Series 65/66 — Laws, Regulations & Ethics flashcards
10 of 80 cards free to study here · 5 topics · the whole deck is built into Willys
Uniform Securities Act definitions and exclusions, state and SEC registration of firms, individuals and securities, exemptions, Administrator powers and penalties, the Investment Advisers Act, NASAA ethics rules, Reg BI and insider trading.
Learn deck · part of NASAA Series 65 and Series 66 · written against: NASAA Series 65 and 66 content outlines; Uniform Securities Act, NASAA model rules and the Investment Advisers Act of 1940 as of 2026. Updated 2026-10-10.
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Is a state government or a city a 'person' under the Uniform Securities Act?Yes — governments and their political subdivisions are persons, along with individuals, corporations, partnerships, associations, joint-stock companies and unincorporated organizations.Securities Act Definitions
Watch out: a trust is a person only when its beneficiaries' interests are evidenced by a security. -
A broker-dealer has no office in a state and sells there only to banks, insurance companies and other broker-dealers. Is it a broker-dealer that must register in that state?No — a firm with no place of business in the state that deals only with issuers, other broker-dealers and institutional investors there is excluded from the definition.Securities Act Definitions
Why: the state's interest is in protecting its retail investors, not sophisticated institutions. -
An investment adviser manages ninety million dollars for clients in a state that registers and examines advisers. Where does it register?With the state, as a mid-sized adviser.Registration & Exemptions
Why: advisers between twenty-five and one hundred million in assets under management register with their state when that state examines advisers. SEC registration becomes available at one hundred million and mandatory at one hundred ten million. -
An SEC-registered adviser's assets under management drop to ninety-five million dollars. Must it switch to state registration?No — it may stay with the SEC unless its assets fall below ninety million.Registration & Exemptions
Why: the buffer keeps advisers near the threshold from switching regulators every time markets move. -
What two conditions must both be met for the Administrator to deny, suspend or revoke a registration?The order must be in the public interest, and one of the grounds listed in the Act must exist, such as a willful violation, a misleading application or a disqualifying conviction.Administrator Powers & Penalties
Why: the public interest alone is not enough without a specific statutory ground. -
An applicant was convicted of a felony unrelated to securities twelve years ago. Can the Administrator deny registration on the basis of that conviction alone?No.Administrator Powers & Penalties
Why: the conviction ground reaches any felony, or a securities-related misdemeanor, within the past ten years. -
Under the SEC custody rule, where must an adviser with custody keep client funds and securities, and who sends the account statements?With a qualified custodian, such as a bank or broker-dealer, which sends account statements directly to clients at least quarterly.Federal Adviser Regulation
Why: the adviser must also have a reasonable basis, after due inquiry, to believe the statements are being sent. -
What independent check does the SEC custody rule generally require of an adviser with custody?A surprise examination by an independent public accountant at least once a year.Federal Adviser Regulation
Watch out: an adviser whose only custody is the authority to deduct its fees from client accounts is excused from the surprise exam. -
What two duties make up an investment adviser's fiduciary duty?A duty of care and a duty of loyalty.Ethics & Prohibited Practices
Why: care means advice in the client's best interest, best execution and monitoring; loyalty means not putting the adviser's interests first and fully disclosing conflicts. -
An adviser's client grants discretion by phone and the adviser trades the next day. By when must the adviser have written authority under NASAA's rules?Within ten business days after the first discretionary trade.Ethics & Prohibited Practices
Watch out: an agent of a broker-dealer must have written discretionary authority before the first trade.
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About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- Topic outline follows the NASAA Series 65 and Series 66 content outlines effective June 12, 2023 (outline only; no outline text reproduced).
- Checked against the Uniform Securities Act (1956, as amended), NASAA model rules (including Rule 102(a)(4)-1 as amended May 4, 2026 and the brochure rule), the Investment Advisers Act of 1940 and SEC rules (17 CFR Part 275); public domain U.S. government sources where federal.
- Original wording; no textbook, prep-course or question-bank text copied. Figures indexed yearly are excluded; state fees and penalties vary.
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