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← Series 63: Regulation of Securities & Issuers
Series 63 practice questioneasyAntifraud—preservation under NSMIA

A state Administrator learns a misleading prospectus was used in connection with a private placement exempt from state registration under NSMIA. Which remedy is available to the Administrator?

  1. AInitiate disciplinary action for antifraud violations.✓ Correct answer
  2. BBlock the offering until registration documents are filed.
  3. CImpose merit review and approval of the offering.
  4. DRequire the issuer to register as a broker-dealer.
Explanation

Why A — Initiate disciplinary action for antifraud violations.

NSMIA does NOT preempt state antifraud enforcement (USA Sec. 203A). States retain authority to pursue fraud even in exempt or federally preempted offerings; registration, merit review, or broker-dealer registration are not allowed remedies here.

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