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Difficulty: MediumState Securities Regulators and Blue Sky Laws

A broker-dealer firm registered with the SEC has its primary office in State A. One of the firm's registered agents wishes to contact an existing retail client who is temporarily vacationing in State B for two weeks to execute a trade. Under the Uniform Securities Act and state Blue Sky laws, which rule governs the agent's registration status in State B?

  1. The agent is not required to register in State B because the existing client is only temporarily present in that state.Answer
  2. B
    The agent must register in State B prior to making contact because federal SEC registration does not automatically grant state-level exemption for retail solicitation.
  3. C
    The agent is exempt from registration in State B because FINRA maintains primary regulatory authority over state securities Administrators.
  4. D
    The agent must file a notice filing with State B's Administrator within 15 days after executing the transaction.

Answer

The agent is not required to register in State B because the existing client is only temporarily present in that state.
Under the Uniform Securities Act and state Blue Sky laws, an agent registered in their home state is exempt from registration in another state if contacting an existing client who is temporarily residing or vacationing in that state. Because the client is only in State B for two weeks, no state registration in State B is triggered.

Step-by-Step Solution

1
Identify the jurisdiction and relationship parameters
The agent is registered in State A and is contacting an existing client located temporarily in State B.
State Blue Sky laws evaluate whether an individual is doing business in a state based on client residency and location.
2
Apply the Uniform Securities Act exemption rules for agents
The Uniform Securities Act provides a specific exemption for agents dealing with existing clients who are temporarily in a state ( vacationing, short trips).
Agents are not deemed to be operating out of or conducting regular business in the state when servicing temporary visitors.

Key Concept

State Blue Sky Exemption for Existing Clients Temporarily Out of State
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Topics

State Securities Regulators and Blue Sky Laws

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