SERIES 65 — LAWS, REGULATIONS & GUIDELINES

High-Yield Cheat Sheet

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INVESTMENT ADVISERS ACT OF 1940

IA Definition & the ABC Test

Three-part test — ALL must be present:

Advice (securities recommendations/analysis)

Business (regular/continuous activity)

Compensation (direct or indirect fee)

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Broker-Dealer Exclusion: BD may give securities advice if tied to BD activities AND BD receives no additional compensation → not an adviser

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REGISTRATION THRESHOLDS & RULES

Federal vs. State Registration

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Key Rules:

• Below $25M AUM in state → exempt from state registration

• Federal registered adviser must use SEC Form ADV

• State registered adviser must use Uniform Application

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FORM ADV REQUIREMENTS

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Annual Update: 120 days after fiscal year-end

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CUSTODY & FINANCIAL RESPONSIBILITY

Net Worth Requirements

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Custody Rules

• Qualified custodian requirement: Bank, broker-dealer, or qualified trust company

• Constructive custody: Deducting advisory fee from client account = custody

• Surprise examination: Annual unannounced audit by independent CPA (if holding/custodying funds)

• Prohibited: Adviser cannot serve as custodian

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INVESTMENT ADVISER REPRESENTATIVES (IARs)

IAR Definition & Registration

• IAR: Individual employed/associated with adviser; engages in advising or supervising

• Registration method: State-registered adviser → IAR registers by state; Federal adviser → IAR registers federally

• Series 65: Examination; no sponsoring firm required for self-enrollment

Professional Designation Waivers

CFA, CFP, ChFC, PFS, CIMA holders may waive Series 65 (state-dependent; verify with administrator)

Re-registration Window

2-year window to maintain registration; failure to renew = termination

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UNIFORM SECURITIES ACT (USAct)

Administrator Powers

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Penalties

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Securities Registration (State-Level)

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Antifraud Rule

Universal: Applies to all market participants — all fraud prohibitions apply regardless of whether securities are exempt

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REGULATION BEST INTEREST (Broker-Dealers)

Four Core Obligations

Disclosure: Conflicts, material facts; Form CRS

Care: Reasonable diligence; benefit to customer

Conflict of Interest: Manage conflicts before recommending

Compliance: Systems; supervision; monitoring

IA Fiduciary vs. BD Reg BI

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LATE Exclusions	Criteria
Lawyers	Legal advice incidental to practice
Accountants	Tax/accounting advice incidental to practice
Teachers	Educational content; no personalized advice
Engineers	Technical advice incidental to practice
AUM Level	Registration	Regulator
≥ $110M	Mandatory Federal (SEC)	SEC
$100M–$110M	Optional buffer zone	Choose SEC or state
$90M–$100M	State registration	State; can voluntarily register with SEC
< $90M	State registration required	State (unless exemption)
Part	Content	Delivery Timing
Part 1A	Firm background, business, registration	At/before engagement
Part 1B	Item 12 (conflicts); Item 19 (financial condition)	Before compensation collection
Part 2A	Adviser brochure (client-facing)	At/before engagement; annually on request
Part 2B	Adviser representative brochures	At/before engagement
Custody Type	Net Worth Minimum
Discretionary authority only	$10,000
Any custodial control	$35,000
Action	Prior Notice Required?	Hearing Window
Cease-and-desist order	NO (summary)	15 days to request
Revocation/suspension	YES	15 days
Denial of application	YES	15 days
Violation	Civil	Criminal
Max fine	$5,000	$5,000 + 3 years
Method	Use	Timeline
Coordination	Federal + state filing	Effective when SEC declares effective
Qualification	Non-federal or special	State administrator sets
Notice filing	Federal covered; state notice only	10 days; effective on filing
Duty	IA Fiduciary	BD Reg BI
Standard	Fiduciary (client best interest paramount)	Suitability + conflicts disclosure
Conflict rule	Eliminate or disclose/consent	Manage (disclose + internal controls)
Form	ADV Part 2A	Form CRS

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COMMUNICATIONS & ADVERTISING

Marketing Rule (SEC)

• Testimonials & endorsements: Written agreement; ≥ $1,000 threshold; disclose compensation

• Performance advertising:

- Net of fees: Required - Gross of fees: Optional; if shown, net required alongside - Multi-year: Minimum 1, 5, and 10 years (if applicable)

• Model portfolios: OK if identified; track actual performance

• Soft dollars: Must disclose material conflicts; reasonable allocation

Proxy Voting & Contract Assignment

• Proxy voting: Disclose policy; execute per client instruction

• Assignment: Material change requires client consent (new adviser assignment voids)

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ETHICS & FI