Series 63 practice questionmediumDe Minimis Exemption Calculation
A firm with no offices in State M has 4 non-institutional clients and 2 insurance companies as clients in State M. Under the USA, must the firm register in State M?
- ANo, because only the non-institutional clients count toward the de minimis exemption✓ Correct answer
- BYes, because the total number of clients exceeds 5
- CYes, because insurance companies count as retail clients
- DYes, because every institutional client counts twice
Explanation
Why A — No, because only the non-institutional clients count toward the de minimis exemption
With no place of business in State M, the adviser remains within the de minimis exemption because it has only four non-institutional clients there. The insurance-company clients are institutional clients and do not defeat the exemption.
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