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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardExemptions — Canadian Broker-Dealers

Under NASAA model rules, a Canadian broker-dealer may be exempt from state registration when dealing with a Canadian citizen who temporarily resides in a U.S. state, provided:

  1. AThe broker-dealer maintains an office in the state
  2. BThe client relationship existed before the client moved to the U.S. and the broker-dealer does not solicit new U.S. clients✓ Correct answer
  3. CThe broker-dealer registers with the SEC within 60 days
  4. DThe transactions involve only U.S. government securities
Explanation

Why B — The client relationship existed before the client moved to the U.S. and the broker-dealer does not solicit new U.S. clients

Under NASAA model rules for Canadian broker-dealers, an exemption from state registration may be available when the client relationship was established before the Canadian citizen moved to the U.S. and the broker-dealer does not direct solicitation efforts at new U.S. clients. This accommodates existing cross-border relationships while maintaining investor protection for U.S. residents.

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