Series 63 practice questionmediumExemptions — Broker-Dealers with No Office in State
In a state-law practice set, a candidate reviews the following scenario. Prioritize the registration trigger and ignore irrelevant noise. A broker-dealer with no office in a state is exempt from registration in that state if its only transactions are with:
- AAny retail customer who contacts the firm
- BExisting clients who have moved to that state within the past year
- COther broker-dealers, institutional investors, or issuers✓ Correct answer
- DResidents who respond to general advertising
Explanation
Why C — Other broker-dealers, institutional investors, or issuers
Under USA Section 401(c), a broker-dealer that has no office in the state is exempt from registration if its only transactions in the state are with other broker-dealers, banks, insurance companies, investment companies, pension trusts, or other institutional investors. Transactions with retail customers or advertising respondents would require registration. The extra setup is just noise; the controlling state-law rule stays the same.
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