NASAA Series 63Regulation of Broker-Dealers and AgentsMedium
A client makes an unsolicited order to purchase a security through an agent who is registered in State A but not in State B, where the client is temporarily vacationing. The agent executes the order. Under the Uniform Securities Act, is this transaction permissible?
- ANo, unless the agent's broker-dealer is also registered in State B.
- BNo, because the agent is not registered in State B.
- CYes, because the order was unsolicited.
- DYes, but only if the agent initiates registration in State B within 10 business days.
Show answer & explanationAnswer & explanation
Correct answer: C. Yes, because the order was unsolicited.
Under the Uniform Securities Act, an agent may effect transactions for existing clients who are temporarily in a state where the agent is not registered, provided the order is unsolicited. This is an important exemption to facilitate client service without requiring immediate, temporary registration for incidental contact.
Why the other options are wrong
- A. The broker-dealer's registration status in State B is relevant for BD activities, but the agent's ability to take unsolicited orders for an existing client is a specific agent exemption.
- B. The unsolicited nature of the order is a key exception to the general registration requirement.
- D. Initiating registration is typically for clients who *move* states permanently, not for temporary presence with unsolicited orders.
Agent Unsolicited Order Exemption (Temporary Client)
An agent is not required to register in a state if they effect transactions for an existing client who is temporarily present in that state, provided the orders are unsolicited.
- Applies only to existing clients.
- Client must be 'temporarily' in the non-registered state.
- Orders must be 'unsolicited' by the agent.
- Aids in servicing clients who travel.
Memory trick: Unsolicited calls from temporary clients can still get a 'yes' from your agent.