SERIES 66 LATEST 2026 EXAM QUESTIONS AND
SOLUTIONS RATED A+
✔✔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.
It is illegal to sell securities that are not registered unless the security or the transaction
itself is exempt from state registration requirements. This applies to new issues (primary
distributions) and secondary market transactions.
✔✔Under the NASAA's Model Rule on Unethical Business Practices of Investment
Advisers, Investment Adviser Representatives, and Federal Covered Advisers, which of
the following statements regarding the use of reports is TRUE? - ✔✔An investment
adviser is not prohibited from providing clients with recommendations or reports
prepared by others (3rd party reports), but the adviser must disclose the true source of
the recommendations or reports. However, the disclosure requirement does not apply to
the research material, including 3rd party reports, an adviser uses in formulating
investment advice.
✔✔Which of the following statements regarding registration of investment advisers is
(are) TRUE under the Investment Advisers Act of 1940?
If any material information filed in the registration becomes inaccurate, an amendment
must be filed promptly.
If any nonmaterial information filed on Form ADV changes, an amendment must be filed
within 90 days of the end of the fiscal year. - ✔✔The SEC requires prompt amendment
of any material information changes on Form ADV (e.g., names, location, control,
custody, organization) and also requires nonmaterial amendments within 90 days of the
end of the adviser's fiscal year.
✔✔NSMIA - ✔✔The National Securities Markets Improvement Act preempts state
registration of covered securities. State administrators may not impose registration
requirements on securities that are subject to federal regulation.
✔✔Arbitrage - ✔✔Buying on one exchange and selling on another is called arbitrage,
not market manipulation, and it is an accepted business practice.
✔✔An investment adviser is registered in States A and B with their principal office in
State B. The Administrator of State A can request to see: - ✔✔The Administrator of
State A can request that advertisements placed in his state be filed because that is
business relating to his state. As long as the IA meets the "home" state's financial and
recordkeeping requirements, that is good everywhere.
, ✔✔A federal covered investment adviser has decided that it is necessary to increase its
fee schedule and charge commissions on securities trades. However, they are going to
leave the fee structure in place for existing customers. This information must be: -
✔✔Disclosed promptly only to those customers who will be affected by the change
through a new brochure.
Disclosed in the summary of material changes in the annual updating amendment to the
SEC.
Because this will only affect new clients, the brochure (or Part 2A of the ADV), must be
amended to reflect this new method of operation and made available to these clients
and to the SEC at the end of the year. The state has no cause to receive a copy of a
federal covered adviser's brochure.
✔✔Broker dealer definition under USA - ✔✔The USA specifically excludes
agent/issuers and banks, international or domestic, from the definition of a broker-
dealer. Investment advisers also may have to register as broker-dealers if their method
of operation requires it.
✔✔Exempt transaction - ✔✔The purchase of securities from a broker-dealer by an
employee of a bank is a nonexempt transaction because it is a sale of a security by a
broker-dealer to a member of the public. Transactions between broker-dealers and
issuers, transactions between banks, and between banks and insurance companies are
exempt because they occur between financial institutions. Exempt transactions are
most often identified by the transaction's parties, rather than the type of security
involved.
✔✔Under the Uniform Securities Act, which of the following is (are) investment
advisers?
-Jane advises customers regarding the value of gold and silver coins.
-The Trust Department of ABC Bank provides investment advice to its clients.
-Tom writes a newspaper column that analyzes and recommends securities.
-Jill is an attorney specializing in estate planning who, as a side job, structures portfolios
for the beneficiaries of her deceased clients at a reduced fee. - ✔✔4 only. Jane's advice
does not concern securities; banks are exempt from the definition; Tom's advice is not
specific on the basis of the situation of each client (impersonal advice). While an
attorney is generally excluded, Jill is giving investment advice for a fee in a manner that
is not incidental to her legal practice.
✔✔Under the USA, private placements are exempt from state registration if they limit
solicitations to how many noninstitutional clients per 12 month period? - ✔✔10 or fewer.
The USA states that private placements are exempt from registration if they solicit a
maximum of 10 noninstitutional (retail) clients during any 12 month period.
✔✔Notice filing - ✔✔Notice filing is the registration method used by investment
companies registered under the Investment Company Act of 1940.
SOLUTIONS RATED A+
✔✔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.
It is illegal to sell securities that are not registered unless the security or the transaction
itself is exempt from state registration requirements. This applies to new issues (primary
distributions) and secondary market transactions.
✔✔Under the NASAA's Model Rule on Unethical Business Practices of Investment
Advisers, Investment Adviser Representatives, and Federal Covered Advisers, which of
the following statements regarding the use of reports is TRUE? - ✔✔An investment
adviser is not prohibited from providing clients with recommendations or reports
prepared by others (3rd party reports), but the adviser must disclose the true source of
the recommendations or reports. However, the disclosure requirement does not apply to
the research material, including 3rd party reports, an adviser uses in formulating
investment advice.
✔✔Which of the following statements regarding registration of investment advisers is
(are) TRUE under the Investment Advisers Act of 1940?
If any material information filed in the registration becomes inaccurate, an amendment
must be filed promptly.
If any nonmaterial information filed on Form ADV changes, an amendment must be filed
within 90 days of the end of the fiscal year. - ✔✔The SEC requires prompt amendment
of any material information changes on Form ADV (e.g., names, location, control,
custody, organization) and also requires nonmaterial amendments within 90 days of the
end of the adviser's fiscal year.
✔✔NSMIA - ✔✔The National Securities Markets Improvement Act preempts state
registration of covered securities. State administrators may not impose registration
requirements on securities that are subject to federal regulation.
✔✔Arbitrage - ✔✔Buying on one exchange and selling on another is called arbitrage,
not market manipulation, and it is an accepted business practice.
✔✔An investment adviser is registered in States A and B with their principal office in
State B. The Administrator of State A can request to see: - ✔✔The Administrator of
State A can request that advertisements placed in his state be filed because that is
business relating to his state. As long as the IA meets the "home" state's financial and
recordkeeping requirements, that is good everywhere.
, ✔✔A federal covered investment adviser has decided that it is necessary to increase its
fee schedule and charge commissions on securities trades. However, they are going to
leave the fee structure in place for existing customers. This information must be: -
✔✔Disclosed promptly only to those customers who will be affected by the change
through a new brochure.
Disclosed in the summary of material changes in the annual updating amendment to the
SEC.
Because this will only affect new clients, the brochure (or Part 2A of the ADV), must be
amended to reflect this new method of operation and made available to these clients
and to the SEC at the end of the year. The state has no cause to receive a copy of a
federal covered adviser's brochure.
✔✔Broker dealer definition under USA - ✔✔The USA specifically excludes
agent/issuers and banks, international or domestic, from the definition of a broker-
dealer. Investment advisers also may have to register as broker-dealers if their method
of operation requires it.
✔✔Exempt transaction - ✔✔The purchase of securities from a broker-dealer by an
employee of a bank is a nonexempt transaction because it is a sale of a security by a
broker-dealer to a member of the public. Transactions between broker-dealers and
issuers, transactions between banks, and between banks and insurance companies are
exempt because they occur between financial institutions. Exempt transactions are
most often identified by the transaction's parties, rather than the type of security
involved.
✔✔Under the Uniform Securities Act, which of the following is (are) investment
advisers?
-Jane advises customers regarding the value of gold and silver coins.
-The Trust Department of ABC Bank provides investment advice to its clients.
-Tom writes a newspaper column that analyzes and recommends securities.
-Jill is an attorney specializing in estate planning who, as a side job, structures portfolios
for the beneficiaries of her deceased clients at a reduced fee. - ✔✔4 only. Jane's advice
does not concern securities; banks are exempt from the definition; Tom's advice is not
specific on the basis of the situation of each client (impersonal advice). While an
attorney is generally excluded, Jill is giving investment advice for a fee in a manner that
is not incidental to her legal practice.
✔✔Under the USA, private placements are exempt from state registration if they limit
solicitations to how many noninstitutional clients per 12 month period? - ✔✔10 or fewer.
The USA states that private placements are exempt from registration if they solicit a
maximum of 10 noninstitutional (retail) clients during any 12 month period.
✔✔Notice filing - ✔✔Notice filing is the registration method used by investment
companies registered under the Investment Company Act of 1940.
