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Series 63 practice questionmediumFederal/State Coordination — Blue Sky Laws vs Federal

During a compliance drill, focus on how the Uniform Securities Act applies here. Assume all filings and notices are evaluated under the USA. When a conflict exists between a state blue sky law and a federal securities law regarding the registration of a federal covered security, which law prevails?

  1. AThe state law always prevails under the 10th Amendment
  2. BThe SEC and the state Administrator must negotiate a resolution
  3. CThe issuer may choose which law to follow
  4. DFederal law prevails under the Supremacy Clause; the state cannot require registration of federal covered securities✓ Correct answer
Explanation

Why D — Federal law prevails under the Supremacy Clause; the state cannot require registration of federal covered securities

Under NSMIA and the Supremacy Clause of the U.S. Constitution, federal law preempts state law regarding the registration of federal covered securities. States cannot impose registration requirements on federal covered securities, though they may require notice filings and fees, and they retain full antifraud authority. The exam trick is the framing, not the underlying Uniform Securities Act rule.

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