Definition
North American Securities Administrators Association (NASAA)
The association of state securities regulators that develops model rules, has amended model legislation such as the Uniform Securities Act, and develops qualification exams (Series 63, 65, 66) that FINRA administers. States generally regulate investment advisers with less than $100 million AUM (subject to exceptions and a $100 million to $110 million buffer) and coordinate enforcement through NASAA.
NASAA creates the Series 65 exam, which investment adviser representatives generally must pass (or pass the Series 66 together with the Series 7) to register in their state. It also amends the Uniform Securities Act, model legislation that states can adopt, and writes model rules under it.
NASAA is not a regulator itself; it's an association of state regulators who coordinate policy and create model rules. Individual states retain actual regulatory authority.
How is North American Securities Administrators Association (NASAA) tested on the exam?
- Understanding NASAA's role in coordinating state securities regulation
- Recognizing that NASAA develops the Series 63, 65 and 66 exams, which FINRA administers
- Knowing that states (not NASAA directly) regulate smaller investment advisers
- Understanding the Uniform Securities Act as model legislation that states adopt and NASAA has amended
- Identifying which advisers register with states vs. SEC based on AUM thresholds
Regulatory limits
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| State registration threshold for investment advisers | Less than $100 million AUM | Advisers below this threshold generally register with states (exceptions include advisers to registered investment companies and advisers that would have to register in 15 or more states); from $100 million to $110 million SEC registration is optional |
| State registration threshold (mid-sized advisers) | $100 million to $110 million AUM | Mid-sized advisers may choose state or SEC registration in this buffer zone |
| SEC registration requirement | $110 million AUM or more | Advisers at or above this level generally must register with the SEC, not the states, unless an exemption applies |
Think of NASAA like the "Coaches Association" for state securities regulators: They annotate the playbook (the Uniform Securities Act, which the Uniform Law Commission wrote and NASAA has amended), create the test (Series 65), and coordinate strategy, but each state coach runs their own team (generally regulates advisers under $100M). NASAA doesn't referee games.
Practice questions
Test your understanding with the questions below. Pick an answer to reveal the explanation.
Jennifer is starting an investment advisory firm and expects to manage $75 million in client assets across California, Nevada, and Arizona. She asks where she needs to register her firm. Which recommendation is most accurate?
C is correct. Investment advisers with less than $100 million AUM generally register with the state securities regulators, not the SEC, in each state where they have a place of business or, in the past 12 months, more than 5 resident clients other than institutional investors. Jennifer's $75 million AUM falls below the federal threshold, so she registers with California, Nevada, and Arizona state regulators.
A is incorrect because NASAA is not a registration authority. It's an association that coordinates state regulators but doesn't accept registrations itself. B is incorrect because operating in three states doesn't trigger SEC registration; the multistate exemption applies only to an adviser that would otherwise have to register in 15 or more states, so AUM controls here. D is incorrect because dual registration with NASAA isn't possible (NASAA isn't a regulator), and SEC registration isn't required or permitted at this AUM level.
The Series 65 exam tests your understanding of the state vs. federal registration framework. Knowing that NASAA coordinates but doesn't regulate, and that AUM determines registration jurisdiction, is critical for advising clients on compliance obligations.
What is the AUM threshold below which investment advisers must register with state securities regulators rather than the SEC?
C is correct. Investment advisers with less than $100 million in assets under management generally must register with state securities regulators (coordinated through NASAA's model rules) rather than with the SEC.
A ($25 million) is a real threshold, but it is the lower edge of the mid-sized range: advisers below it are generally barred from SEC registration, and advisers from $25 million to $100 million are generally state-registered too. B ($50 million) is not a threshold in the current framework. D ($150 million) exceeds the SEC registration requirement threshold of $110 million, so advisers at this level would be required to register with the SEC, not states.
The Series 65 exam frequently tests the $100 million AUM threshold as the dividing line between state and federal registration. Understanding this threshold is essential for determining compliance obligations and registration jurisdiction for investment advisory firms.
An investment adviser currently manages $95 million in client assets and projects adding 3 new institutional clients over the next year, each with $6 million in assets. After onboarding these clients, where will the adviser be required to register?
B is correct. Calculate the new AUM: $95 million + (3 clients × $6 million) = $95 million + $18 million = $113 million. Since the adviser will manage $113 million in assets, which exceeds the $110 million SEC registration threshold, the adviser must transition from state to SEC registration.
A is incorrect because $113 million AUM exceeds the state registration limit ($100 million buffer zone ends at $110 million). C is incorrect because the $100-$110 million buffer zone for optional registration doesn't apply. At $113 million, SEC registration is mandatory, not optional. D is incorrect because advisers register either with states or the SEC based on AUM, not both simultaneously.
The Series 65 exam tests your ability to calculate AUM changes and determine when advisers must transition between state and SEC registration. Understanding the $100 million and $110 million thresholds and how to apply them to real-world scenarios is critical for advising firms on regulatory compliance.
All of the following statements about NASAA are accurate except
C is correct (the exception). NASAA does not directly regulate investment advisers. NASAA is an association that coordinates among state securities regulators, but the individual state securities administrators retain actual regulatory authority over advisers in their jurisdictions.
A is accurate: NASAA amends the Uniform Securities Act, model legislation that states can adopt and adapt to their needs, and writes model rules under it. B is accurate: NASAA develops the Series 63 (state law exam), Series 65 (investment adviser representative exam), and Series 66 (combined 63/65) exams, and FINRA administers them. D is accurate: NASAA serves as a coordination body where state regulators develop common policy positions and share enforcement information.
The Series 65 exam tests your ability to distinguish NASAA's coordinating role from actual regulatory authority. Understanding that NASAA creates model rules and exams but doesn't directly regulate is essential for explaining the multi-layered securities regulatory framework to clients.
An investment adviser with $105 million AUM is considering its registration options. Which of the following statements are accurate?
1. The adviser falls within the mid-sized adviser buffer zone
2. The adviser must register with the SEC
3. The adviser may choose to register with either states or the SEC
4. The adviser's representatives generally must qualify by exam, such as the Series 65 that NASAA develops
C is correct. Statements 1, 3, and 4 are accurate.
Statement 1 is true: The $100 million to $110 million range is the "buffer zone" for mid-sized advisers who have outgrown state-only registration but aren't yet required to register with the SEC.
Statement 2 is false: SEC registration is not mandatory until $110 million AUM. At $105 million, the adviser has a choice.
Statement 3 is true: Within the $100-$110 million buffer zone, advisers may elect either state or SEC registration based on their business needs and compliance preferences.
Statement 4 is true: Investment adviser representatives generally must pass the Series 65 (or the Series 66 together with the Series 7) or hold a designation that waives the exam, whether the firm registers with states or the SEC. NASAA develops the exam and FINRA administers it.
The Series 65 exam tests detailed knowledge of the registration framework's nuances, including the mid-sized adviser buffer zone. Understanding when registration is optional vs. mandatory, and that individual qualification requirements apply regardless of firm registration level, demonstrates complete knowledge of the NASAA-coordinated regulatory system.
What concepts relate to North American Securities Administrators Association (NASAA)?
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Where does North American Securities Administrators Association (NASAA) appear on the Series 65 exam?
This term is tested in the following Series 65 exam topics: