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".

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