NASAA Series 66 Uniform Combined State Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesMedium
An investment adviser representative (IAR) for a state-registered investment adviser (IA) is preparing to open a new branch office in a neighboring state. The IAR will primarily be servicing existing clients who are relocating to this new state, and will also be seeking new clients there. Under the Uniform Securities Act (USA), what action must the IAR take regarding registration in the new state?
- AThe IAR must register in the new state because they will have a place of business there.
- BThe IAR only needs to file a notice with the Administrator of the new state, not full registration.
- CThe IAR does not need to register in the new state as long as their IA firm is properly registered in that state.
- DThe IAR must register in the new state only if they exceed the de minimis exemption of five clients in that state.
Show answer & explanationAnswer & explanation
Correct answer: A. The IAR must register in the new state because they will have a place of business there.
Under the Uniform Securities Act, an IAR must register in any state where they have a place of business, regardless of the number of clients serviced there. The de minimis exemption applies to IARs who do not have a place of business in the state.
Why the other options are wrong
- B. Notice filing is typically for federal covered investment advisers, not state-registered IARs establishing a place of business.
- C. IAR registration is separate from the IA firm's registration, and both may be required.
- D. The de minimis exemption applies to IARs without a place of business in the state, not those with one.
IAR Place of Business Registration
An Investment Adviser Representative (IAR) must register in any state where they maintain a 'place of business,' regardless of the number of clients.
- A 'place of business' includes an office where the IAR regularly provides investment advisory services.
- This requirement applies even if the IAR primarily serves existing clients or a small number of clients.
- The de minimis exemption (fewer than 6 clients) does not apply if an IAR has a physical office in the state.
Memory trick: If your office has a 'place' in a new state, you must register there.