Series 63 practice questionmediumIA Exemptions and Exclusions — Institutional Clients
On a timed state-securities quiz, the scenario below appears. The key is the registration, exemption, or ethical rule doing the real work. An investment adviser located in State X has no office in State Y and provides advice exclusively to three insurance companies located in State Y. According to the Uniform Securities Act, which of the following best describes the adviser's registration requirements in State Y?
- AThe adviser is exempt from registration in State Y.✓ Correct answer
- BThe adviser must register only if it solicits retail clients in State Y.
- CThe adviser must register in State Y since it has three clients there.
- DThe adviser is excluded from the definition of investment adviser in State Y.
Explanation
Why A — The adviser is exempt from registration in State Y.
Under the USA, an investment adviser with no place of business in a state who deals only with specified institutional clients, such as insurance companies, is exempt from registration in that state (USA Section 403(b)). This version tests the same concept with a different fact pattern wrapper.
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