North American Securities Administrators Association (NASAA)
North American Securities Administrators Association (NASAA)
The association of state securities regulators that develops model rules like the Uniform Securities Act and administers qualification exams (Series 63, 65, 66). States regulate investment advisers with less than $100 million AUM and coordinate enforcement through NASAA.
NASAA creates the Series 65 exam that investment adviser representatives must pass to register in their state. It also develops the Uniform Securities Act as model legislation that states can adopt.
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 This Is Tested
- Understanding NASAA's role in coordinating state securities regulation
- Recognizing that NASAA develops and administers qualification exams
- Knowing that states (not NASAA directly) regulate smaller investment advisers
- Understanding the Uniform Securities Act as NASAA's model legislation
- Identifying which advisers register with states vs. SEC based on AUM thresholds
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| State registration threshold for investment advisers | Less than $100 million AUM | Advisers below this threshold register with states; those above register with SEC |
| 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 must register with SEC, not states |
Example Exam Questions
Test your understanding with these practice questions. Select an answer to see 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 must register with the individual state securities regulators in each state where they conduct business, not with the SEC. 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 multiple states doesn't trigger SEC registration; only the AUM threshold ($110M+) does. 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 must register with state securities regulators (coordinated through NASAA's model rules) rather than with the SEC.
A ($25 million) is not a regulatory threshold in the state vs. SEC registration framework. B ($50 million) was historically significant but is not the current threshold. 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.
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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 EXCEPT answer). 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 develops the Uniform Securities Act as model legislation that states can adopt and adapt to their needs. B is accurate: NASAA creates and administers the Series 63 (state law exam), Series 65 (investment adviser representative exam), and Series 66 (combined 63/65) exams. 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 must pass the Series 65 exam administered by NASAA
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 must pass the Series 65 exam (or Series 66, or hold certain professional designations) regardless of whether the firm registers with states or the SEC. NASAA administers this exam.
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 comprehensive knowledge of the NASAA-coordinated regulatory system.
💡 Memory Aid
Think of NASAA like the "Coaches Association" for state securities regulators: They write the playbook (Uniform Securities Act), create the test (Series 65), and coordinate strategy - but each STATE coach runs their own team (regulates advisers under $100M). NASAA doesn't referee games.
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Where This Appears on the Exam
This term is tested in the following Series 65 exam topics: