Under the USA, an agent must be registered in a state if they effect transactions in that state for a client who is a resident of that state, regardless of where the firm is headquartered or the security involved. ‘Effecting transactions’ includes solicitation and execution. Merely maintaining an account (C) or executing an unsolicited order (D) typically does not trigger a registration requirement. Providing investment advice (B) would require registration as an investment adviser, not under the agent registration provisions tested by the Series 63.

The Uniform Securities Act provides an exemption from state registration for offerings sold exclusively to residents within one state, by an issuer resident and doing business within that same state. This describes an intrastate offering. It is not a federal covered security (A). While federal Rule 147/147A provides a safe harbor, the USA has its own intrastate exemption. State registration would not be required (C). Agents are permitted to sell exempt securities, including private placements, provided all conditions of the exemption are met (D is incorrect).

The misappropriation or conversion of client funds is a fraudulent and prohibited practice under the USA. The Administrator does not need to prove intent to permanently deprive the client or actual loss. The act itself—using client assets for an unauthorized purpose—constitutes fraud. Disclosure after the fact (B) does not cure the violation. The violation occurs at the moment of misuse, irrespective of subsequent loss (D) or intent to repay (A).

Under the USA’s ‘manual’ exemption (or similar state provisions), a broker-dealer registered in a state may effect unsolicited transactions for clients who are residents of another state without registering in the client’s home state, provided the transaction is executed on the physical premises of the broker-dealer in the state where it is registered. Since the client walked in and the purchase was unsolicited, registration in his home state is not required. Solicitation (A) would change the answer. Registration is transaction-based, not automatic for all clients (C). Maintenance of the account (D) generally does not trigger registration.

NSMIA defines federal covered securities, which are generally exempt from state registration requirements. These include securities listed on national exchanges (NYSE, Nasdaq) (B, C), and securities issued by registered investment companies (mutual funds) (A). Private offerings, such as a limited partnership interest sold to a small number of investors, are not automatically federal covered securities unless they meet specific conditions under Rule 506 of Regulation D. An offering to 30 non-accredited investors (D) would not qualify for the Rule 506 exemption and thus would likely remain subject to state registration.

The USA prohibits fraud and requires disclosure of all material facts. For a variable annuity, material facts include fees (mortality & expense charges, sub-account fees), investment risks (fluctuating value), and potential penalties (surrender charges, tax penalties). Guaranteeing returns (A) is fraudulent. Omitting material facts like surrender charges (B) is a deceptive omission. Recommending a security based on self-interest (high commission) without regard to the customer’s suitability (D) is a breach of ethical obligation.

Administrators are granted broad investigative powers under the USA, including the authority to subpoena witnesses and compel the production of records. Refusing to comply with a lawful subpoena can lead to sanctions, but the Administrator must follow due process. Immediate revocation without a hearing (A) is not typically permitted; a notice and hearing process is required. Arrest power (C) generally lies with law enforcement, not the securities Administrator. The Administrator has clear authority to request records as part of an investigation (D is incorrect).

The USA provides exclusions from the definition of ‘investment adviser.’ These exclusions include: the press (A), broker-dealers whose advice is incidental and who receive no special compensation for it (B), and banks (D). A person who provides financial planning for a fee and gives specific investment advice meets the core definition of an investment adviser and is not excluded, therefore requiring registration.

The USA provides an exemption for non-issuer transactions (secondary market transactions). A gift or sale between two parties where the issuing company is not involved and receives no proceeds is a classic non-issuer transaction. The registration status of the security is irrelevant for this exemption. Therefore, the transaction is exempt (B correct, A incorrect). The issuer is not involved, so it cannot file a registration (C). The accredited investor standard (D) applies to certain private placements (Rule 506), not to non-issuer gift transactions.

Under the USA, an agent must be registered in a state if they effect transactions in that state for a client who is a resident of that state, regardless of where the firm is headquartered or the security involved. ‘Effecting transactions’ includes solicitation and execution. Merely maintaining an account (C) or executing an unsolicited order (D) typically does not trigger a registration requirement. Providing investment advice (B) would require registration as an investment adviser, not under the agent registration provisions tested by the Series 63.0