NASAA Series 63Regulation of Broker-Dealers and AgentsHard
A state-registered broker-dealer wants to engage a new agent. Before the agent can begin transacting business, what is the mandatory first step that must be completed regarding the agent's registration?
- AThe agent must pass the Series 7 exam.
- BThe agent must complete 40 hours of ethics training.
- CThe agent's application must be filed with the Administrator.
- DThe broker-dealer must conduct a criminal background check.
Show answer & explanationAnswer & explanation
Correct answer: C. The agent's application must be filed with the Administrator.
The fundamental first step for an agent to become registered is to file an application (Form U4) with the Administrator. While other steps like exams and background checks are part of the overall process, the filing of the application officially initiates the registration process with the regulatory authority.
Why the other options are wrong
- A. Passing exams is required, but the application filing is the initial procedural step to begin registration.
- B. Ethics training may be required, but it typically follows or runs concurrently with the application process, not prior to filing.
- D. Background checks are part of the due diligence, but the application filing is the formal initiation of registration with the state.
Agent Registration Initiation
The formal process for agent registration begins with the filing of a complete application (Form U4) with the state Administrator.
- Form U4 is the primary agent registration document.
- Filed through the Central Registration Depository (CRD).
- Application must be complete and accurate.
Memory trick: Application first, then approval, then active.