Series 63 practice questionhardAgent registration—new agent of out-of-state BD
A new agent joins a broker-dealer registered in State Z. The agent plans to cold-call prospective clients in State Y, where neither the agent nor the broker-dealer is registered. Under the USA, what must occur before the agent can lawfully solicit State Y residents?
- ABoth the broker-dealer and the agent must be registered in State Y.✓ Correct answer
- BOnly the agent must register in State Y.
- COnly the broker-dealer must register in State Y.
- DNo registration is required if only cold-calling.
Explanation
Why A — Both the broker-dealer and the agent must be registered in State Y.
An agent may not solicit or effect securities transactions in a state unless both the agent and the broker-dealer are registered there (USA Sec. 402(b)). Both must be registered before contacting State Y residents.
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