A training manager asks you to analyze the following USA issue. Prioritize the registration trigger and ignore irrelevant noise. Pinnacle Securities is a broker-dealer with its only office in State A. It has no office in State B. Pinnacle receives an unsolicited order from a retail customer residing in State B. Must Pinnacle register in State B?

ANo, because the order was unsolicited
BNo, because Pinnacle has no office in State B and only transacts with institutional investors there
CYes, because a retail customer transaction in State B does not qualify for the no-office exemption✓ Correct answer
DYes, but only if the transaction exceeds $10,000

Explanation

Why C — Yes, because a retail customer transaction in State B does not qualify for the no-office exemption

Under USA Section 401(c), the exemption for broker-dealers with no office in a state applies only when transactions are limited to other broker-dealers, institutional investors, or issuers. A transaction with a retail customer, even if unsolicited, falls outside the scope of this exemption. Pinnacle must register in State B before effecting the retail transaction. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.

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