Series 63 practice questionmediumExemptions — Broker-Dealers with No Office in State
In a state-law practice set, a candidate reviews the following scenario. The key is the registration, exemption, or ethical rule doing the real work. 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. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.
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