Series 63 practice questionmediumExemptions — Institutional Investors
On a timed state-securities quiz, the scenario below appears. Prioritize the registration trigger and ignore irrelevant noise. Which of the following is considered an institutional investor for purposes of broker-dealer registration exemptions under the USA?
- AAn individual with a net worth exceeding $1 million
- BA small business with annual revenues under $500,000
- CA college student investing through a custodial account
- DA bank acting for its own account✓ Correct answer
Explanation
Why D — A bank acting for its own account
Under USA Section 401, institutional investors include banks, insurance companies, investment companies, employee benefit plans with assets exceeding certain thresholds, and other entities recognized by the Administrator. A bank acting for its own account qualifies. Individual net worth alone does not make someone an institutional investor for these purposes. State-law analysis leads to the same conclusion despite the alternate scenario.
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