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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questioneasyExemptions — Federal Covered Advisers

For a mock NASAA exam, assume the administrator is testing this exact point. The key is the registration, exemption, or ethical rule doing the real work. A federal covered investment adviser is one that:

  1. AIs registered with a state Administrator and manages less than $25 million
  2. BIs registered with the SEC and is generally exempt from state registration requirements✓ Correct answer
  3. COnly advises federal government pension plans
  4. DHas offices in all 50 states
Explanation

Why B — Is registered with the SEC and is generally exempt from state registration requirements

Under the National Securities Markets Improvement Act (NSMIA), federal covered advisers are those registered with the SEC, typically because they manage $100 million or more in assets. While they must file notice with the state and pay fees, they are generally exempt from state registration. States may not impose additional substantive requirements on them. The governing USA principle is unchanged even though the framing is different.

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