Series 63 practice questionmediumBroker-dealer registration triggers
A broker-dealer headquartered in State L establishes a single-client relationship with a resident of State K and has no office in State K. The client is an individual. Under the USA, is registration as a broker-dealer required in State K?
- AYes, because it is conducting business with a retail client in State K.✓ Correct answer
- BNo, since no office is maintained in State K.
- CNo, as long as the client relationship is infrequent.
- DYes, unless the client is an institutional investor.
Explanation
Why A — Yes, because it is conducting business with a retail client in State K.
A broker-dealer must register if it does business with residents of a state, unless all clients are institutions or certain other exemptions apply (USA Sec. 401(c)). Having even one retail client triggers registration.
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