NASAA Series 63Regulation of Securities and IssuersMedium
An open-end investment company registered under the Investment Company Act of 1940 offers its shares for sale in a state. Under the Uniform Securities Act, the Administrator may require the investment company to:
- ATake no action at all, since federal covered securities are entirely outside state jurisdiction
- BRegister the securities by qualification before any sales occur
- CFile a notice filing and pay a fee, but may not require full registration of the securities
- DRegister the securities by coordination only if the fund is federal covered
Show answer & explanationAnswer & explanation
Correct answer: C. File a notice filing and pay a fee, but may not require full registration of the securities
Shares of registered investment companies are federal covered securities under NSMIA, exempting them from state registration. However, states may still require a notice filing and collection of fees for such offerings.
Why the other options are wrong
- A. Incorrect; states still have limited notice filing authority.
- B. Incorrect; full state registration is preempted for federal covered securities.
- D. Incorrect; coordination registration doesn't apply here since the security is already federal covered.
Notice Filing for Federal Covered Securities
States may require notice filings and fees for federal covered securities like registered investment company shares, but cannot require full registration.
- NSMIA preempts state registration of federal covered securities
- States retain notice filing and fee authority
- Applies to mutual funds and NMS-listed securities
Memory trick: Feds cover it, states just collect a small toll.