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Understanding Securities Professional Regulation Study Guide

Learn about the essential regulatory standards for financial communications, including the USA and SEC IA Marketing Rule. This guide covers advertising, social media use, testimonials, endorsements, and performance reporting to ensure compliance and ethical practices in the financial services industry.

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Series 63 Exam and State Regulation

Series 63 Exam and State Regulation

An introduction to the Uniform Securities Agent State Law Examination, the Uniform Securities Act, and the role of NASAA in state securities regulation.

  • Uniform Securities Agent State Law Examination
  • Uniform Securities Act
  • NASAA
  • state securities regulation
  • National Securities Markets Improvement Act
  • NSMIA
  • blue sky laws
  • federal covered investment advisory firms
  • securities issues
  • broker-dealers
  • investment advisers
  • investment adviser representatives
  • securities agents

Regulation of Securities Professionals and Issuers

Regulation of Broker-Dealers and Agents

This chapter covers state law concepts regarding the definition, registration requirements, and post-registration responsibilities for broker-dealers and agents under the USA.

  • Broker-dealer definition
  • Agent definition
  • Registration requirements for broker-dealers
  • Registration requirements for agents
  • Exempt securities
  • Exempt transactions
  • Institutional investors
  • Retail investors
  • Agency transactions
  • Principal transactions
  • Snowbird exemption
  • Canadian broker-dealer limited registration
  • Successor broker-dealers
  • Fidelity bonds
  • Custody vs. discretion
  • Ministerial transactions
  • Statutory disqualification
  • Consent to Service of Process
  • Form BD
  • Form U4

Regulation of Investment Advisers and Representatives

This chapter covers the USA definition of investment advisers and investment adviser representatives, including registration requirements, federal covered versus state registered status, and fiduciary duties.

  • Investment adviser definition
  • Investment adviser representative definition
  • Federal covered advisers
  • State registered advisers
  • Registration buffer
  • Notice filing
  • De minimis registration exemption
  • Fiduciary duty
  • Custody requirements
  • Minimum net worth requirements
  • Fee-only versus fee-based advisers
  • Wrap accounts
  • Incidental advice
  • Solicitors and promoters
  • Continuing education requirements

Regulation of Securities and Issuers

This chapter covers regulatory definitions, registration processes, and exemptions that apply to securities and issuers at the state level.

  • USA definition of securities
  • Federal covered securities
  • Registration by Coordination
  • Registration by Qualification
  • Notice Filing
  • Exempt securities
  • Exempt transactions
  • Issuer and nonissuer transactions
  • Administrator authority
  • Qualified purchaser
  • Stop orders
  • Private placement exemptions
  • Fiduciary transactions
  • Unsolicited brokerage transactions

USA Remedies and Administrative Provisions

The Uniform Securities Act Administrator has authority over securities business, investigations, registrations, and enforcement of rules and orders.

  • Administrator jurisdiction
  • Rules and orders
  • Registration denial, suspension, revocation, and cancellation
  • Registration withdrawal
  • Cease and desist orders
  • Subpoena authority
  • Contumacy
  • Civil and criminal penalties
  • Right of rescission
  • Recordkeeping requirements
  • Administrative hearings and appeals

Regulatory Standards, Disclosures, and Ethical Obligations

Communications with Customers and Prospects

Regulations and standards for truthful, transparent, and clear communications, including the SEC IA Marketing Rule, USA communications standards, and advertising requirements for BDs and IAs.

  • USA communications standards
  • SEC IA Marketing Rule
  • Administrator jurisdiction over advertising
  • Advertising definition for IAs and BDs
  • Adoption and entanglement in social media
  • Testimonials and endorsements
  • Compensated versus uncompensated testimonials
  • Third-party ratings and due diligence
  • Performance advertising and net performance requirements
  • Hypothetical performance disclosures
  • Recordkeeping for advertising and communications
  • Static versus interactive social media content

Investment Adviser and Account Disclosures

This content covers regulatory requirements for Investment Adviser client disclosures, Form ADV components, margin account agreements, and options disclosure documents.

  • Investment Advisory Agreement
  • Form ADV Part 2B brochure supplement
  • Form ADV Part 3 relationship summary
  • Form CRS
  • Margin disclosure statement
  • Hypothecation agreement
  • Credit agreement
  • Loan consent form
  • Options disclosure document
  • Options account agreement
  • Street name ownership
  • Regulation T
  • Maintenance margin

Ethical Practices and Obligations

This topic covers cybersecurity procedures, advisory fees and compensation, soft dollars, insider information, and the protection of vulnerable adults.

  • Cybersecurity deficiencies and threats
  • Information security and cybersecurity policies
  • Broker-dealer and advisory fees
  • Investment adviser fee arrangements
  • Performance fees and qualified clients
  • Brokerage commission matters
  • Soft dollars and safe harbor services
  • Inside information and insider trading
  • Civil and criminal penalties for insider trading
  • Exploitation of seniors and vulnerable adults
  • Trusted contact persons
  • Prohibited practices including churning and commingling

Ethical Practices and Obligations for Securities Professionals

This content outlines unlawful practices, market manipulation, and regulatory standards for broker-dealers, agents, investment advisers, and investment adviser representatives.

  • Unlawful practices
  • Best execution violation
  • Market manipulation
  • Painting the tape
  • Spoofing
  • Layering
  • Wash trades
  • Matched purchases
  • Pump and dump schemes
  • Marking the close
  • Short squeeze
  • Regulation Best Interest (Reg BI)
  • Fiduciary standard
  • Standard of loyalty
  • Standard of care
  • Self-dealing
  • Suitability
  • Conflicts of interest
  • Selling away
  • Agency cross trades

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