Table of Contents
SERIES 63 | SERIES 65 | SERIES 66 | FINANCIAL REGULATION COURSES
The Uniform Securities Act is the model state securities law developed by the Uniform Law Commission — formerly the National Conference of Commissioners on Uniform State Laws — that serves as the template upon which most of the fifty states, the District of Columbia, and United States territories have based their individual state securities statutes, creating a framework of substantially consistent state securities regulation that operates alongside the federal securities laws administered by the SEC to form the dual-layer regulatory system governing the United States securities industry.
First promulgated in 1956 and subsequently amended with additions developed by the North American Securities Administrators Association — NASAA — the Uniform Securities Act establishes the framework for state registration of broker-dealers, their agents, investment advisers, and investment adviser representatives, the registration or exemption requirements for securities offered within the state, the antifraud provisions that prohibit fraudulent conduct in connection with securities transactions regardless of registration status, and the administrative, civil, and criminal enforcement powers available to state securities administrators to investigate violations and protect investors.
The Uniform Securities Act is not itself a statute with the force of law — it is a model act that each state legislature adopts, adapts, or uses as guidance when enacting its own state securities law.
The result is a framework of state securities regulation that is substantially uniform across most jurisdictions while retaining state-specific variations — and that is the primary substantive content tested on the Series 63 Uniform Securities Agent State Law Examination and the state law portions of the Series 65 Uniform Investment Adviser Law Examination and Series 66 Uniform Combined State Law Examination, all developed by NASAA and administered by FINRA.
State securities regulation predates federal securities law by more than two decades — Kansas enacted the first state securities statute in 1911, and other states quickly followed with their own investor protection laws designed to prevent fraudulent securities sales within their borders.
These state laws became known collectively as blue sky laws — a term attributed to a judicial opinion describing how speculative securities promoters would sell investors shares in everything including the blue sky itself. By the time Congress enacted the Securities Act of 1933 and the Securities Exchange Act of 1934 in response to the Great Depression and the stock market crash of 1929, every state already had its own securities regulatory framework — and the federal laws were designed to operate alongside rather than preempt the existing state regulatory structure.
The proliferation of fifty separate state securities laws — each with its own definitions, registration requirements, exemptions, and enforcement procedures — created significant compliance burdens for securities firms operating across multiple states and produced inconsistencies in investor protection from state to state.
The Uniform Law Commission responded to this fragmentation by developing the original Uniform Securities Act of 1956 — a comprehensive model act designed to bring a measure of uniformity to state securities regulation while preserving the fundamental principle that states have their own independent authority to regulate securities transactions occurring within their borders.
NASAA — the association of state securities administrators from all fifty states, the District of Columbia, Puerto Rico, the United States Virgin Islands, and the Canadian provinces — subsequently developed amendments and updates to the 1956 Act, incorporating changes necessitated by developments in federal law, market evolution, and accumulated regulatory experience.
The current working version of the Uniform Securities Act incorporates NASAA's amendments and serves as the primary reference for the content of the Series 63, Series 65, and Series 66 examinations.
The Uniform Securities Act addresses four principal areas of securities regulation — the registration of broker-dealers and agents, the registration of investment advisers and investment adviser representatives, the registration or exemption of securities, and the antifraud provisions that apply universally regardless of registration status.
Broker-dealer and agent registration under Section 201 of the Act requires every broker-dealer transacting securities business within the state and every agent — defined as an individual representing a broker-dealer in effecting securities transactions — to register with the state securities administrator unless they qualify for a specific exemption.
The registration process requires submission of detailed application information through the Central Registration Depository — the CRD system maintained by FINRA — including background information about the applicant, disclosure of any disciplinary history, and satisfaction of minimum financial requirements and bonding obligations specified in Section 202 of the Act.
The most significant exemption from broker-dealer registration under the Uniform Securities Act is the federal covered broker-dealer exemption — a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of FINRA is not required to separately register in each state as a broker-dealer but must file a notice with each state in which it conducts business and pay the applicable state registration fee.
This notice filing — rather than full state registration — reflects the preemption framework established by the National Securities Markets Improvement Act of 1996 — NSMIA — which divided regulatory authority between federal and state regulators, assigning primary jurisdiction over broker-dealers to FINRA and the SEC while preserving state authority over agents of those broker-dealers.
Investment adviser and investment adviser representative registration under Section 201 follows a parallel structure — investment advisers must register with either the SEC under the Investment Advisers Act of 1940 or with each state in which they conduct advisory business, depending on their assets under management. Investment advisers managing less than one hundred million dollars in assets register with the states — called state-registered or state investment advisers.
Investment advisers managing one hundred million dollars or more register with the SEC — called federal covered advisers.
Federal covered advisers are not required to register with state securities administrators but must file a notice — Form ADV Part 1 — with each state in which they have clients or a place of business and pay the applicable state fee.
Investment adviser representatives — the individual persons who represent investment advisers in providing investment advice to clients — must register individually with the state securities administrator in every state in which they have a place of business or provide advisory services to more than five retail clients, regardless of whether their employing firm is a state-registered or federal covered adviser. This individual registration requirement for investment adviser representatives was established by NSMIA and reflects the states' continuing authority over the individuals who directly interact with retail investors even when the firm itself is federally regulated.
One of the most frequently tested exemptions in the Series 65 examination context is the de minimis exemption from state investment adviser registration — which provides that an investment adviser with no place of business in a state is exempt from state registration in that state if its only clients in the state are five or fewer retail investors during the preceding twelve-month period.
The de minimis exemption applies only to investment advisers — it does not apply to broker-dealers, which must register in every state where they conduct business regardless of the number of clients. An investment adviser with its principal office in New York that has only three retail clients in California is exempt from California state investment adviser registration under the de minimis exemption — provided it has no office or other place of business in California. If the adviser opens a California office — even a home office — the exemption is lost and state registration is required regardless of the number of clients.
The de minimis exemption does not apply to institutional clients — the five-client threshold counts only retail investors. An investment adviser with one hundred institutional clients in a state and no place of business there remains exempt from state registration if it has no retail clients in that state — but the threshold applies to the retail client count alone.
The Uniform Securities Act requires that any security offered or sold within a state be registered with the state securities administrator or qualify for an exemption from registration — a requirement that operates independently of and in addition to the SEC registration requirements of the Securities Act of 1933 for public offerings.
Three methods of state securities registration are established under the Uniform Securities Act. Registration by coordination — the most commonly used method for securities simultaneously registered under the Securities Act of 1933 — allows the issuer to register the securities with the state by coordinating the state registration with the federal registration, filing copies of the federal registration materials with the state and having the state registration become effective simultaneously with the federal registration. Registration by qualification — the most comprehensive method — requires the issuer to file detailed information with the state administrator and obtain the administrator's affirmative approval before selling securities in the state, without reference to any federal registration. Registration by filing — available for securities of issuers that have been reporting companies under the Securities Exchange Act of 1934 for at least the preceding twelve months — allows registration by filing the relevant federal disclosure documents with the state.
The most important exemptions from state securities registration are the federal covered security exemptions established by NSMIA — securities registered under the Securities Act of 1933 and listed on national securities exchanges, securities of investment companies registered under the Investment Company Act of 1940, and certain securities sold pursuant to Regulation D private placement exemptions to qualified purchasers are federal covered securities exempt from state registration requirements. States may require notice filings and fees for federal covered securities but may not impose their own substantive registration requirements — a preemption that dramatically reduced the compliance burden of multistate securities offerings following NSMIA's enactment in 1996.
Section 101 of the Uniform Securities Act — the antifraud provision — is the broadest and most fundamental provision of the Act, prohibiting fraudulent and deceptive conduct in connection with any securities transaction regardless of whether the security or the person involved is registered, exempt from registration, or subject to any other provision of the Act.
The antifraud provisions apply to every offer and sale of securities within the state — to registered and unregistered securities, to exempt and non-exempt transactions, and to registered and unregistered persons. A securities transaction that is entirely exempt from registration requirements is nonetheless fully subject to the antifraud provisions — exemption from registration does not exempt anyone from the obligation to deal honestly and avoid deceptive practices in connection with securities transactions.
The Uniform Securities Act antifraud provisions prohibit employing any device, scheme, or artifice to defraud — making any untrue statement of a material fact — omitting to state a material fact necessary in order to make the statements made not misleading — and engaging in any act, practice, or course of business that operates as a fraud or deceit. These provisions closely parallel the federal antifraud provisions of Section 17(a) of the Securities Act of 1933 and SEC Rule 10b-5 under the Securities Exchange Act of 1934 — reflecting the intent that state and federal antifraud protection operate in tandem to provide comprehensive coverage across all securities transactions.
Every state's securities law designates a state securities administrator — the official or agency responsible for administering the Uniform Securities Act within that state. State securities administrators hold broad investigative and enforcement authority under the Act — they may issue subpoenas compelling the production of documents and the testimony of witnesses, conduct examinations of registered persons' books and records, issue cease and desist orders halting ongoing violations, deny or revoke the registration of broker-dealers, agents, investment advisers, and investment adviser representatives, impose civil monetary penalties, refer cases for criminal prosecution, and seek judicial injunctions and other equitable relief.
The state securities administrator is the primary point of contact for investor complaints about broker-dealers, agents, investment advisers, and investment adviser representatives within the state — and state administrators have historically been aggressive enforcement authorities, particularly against retail investment fraud targeting individual investors in their state. NASAA coordinates enforcement efforts among state administrators — sharing information about ongoing investigations, coordinating multistate enforcement actions against firms or individuals operating across multiple states, and maintaining the BrokerCheck alternative database that supplements FINRA's own BrokerCheck system.
The Uniform Securities Act with NASAA amendments is the primary substantive basis for the Series 63 Uniform Securities Agent State Law Examination — which tests candidates' knowledge of state securities law requirements applicable to agents of broker-dealers. The Series 63 consists of sixty-five multiple-choice questions with sixty scored questions, administered over seventy-five minutes, with a passing score of seventy-two percent — forty-three correct answers out of sixty scored questions.
The Series 65 Uniform Investment Adviser Law Examination incorporates state law content based on the Uniform Securities Act — approximately twenty-five to thirty percent of the Series 65 examination covers state securities law including registration requirements for investment advisers and investment adviser representatives, exemptions from registration, the antifraud provisions, and the enforcement powers of state securities administrators.
The Series 66 Uniform Combined State Law Examination combines the content of the Series 63 and the state law portions of the Series 65 into a single examination — qualifying candidates as both securities agents and investment adviser representatives through a single test rather than requiring separate Series 63 and Series 65 examinations.
The Uniform Securities Act is the foundational statutory framework tested on the Series 63, Series 65, and Series 66 examinations in the context of state securities regulation, registration requirements, exemptions, antifraud provisions, and administrator authority.
The key points to retain are these.
The Uniform Securities Act is a model state securities law first promulgated by the Uniform Law Commission in 1956 and subsequently amended by NASAA — it serves as the template for state blue sky laws that operate alongside federal securities regulation to form the dual-layer United States securities regulatory system. Kansas enacted the first state securities law in 1911 — all fifty states and the District of Columbia have their own securities statutes based substantially on the Uniform Securities Act framework.
The Act regulates four principal areas — broker-dealer and agent registration, investment adviser and investment adviser representative registration, securities registration and exemption, and antifraud provisions applying universally to all securities transactions regardless of registration status.
Broker-dealers registered with the SEC and members of FINRA file notice rather than full state registration — agents of those broker-dealers must individually register in each state where they conduct business. Investment advisers managing less than one hundred million dollars register with state administrators — those managing one hundred million dollars or more register with the SEC as federal covered advisers and file notice in states where they operate.
Investment adviser representatives must individually register in every state where they have a place of business or serve more than five retail clients regardless of whether their firm is state or federally registered. The de minimis exemption from state investment adviser registration applies when the adviser has no place of business in the state and fewer than six retail clients there during the preceding twelve months — this exemption applies to investment advisers only not broker-dealers.
The three methods of state securities registration are coordination — simultaneous with federal registration under the 1933 Act — qualification — state administrator affirmative approval — and filing — available for seasoned reporting issuers. Federal covered securities under NSMIA — exchange-listed securities, registered investment company shares, and certain Regulation D securities — are exempt from state registration requirements though states may require notice filings and fees. The antifraud provisions apply to all securities transactions regardless of registration status — prohibiting fraudulent devices, material misstatements, material omissions, and deceptive practices in connection with any offer or sale of securities within the state.
