NASAA Series 63Regulation of Broker-Dealers and AgentsMedium
A registered agent in State X has a client who moves from State X to State Y. The client wants to continue doing business with the agent. The agent is not registered in State Y. Under the Uniform Securities Act, what is the agent allowed to do to continue servicing this client?
- AContinue servicing the client indefinitely as long as the transactions are unsolicited.
- BContinue servicing the client for 30 days while registration in State Y is pending.
- CContinue servicing the client for 60 days if the client initiates the contact.
- DImmediately cease all activity with the client until properly registered in State Y.
Show answer & explanationAnswer & explanation
Correct answer: B. Continue servicing the client for 30 days while registration in State Y is pending.
The Uniform Securities Act often provides a temporary period (typically 30 or 60 days, depending on the state and specific rule, but 30 days is a common temporary period for agents) during which an agent can continue to service an existing client who moves to a new state, provided the agent initiates the registration process in the new state.
Why the other options are wrong
- A. Unsolicited transactions do not generally exempt an agent from registration requirements in a state where they conduct business regularly.
- C. 60 days is less common, and the client initiating contact is not the primary condition for this temporary allowance.
- D. This is too restrictive; there's often a temporary allowance for existing clients.
Agent Temporary Registration (Moved Client)
An agent may continue to transact business with an existing client who moves to a new state for a limited period (e.g., 30 days) if the agent promptly applies for registration in the new state.
- Applies to existing clients only.
- Requires prompt application for registration in the new state.
- The temporary period is usually 30 or 60 days, depending on specific state rules.
Memory trick: Moved clients get a grace period, but registration must follow soon.