Series 66: Investment Adviser Law & State Regulations

What are the three components of the 'ABC Test' used to define an Investment Adviser under the Uniform Securities Act?

The three components are: providing Advice about securities, being in the Business of providing advice, and receiving Compensation for those services.

Under the Uniform Securities Act, how is an 'Agent' defined?

An individual who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.

Which registration method is used for securities that are being registered with the SEC simultaneously under the Securities Act of 1933?

Registration by Coordination.

What is the record-keeping requirement for Investment Advisers regarding the duration they must keep most records?

Records must be kept for a total of five years, with the first two years located in the principal office of the adviser.

What prohibited practice involves a broker-dealer executing an excessive number of trades in a client's account primarily to generate commissions?

Churning.

What is the term for the prohibited practice of a trader entering an order for their own account before a large, pending client order to profit from the price movement?

Front-running.

Which entities are specifically excluded from the definition of an Investment Adviser, even if they provide advice for a fee, provided the advice is incidental to their profession?

L.A.T.E. professionals: Lawyers, Accountants, Teachers, and Engineers.

What is the 'De Minimis' exemption for state-registered Investment Advisers?

An IA is exempt from registration in a state if they have no place of business in that state and have five or fewer retail clients in that state during the preceding 12 months.

If an Investment Adviser is 'Federal Covered' (SEC-registered), where must its Investment Adviser Representatives (IARs) register?

IARs of federal covered advisers must register only in the state(s) where the IAR has a place of business.

What is 'Notice Filing' in the context of state securities registration?

A procedure where federal covered securities (like NYSE or Nasdaq listed stocks) provide copies of SEC-filed documents to the state and pay a filing fee.