Series 63 practice questionmediumFederal/State Coordination — Notice Filing
A training manager asks you to analyze the following USA issue. Treat the facts as a straight Series 63 application question. A mutual fund registered under the Investment Company Act of 1940 wants to sell shares in a particular state. What must the fund do at the state level?
- AFile a notice filing and pay any required fees to the state✓ Correct answer
- BRegister its shares by coordination with the state Administrator
- CRegister its shares by qualification with the state Administrator
- DNo state-level action is required whatsoever
Explanation
Why A — File a notice filing and pay any required fees to the state
Under NSMIA and USA Section 302, mutual fund shares are federal covered securities and are exempt from state registration. However, states may require notice filings, which typically include submitting copies of documents filed with the SEC, a consent to service of process, and paying applicable fees. This is less burdensome than full registration. The extra setup is just noise; the controlling state-law rule stays the same.
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