Series 66 Exam Prep Episode 4 Laws and Regulations

2.4 Laws, Regulations and Guidelines Including Prohibition on Unethical Business
Practices
Forty-five questions in every Series 66 examination (45%) will test standards for
professional conduct by broker-dealers, broker-dealer agents, investment advisers and
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investment adviser representatives. These forty-five questions will cover the following eight
components:
(1) Regulation of Investment Advisers, Including State-Registered Advisers and Federal
Covered Advisers
o Definitions of an investment adviser and federal covered adviser (USA § 401,
IAA § 202)
o Notice filing requirements
o Registration and post-registration requirements (e.g., required books and
records, registration maintenance requirements, Form ADV, IAA § 203, IAA
§ 203A, USA § 201, USA § 202, USA § 203, USA § 204, SEC Rule 203A-1,
SEC Rule 203A-2, SEC Rule 204-1, SEC Rule 204-3, NASAA Recordkeeping
Requirements for Investment Advisers Model Rule 203(a)-2, NASAA Brochure
Rule Requirements for Investment Advisers Model Rule 203(b)-1, NASAA
Financial Reporting Requirements for Investment Advisers Model Rule
203(c)-1, NASAA Model Rule for Investment Adviser Written Policies and
Procedures Under the Uniform Securities Acts of 1956 and 2002)
o Exemptions for exempt reporting advisors and private fund advisors (IAA §
203, SEC Rule 204-4, NASAA Registration Exemption for Investment Advisers
to Private Funds Model Rule)
o Investment adviser representative supervision
(2) Regulation of Investment Adviser Representatives
o Definition of an investment adviser representative (USA § 401, SEC Rule
203A-3)
o Registration and post-registration requirements (USA § 201, USA § 202, USA
§ 203, USA § 204, Form U4, NASAA Registration Requirements for
Investment Advisers Model Rule 202(a)-1, NASAA Examination Requirements
for Investment Advisers and Investment Adviser Representatives Model Rule
204(b)(6)-1)
(3) Regulation of Broker-Dealers
o Definition of a broker-dealer (USA § 401, IAA § 202)
o Definition of an underwriter (SA § 2)
o Definition of a market maker, associated person (SEA § 3)
o Registration and post-registration requirements (e.g., required books and
records, registration maintenance requirements, SEA § 15, SEC Rule 17a-3,
SEC Rule 17a-4, SEC Rule 10b-10, USA § 201-A, Form BD)
o Broker-dealer agent supervision
(4) Regulation of Broker-Dealer Agents
o Definition of a broker-dealer agent (USA § 401)
o Registration and post-registration requirements (e.g., Form U4)
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(5) Regulation of Securities and Issuers
o Definitions of offer, sale, security, federal covered security, person, issuer and
non-issuer (e.g., SA § 2, SEA § 3, USA § 401, Howey test)
o The securities registration process, including federal and state registration and
notice filing requirements, registration exemptions and post-registration
requirements (SA § 3, SA § 5, SA § 18, SEC Regulation D, USA § 301, USA
§ 302, USA § 303, USA § 304, USA § 305, USA § 402)
o Definition of accredited investor (SEC Rule 501)
o Definitions of investment companies (ICA § 2, ICA § 8)
o State antifraud authority
(6) Remedies and Administrative Provisions
o Authority of state securities administrator (USA § 204, USA § 306, USA §
406, USA § 407, USA § 412)
o Administrative actions (USA § 408)
o Other penalties and liabilities (USA § 409, USA § 410, USA § 411, USA §
414)