Series 63

By Investopedia AAA

The Foundation - National Conference of Commissioners on Uniform State Laws (NCCUSL)

The Uniform Securities Act (USA) was drafted by the NCCCUL (along with other model laws), but it is the North American Securities Administration (NASAA) that is responsible for the Series 63 exam, our subject in this book. Formed in 1892, the NCCUSL describes itself as follows:

"The state uniform law commissioners come together as the National Conference for one purpose - to study and review the law of the states to determine which areas of law should be uniform."

  • State securities law varied widely from state to state in the early half of the 1900s, despite the passage of the Securities Act of 1933 and the Securities Exchange Act of 1934.

  • To unify (streamline) state securities laws, the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the USA in 1956. The NCCUSL was a national organization of legal professionals devoted to creating legal congruency from state to state.

  • The USA provides criminal and civil penalties for violations, or for fraudulent acts to deceive investors and/or violations of the act. One thing to remember here, though: The USA is much more closely focused on the protection of the individual investor than institutions. Institutions are frequently one of the exemptions. Many questions refer to exemptions and/or exclusions rather than directly to registration.

With a brief overview of the USA origination out of the way, let's take a closer look at the main bullet points of the USA. Keep the following items in the back of your mind as you work through the study guide - they are what NASAA wants you to know!

Federal and State Securities Law and its Impact on the USA
We need to briefly look at a couple of the more recent federal laws that have had a dramatic impact on the USA: the National Securities Markets Improvement Act of 1996 (NSMIA) and the Gramm-Leach-Bliley Act of 1999 (GLBA).

  • NSMIA
    In 1996, Congress preempted significant parts of a state's power to duplicate federal regulation. For example, NSMIA prohibits a state from subjecting an offering of "federal covered securities" to merit review and other registration requirements by the states. A principal effort of the 2002 Uniform Act was "to reconcile, and to achieve better coordination of, federal and state securities regulation." NSMIA was the law that defined "federal covered securities", which we'll be looking at in detail.

  • GLBA
    Although not as critical to an understanding of how the USA works, the GLBA of 1999 changed the nature of registration for broker-dealers (B/Ds) and allowed, in certain cases, banks to register as B/Ds. Although, thus far, banks have continued the practice of creating broker-dealer subsidiaries rather than registering as such themselves.
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