🏦LTB
← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardExemptions — Scenario

For a licensing checkpoint quiz, treat the following as the opening fact pattern. Prioritize the registration trigger and ignore irrelevant noise. A broker-dealer registered in State A but not State B sends a research report to an investment company headquartered in State B. The investment company, after reading the report, places an order with the broker-dealer. Has the broker-dealer violated the USA?

  1. AYes, because sending a research report constitutes solicitation requiring registration
  2. BYes, because any contact with an entity in State B requires registration
  3. CNo, but only because the investment company initiated the order
  4. DNo, because the broker-dealer has no office in State B and the transaction is with an institutional investor✓ Correct answer
Explanation

Why D — No, because the broker-dealer has no office in State B and the transaction is with an institutional investor

Under USA Section 401(c), a broker-dealer with no office in a state is exempt from registration if its transactions in that state are exclusively with institutional investors. Investment companies qualify as institutional investors. The exemption applies regardless of whether the broker-dealer or the institutional client initiated the contact. The exam trick is the framing, not the underlying Uniform Securities Act rule.

Turn it into reps

Reading one answer is not the same as being ready

Lucky the Banker is a free practice app with 646+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.

Practice Series 63 freeSeries 63 exam guide
Related Regulation of Broker-Dealers & Agents questions