For a licensing checkpoint quiz, treat the following as the opening fact pattern. The key is the registration, exemption, or ethical rule doing the real work. Riverside Capital Advisers is an investment adviser with no office in State X. It provides investment advice exclusively to two insurance companies and four high net-worth individuals residing in State X. According to the Uniform Securities Act (USA), which of the following statements is TRUE regarding Riverside's registration requirements in State X?

Why D — Riverside must register because it advises natural persons, not just institutional investors, and exceeds the de minimis exemption.

Under the USA (Section 403(b)), an IA with no office in the state is exempt if it only advises institutional clients OR has no more than five non-institutional clients in the state during the preceding 12 months (the de minimis exemption). Riverside has six clients, but only two are insurance companies (institutions); the other four are high net-worth individuals (not institutions under the USA). Because it has more than five non-institutional clients, it does not qualify for the de minimis exemption and must register. Option D is correct. The extra setup is just noise; the controlling state-law rule stays the same.