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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionmediumBroker-Dealer Registration — Scenario

ABC Securities, a broker-dealer registered in State X, opens a new branch office in State Y where it is not yet registered. An agent at the new office begins soliciting clients in State Y. Which statement is TRUE?

  1. AThe agent may solicit clients because the firm is registered in State X
  2. BThe firm must register as a broker-dealer in State Y before conducting business there✓ Correct answer
  3. CThe firm is exempt from registration in State Y because it already holds a federal registration
  4. DThe agent may solicit institutional clients only in State Y without registration
Explanation

Why B — The firm must register as a broker-dealer in State Y before conducting business there

Under USA Section 201, a broker-dealer must be registered in each state where it conducts business. Registration in one state does not extend to another. ABC Securities must register in State Y before any of its agents may solicit clients there, regardless of the type of client being solicited.

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