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Series 63 practice questionhardIA Exemptions and Exclusions — Administrator’s Authority to Deny Exemptions

In a state-administrator case study, the scenario starts here. The key is the registration, exemption, or ethical rule doing the real work. Under the Uniform Securities Act, which of the following best describes the state Administrator's authority regarding investment adviser exemptions for advisers doing business solely with other investment advisers and certain institutional clients?

  1. AThe Administrator is required to automatically grant exemptions to all advisers serving institutional clients.
  2. BThe Administrator can only revoke exemptions for advisers with a place of business in the state.
  3. CThe Administrator may not deny or revoke any exemption granted to investment advisers under any circumstances.
  4. DThe Administrator may, by rule or order, deny or revoke the exemption for an adviser doing business only with banks, investment companies, or other investment advisers.✓ Correct answer
Explanation

Why D — The Administrator may, by rule or order, deny or revoke the exemption for an adviser doing business only with banks, investment companies, or other investment advisers.

According to Section 403(b)(6) of the USA, the Administrator may, by rule or order, deny or revoke exemptions for investment advisers who transact business only with institutional clients, such as banks or other IAs. This authority allows the Administrator discretion to deny or revoke such exemptions to protect investors. Option A accurately reflects this provision. This version tests the same concept with a different fact pattern wrapper.

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