Series 63 practice questioneasyDe minimis exception vs. place of business
An IA located in State A has 4 retail clients in State B and no office there. Which statement is TRUE regarding State B registration?
- ARegistration in State B is not required due to the de minimis exemption✓ Correct answer
- BRegistration in State B is required regardless of client count
- CRegistration in State B is required only if the clients are institutional
- DRegistration in State B is required if the IA markets services via the internet
Explanation
Why A — Registration in State B is not required due to the de minimis exemption
The de minimis exemption allows an IA to have up to 5 non-institutional clients in a state without registering, if the IA has no place of business there (USA 222(d)). Option B ignores the exemption, C misstates it, and D is only relevant if targeted activity occurs.
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