulators with which they were registered for at least two years after termination, and must report residential address changes for two years following the termination date or the last Form U5 amendment. Fourteen months is inside that period. The filing of the Form U5 does not end the duty, the duty is not limited to interstate moves, and the period is two years, not six months.FINRA Form U5 instructions; individual obligations after termination

An agent remains employed and registered with her firm in States A and B, but the firm withdraws her registration in State C because she no longer solicits there. Which Form U5 filing does the firm use?

• a.A partial Form U5, which ends only the State C registration and omits the termination reason and disclosure questions.✓
• b.No Form U5, because a firm files the form only when an agent leaves the firm completely and not for a single state.
• c.An amendment Form U5, which updates the termination date for registrations that have already been ended on an earlier filing.
• d.A full Form U5, which ends all of her registrations and must include the reason for termination and the disclosure questions.

A partial Form U5 terminates the individual from selected SROs and jurisdictions and does not include the reason for termination or the disclosure questions. A full Form U5 terminates all registrations, which is not what the firm intends. An amendment form is for an individual who was previously terminated, and a firm that drops a state registration still files a partial form.FINRA Form U5 filing types