NASAA Series 63Regulation of Investment Advisers and IARsMedium
A federal covered investment adviser conducts business with clients in State M. The Administrator of State M wishes to require the adviser to maintain additional books and records beyond those mandated under the Investment Advisers Act of 1940. Under the Uniform Securities Act, the Administrator's authority to impose such a requirement is:
- Acontingent upon the adviser's written consent to additional state supervision
- Bunlimited, since all advisers doing business in the state are subject to state recordkeeping rules
- Climited to requiring notice filings, collecting fees, and enforcing antifraud provisions
- Dlimited to advisers with more than $100 million in regulatory assets under management
Show answer & explanationAnswer & explanation
Correct answer: C. limited to requiring notice filings, collecting fees, and enforcing antifraud provisions
Under NSMIA, states may not impose substantive registration or recordkeeping requirements on federal covered advisers beyond notice filing, fee collection, and enforcement of antifraud provisions; recordkeeping and registration are preempted and governed by the SEC.
Why the other options are wrong
- A. Adviser consent is irrelevant; the limitation is statutory under NSMIA, not contractual.
- B. States' authority is preempted for federal covered advisers, not unlimited.
- D. There is no AUM-based carve-out restoring state recordkeeping authority.
NSMIA Preemption for Federal Covered Advisers
States cannot impose registration or additional recordkeeping requirements on federal covered advisers; their authority is limited to notice filings, fees, and antifraud enforcement.
- Federal covered advisers register with the SEC, not the states
- States may require notice filing and collect fees
- Antifraud authority remains with the states regardless of federal covered status
Memory trick: Notice, fees, fraud — that's all a state affords