SERIES 66 EVALUATION EXAM 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔What is the difference between an offer and a sale? - ✔✔An offer is made in an
attempt to sell; a sale is the binding contract to sell a security for value. An offer will not
require a principal's approval, but a designated supervisory individual must approve all
sales on the date the order is executed.
✔✔Section 402(a) of the Uniform Securities Act contains a lengthy list of securities that
are exempt from the registration and advertising filing requirements of the Act. Included
in that list would be all of the following EXCEPT:
Common stock listed on the NYSE.
Bonds issued by the city of Berlin, Ohio.
Church bonds.
Bonds issued by the city of Berlin, Germany. - ✔✔Bonds issued by the city of Berlin,
Germany.
Securities exempt from state registration include those issued by a U.S. or Canadian
governmental unit, such as municipal bonds, and securities issued by nonprofit and
charitable organizations, such as church bonds. However, bonds issued by a non-
sovereign foreign government (cities, etc.) are not considered exempt securities unless
guaranteed by the sovereign (German, in this case) government. Even before the
NSMIA created the exemption for federal covered securities, those listed on the NYSE
received what was called the "blue-chip" exemption.
✔✔Registration under SEC - ✔✔Currently, registration with the SEC is mandatory (not
optional) for any investment adviser managing a registered investment company (open
or closed-end). It is optional for:
pension consultants once their AUM reach $200 million;
small and mid-size advisers who would be required to register in 15 or more states; and
those advisers with at least $100 million in AUM, but not $110 million in AUM
Any of these choosing to register with the SEC are federal covered advisers and do not
register with any state, although a notice filing may be required.
✔✔Investment advisor fees - ✔✔Fixed annual fees, wrap fees, fees based on a
percentage of assets under management, and commissions from trades effected for
clients are acceptable forms of compensation. Unless the client has at least $1 million
under management or a personal net worth of at least $2 million, performance-based
fees are not permitted.
✔✔Accredited Investors - ✔✔Accredited investors are financial institutions, wealthy
persons, and, for a particular issue, persons involved in the management of the issuer.
Certain institutional purchasers such as banks, insurance companies, investment
,companies, and employee benefit plans that have total assets in excess of $5,000,000
are included in the SEC's definition. In addition, any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his purchase exceeds
$1 million, excluding the value of the primary residence, or has earned in excess of
$200,000 in each of the past 2 years and expects to earn more than $200,000 in the
current year ($300,000 for married couples) is an accredited investor.
✔✔Which of the following is NOT an exempt transaction as defined in Section 402 of
the USA?
A. Corporate bond sale to an insurance company.
B. Isolated sale of a corporate bond on behalf of the bond's issuer.
C. Sale of common stock by the county sheriff at the request of the state securities
Administrator.
D. Sale of XYZ common stock, traded on the OTC Bulletin Board, to an individual
investor by the executor of an estate. - ✔✔B. Isolated sale of a corporate bond on
behalf of the bond's issuer.
First of all, don't panic when you see a Section number - just answer the question based
on the specific topic; in this case, the definition of an exempt transaction. An isolated
sale of a corporate bond on behalf of the bond's issuer is not exempt. Under the USA,
only isolated nonissuer transactions are exempt. In this question, the transaction is on
behalf of the issuer, so this transaction is not exempt. The sale of a corporate bond to
an insurance company is the sale of a security to a financial institution; this is an exempt
transaction. A sale of common stock by the executor of an estate, or by the county
sheriff is considered a fiduciary transaction and is exempt regardless of the client or the
type of security.
✔✔An investment adviser registered in 3 states allows its IARs to attach research
reports, bulletins, and other information to emails sent to customers. File copies would
not be required when these bulletins are sent to:
Persons connected to the investment adviser - ✔✔Every investment adviser registered
or required to be registered under the act must make and keep true, accurate, and
current a file containing a copy of each notice, circular, advertisement, newspaper
article, investment letter, bulletin, or other communication, including by electronic media,
that the investment adviser circulates or distributes, directly or indirectly, to 2 or more
persons (other than persons connected with the investment adviser).
✔✔USA state registration - ✔✔Section 201 of the Uniform Securities Act specifies the
conditions under which one is an investment adviser in the state. Specifically excluded
are those IAs with no place of business in the state who confine their advisory activities
in the state to other investment advisers, federal covered advisers, broker-dealers,
banks, trust companies, savings and loan associations, insurance companies,
employee benefit plans with assets of not less than one million dollars ($1,000,000),
and governmental agencies or instrumentalities. If, however, in addition to the two
, banks, the firm did advisory business with more than 5 retail clients who were residents
of Colorado, then, even with no place of business in the state, they would have to
register.
✔✔Which of the following must register as an agent?
A. An individual who is paid a commission to sell certificates of deposit for ABC National
Bank.
B. An individual representing a broker-dealer who sells commercial paper.
C. An employee of the Fed whose job is selling Treasury bonds to the public.
D. An individual who sells commercial paper for ABC National Bank. - ✔✔An individual
who represents a broker-dealer selling commercial paper must register under the USA.
Though the securities (commercial paper) are exempt, the representative must be
registered as an agent of the broker-dealer. The only exceptions from the definition of
"agent" apply to those who sell on behalf of issuers either of exempt securities or in
exempt transactions. The commercial paper and Treasury bonds are exempt securities
and the bank CDs here referred to are not of the negotiable, jumbo variety sold in the
money market and are not securities so no registration is required.
✔✔Exempt from registration under USA - ✔✔Local companies that issue common stock
sold only within the state must register their securities with the state Administrator.
Airport authority bonds, airplane equipment trust certificates, and securities issued by
religious organizations are exempt from registration with the state Administrator.
✔✔Under the Uniform Securities Act, any partner, officer, or director of a registered
investment adviser is an investment adviser representative if that individual does which
of the following?
A. Offers advice concerning securities.
B. Manages client accounts or portfolios.
C. Determines securities recommendations for representatives to disseminate.
D. Supervises personnel engaged in the above activities but does not sell these
services to the public - ✔✔All of the above.
The Uniform Securities Act defines any individuals associated with an investment
adviser as investment adviser representatives if they manage accounts or portfolios,
determine securities recommendations, or supervise personnel engaged in the above
activities, including any partner, officer, or director who offers advice concerning
securities. Persons who manage client accounts or portfolios, determine securities
recommendations, or supervise personnel engaged in the above activities are
investment adviser representatives.
✔✔Under the Uniform Securities Act, which of the following circumstances would
exempt a security from registration?
The security is exempt from registration under the act.
The transaction in which the security is sold is exempt under the act. - ✔✔Both 1& 2.
SOLUTIONS RATED A+
✔✔What is the difference between an offer and a sale? - ✔✔An offer is made in an
attempt to sell; a sale is the binding contract to sell a security for value. An offer will not
require a principal's approval, but a designated supervisory individual must approve all
sales on the date the order is executed.
✔✔Section 402(a) of the Uniform Securities Act contains a lengthy list of securities that
are exempt from the registration and advertising filing requirements of the Act. Included
in that list would be all of the following EXCEPT:
Common stock listed on the NYSE.
Bonds issued by the city of Berlin, Ohio.
Church bonds.
Bonds issued by the city of Berlin, Germany. - ✔✔Bonds issued by the city of Berlin,
Germany.
Securities exempt from state registration include those issued by a U.S. or Canadian
governmental unit, such as municipal bonds, and securities issued by nonprofit and
charitable organizations, such as church bonds. However, bonds issued by a non-
sovereign foreign government (cities, etc.) are not considered exempt securities unless
guaranteed by the sovereign (German, in this case) government. Even before the
NSMIA created the exemption for federal covered securities, those listed on the NYSE
received what was called the "blue-chip" exemption.
✔✔Registration under SEC - ✔✔Currently, registration with the SEC is mandatory (not
optional) for any investment adviser managing a registered investment company (open
or closed-end). It is optional for:
pension consultants once their AUM reach $200 million;
small and mid-size advisers who would be required to register in 15 or more states; and
those advisers with at least $100 million in AUM, but not $110 million in AUM
Any of these choosing to register with the SEC are federal covered advisers and do not
register with any state, although a notice filing may be required.
✔✔Investment advisor fees - ✔✔Fixed annual fees, wrap fees, fees based on a
percentage of assets under management, and commissions from trades effected for
clients are acceptable forms of compensation. Unless the client has at least $1 million
under management or a personal net worth of at least $2 million, performance-based
fees are not permitted.
✔✔Accredited Investors - ✔✔Accredited investors are financial institutions, wealthy
persons, and, for a particular issue, persons involved in the management of the issuer.
Certain institutional purchasers such as banks, insurance companies, investment
,companies, and employee benefit plans that have total assets in excess of $5,000,000
are included in the SEC's definition. In addition, any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his purchase exceeds
$1 million, excluding the value of the primary residence, or has earned in excess of
$200,000 in each of the past 2 years and expects to earn more than $200,000 in the
current year ($300,000 for married couples) is an accredited investor.
✔✔Which of the following is NOT an exempt transaction as defined in Section 402 of
the USA?
A. Corporate bond sale to an insurance company.
B. Isolated sale of a corporate bond on behalf of the bond's issuer.
C. Sale of common stock by the county sheriff at the request of the state securities
Administrator.
D. Sale of XYZ common stock, traded on the OTC Bulletin Board, to an individual
investor by the executor of an estate. - ✔✔B. Isolated sale of a corporate bond on
behalf of the bond's issuer.
First of all, don't panic when you see a Section number - just answer the question based
on the specific topic; in this case, the definition of an exempt transaction. An isolated
sale of a corporate bond on behalf of the bond's issuer is not exempt. Under the USA,
only isolated nonissuer transactions are exempt. In this question, the transaction is on
behalf of the issuer, so this transaction is not exempt. The sale of a corporate bond to
an insurance company is the sale of a security to a financial institution; this is an exempt
transaction. A sale of common stock by the executor of an estate, or by the county
sheriff is considered a fiduciary transaction and is exempt regardless of the client or the
type of security.
✔✔An investment adviser registered in 3 states allows its IARs to attach research
reports, bulletins, and other information to emails sent to customers. File copies would
not be required when these bulletins are sent to:
Persons connected to the investment adviser - ✔✔Every investment adviser registered
or required to be registered under the act must make and keep true, accurate, and
current a file containing a copy of each notice, circular, advertisement, newspaper
article, investment letter, bulletin, or other communication, including by electronic media,
that the investment adviser circulates or distributes, directly or indirectly, to 2 or more
persons (other than persons connected with the investment adviser).
✔✔USA state registration - ✔✔Section 201 of the Uniform Securities Act specifies the
conditions under which one is an investment adviser in the state. Specifically excluded
are those IAs with no place of business in the state who confine their advisory activities
in the state to other investment advisers, federal covered advisers, broker-dealers,
banks, trust companies, savings and loan associations, insurance companies,
employee benefit plans with assets of not less than one million dollars ($1,000,000),
and governmental agencies or instrumentalities. If, however, in addition to the two
, banks, the firm did advisory business with more than 5 retail clients who were residents
of Colorado, then, even with no place of business in the state, they would have to
register.
✔✔Which of the following must register as an agent?
A. An individual who is paid a commission to sell certificates of deposit for ABC National
Bank.
B. An individual representing a broker-dealer who sells commercial paper.
C. An employee of the Fed whose job is selling Treasury bonds to the public.
D. An individual who sells commercial paper for ABC National Bank. - ✔✔An individual
who represents a broker-dealer selling commercial paper must register under the USA.
Though the securities (commercial paper) are exempt, the representative must be
registered as an agent of the broker-dealer. The only exceptions from the definition of
"agent" apply to those who sell on behalf of issuers either of exempt securities or in
exempt transactions. The commercial paper and Treasury bonds are exempt securities
and the bank CDs here referred to are not of the negotiable, jumbo variety sold in the
money market and are not securities so no registration is required.
✔✔Exempt from registration under USA - ✔✔Local companies that issue common stock
sold only within the state must register their securities with the state Administrator.
Airport authority bonds, airplane equipment trust certificates, and securities issued by
religious organizations are exempt from registration with the state Administrator.
✔✔Under the Uniform Securities Act, any partner, officer, or director of a registered
investment adviser is an investment adviser representative if that individual does which
of the following?
A. Offers advice concerning securities.
B. Manages client accounts or portfolios.
C. Determines securities recommendations for representatives to disseminate.
D. Supervises personnel engaged in the above activities but does not sell these
services to the public - ✔✔All of the above.
The Uniform Securities Act defines any individuals associated with an investment
adviser as investment adviser representatives if they manage accounts or portfolios,
determine securities recommendations, or supervise personnel engaged in the above
activities, including any partner, officer, or director who offers advice concerning
securities. Persons who manage client accounts or portfolios, determine securities
recommendations, or supervise personnel engaged in the above activities are
investment adviser representatives.
✔✔Under the Uniform Securities Act, which of the following circumstances would
exempt a security from registration?
The security is exempt from registration under the act.
The transaction in which the security is sold is exempt under the act. - ✔✔Both 1& 2.
