A:

A. An investment adviser must register with the state if it holds less than $25 million in assets.

B. An investment adviser must register with the state if it holds less than $30 million in assets.

C. An investment adviser must register with individual states if it is registered in fewer than five states, otherwise it must register with the SEC.

D. An investment adviser is exempt from registration in a state if it has five or fewer clients in a 12-month period - in a state where it has no physical address.


Correct answer: D
Section 403 of the USA specifically states, "a person without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state". In addition, in the comments portion of the act, it states, "Section 403(b)(2) is consistent with the National Securities Markets Improvement Act of 1996 which prohibits a state from regulating an investment adviser that does not have a place of business in this state and had fewer than six clients who were state residents during the preceding 12 months." Either way, the act is saying FIVE clients or LESS. Note: The exam may use the phrase "five or fewer".

RELATED FAQS

  1. How can an investment banker switch to a career in corporate finance?

    Understand the difference between investment banking and corporate finance. Learn how an investment banker can switch to ...
  2. What are the best MBA programs for corporate finance?

    Read about the best MBA programs for students who want to pursue a career in corporate finance, including those at Harvard, ...
  3. How stressful is the typical corporate finance job?

    Learn more about careers in corporate finance, the stress associated with those jobs and why investment bankers feel the ...
  4. What should I study in school to prepare for a career in corporate finance?

    Find out which classes to take in college to prepare for a career in corporate finance, including management, accounting ...
RELATED TERMS
  1. Open Architecture

    The option offered by an investment firm to let its clients invest ...
  2. Advanced Diploma In Insurance

    A qualification earned by insurance professionals and conferred ...
  3. Associate In Personal Insurance (API)

    A designation earned by professionals looking for training in ...
  4. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  5. Associate In Reinsurance (ARe)

    A designation earned by insurance professionals looking for reinsurance ...
  6. Associate In Surplus Lines Insurance (ASLI)

    A designation earned by insurance professionals involved with ...

You May Also Like

Related Articles
  1. Investing

    Explaining Clients Why They Need a Budget

  2. Investing

    Short-Term Funds or Fixed Deposits: ...

  3. Professionals

    Is a Google Robo-Advisor on the Horizon?

  4. Professionals

    Are These the 10 Best Stocks in the ...

  5. Professionals

    SEC to Advisors: Implement Cybersecurity ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!