An agent registered in State A travels to State B for a family emergency. While there, a long-standing client from State A, also vacationing in State B, calls the agent to place an unsolicited order. The agent executes the order. Under the Uniform Securities Act, has the agent acted lawfully in State B?
- AYes, provided the agent promptly notifies the Administrator of State B.
- BYes, because the order was unsolicited and from an existing client.
- CNo, because the agent initiated contact with the client while in State B.
- DNo, because the agent is not registered in State B, regardless of the order's nature.
Show answer & explanationAnswer & explanation
Correct answer: D. No, because the agent is not registered in State B, regardless of the order's nature.
An agent must be registered in any state where they effect or attempt to effect transactions, including unsolicited orders. The location of the client at the time of the transaction determines jurisdiction, and vacationing in State B means the transaction occurred in State B. There is no de minimis or unsolicited order exemption for agent registration once a transaction occurs in a state where the agent is not registered.
Why the other options are wrong
- A. Notifying the Administrator after the fact does not rectify the lack of registration.
- B. While unsolicited orders can have exemptions for securities registration, they do not exempt an agent from registration in a state where they are effecting transactions.
- C. The scenario states the client called the agent, making the order unsolicited by the agent, but this does not change the registration requirement.
Agent Jurisdiction & Unsolicited Orders
An agent's registration is required in any state where they effect or attempt to effect transactions, regardless of whether the order is unsolicited or from an existing client, if the client is in that state at the time of the transaction.
- Agent registration follows the client's location during the transaction.
- Unsolicited orders do not exempt an agent from registration.
- No de minimis for agents (unlike IAs).
Memory trick: Agent's Reach, Client's State