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← Series 63: Regulation of Investment Advisers
Series 63 practice questionmediumDe minimis exemption vs. place of business after acquisition

A New York IA acquires a small advisory firm in State D with 3 retail clients in State E. Post-acquisition, the New York IA has no office in State E. The IA's MOST LIKELY registration obligation in State E is:

  1. ARegister immediately in State E
  2. BRely on the de minimis exemption and not register✓ Correct answer
  3. CRegister only if it solicits more clients in State E
  4. DRegister as a broker-dealer in State E
Explanation

Why B — Rely on the de minimis exemption and not register

With only 3 clients and no office, the de minimis exemption applies for State E (USA 222(d)). Registration is not required unless the client count exceeds 5 or a place of business is established. Broker-dealer registration is unrelated.

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