Notice Filing

C is correct. Under NSMIA, federal covered securities like mutual funds registered under the Investment Company Act of 1940 are exempt from state registration and merit review. States can only collect fees, require filing of documents (copies of SEC registration, consent to service of process), and enforce anti-fraud provisions. Texas cannot deny the notice filing based on concentration concerns or require state-mandated legends on offering documents.

A is incorrect because states cannot deny notice filings or prevent federal covered securities from being sold based on merit review. The SEC has exclusive jurisdiction over substantive regulation of investment companies. B is incorrect because NSMIA specifically prohibits states from requiring legends or other conditions on federal covered securities offerings. D is incorrect because investment company securities are federal covered and exempt from state registration requirements, including registration by coordination. Notice filing is the only state-level procedure required.

B is correct. Notice filing serves as a compromise under NSMIA that allows states to collect revenue through filing fees and maintain awareness of securities activity in their jurisdictions, while eliminating the duplicative burden of full state registration for federal covered securities. The SEC handles substantive review; states simply receive notice, collect fees, and retain anti-fraud enforcement authority.

A is incorrect because notice filing specifically prohibits state merit review. NSMIA eliminated state authority to judge the merits of federal covered securities offerings. C is incorrect because notice filing is not registration; it is a simplified notification process that occurs instead of state registration for federal covered securities. D is incorrect because notice filing applies to federal covered securities (like large investment companies), not small offerings, and does not exempt securities from regulation but rather shifts primary regulatory authority to the SEC.

C is correct. Federal covered advisers must file notice filings in states where they have retail clients. Summit must notice file in the 8 states where they have retail individual clients. The 3 states where Summit only serves institutional clients do not require notice filing because federal covered advisers with only institutional clients are exempt from notice filing.

A is incorrect because while SEC registration exempts advisers from state registration, it does not exempt them from notice filing requirements in states where they have retail clients. B is incorrect because states where the adviser only serves institutional clients do not require notice filing. D is incorrect because it reverses the rule - retail clients trigger notice filing, while institutional-only clients do not.

C is correct (the EXCEPT answer). States CANNOT impose merit review requirements or deny effectiveness of federal covered securities based on risk assessment or suitability concerns. NSMIA specifically prohibited state merit review of federal covered securities to eliminate duplicative regulation and create a uniform national market for these securities.

A is accurate: States can collect filing fees for notice filings. This revenue provision was preserved under NSMIA to allow states to fund their securities regulation operations. B is accurate: States can require issuers to submit copies of documents filed with the SEC, including registration statements, amendments, and periodic reports. D is accurate: States retain full anti-fraud enforcement authority over federal covered securities. They can investigate fraudulent conduct, bring enforcement actions, and prosecute violations of anti-fraud provisions, even though they cannot conduct merit review.

A is correct. Statements 1 and 2 are accurate.

Statement 1 is TRUE: States can require issuers to file consent to service of process as part of notice filing. This allows the state to serve legal papers on the issuer in any enforcement action, ensuring the state can exercise jurisdiction over fraud and other violations.

Statement 2 is TRUE: States can request information about the value or amount of securities to be offered in their state. This helps states track market activity and assess filing fee amounts where fees are based on offering size.

Statement 3 is FALSE: States cannot conduct merit review of notice-filed securities or reject offerings based on substantive concerns like high fees. NSMIA specifically prohibited state merit review of federal covered securities. The SEC has exclusive jurisdiction over substantive regulation of investment companies, including fee structures.

Statement 4 is FALSE: Investment company securities registered under the Investment Company Act of 1940 are federal covered securities exempt from state registration requirements. Notice filing is the only state-level procedure required; it is not registration and does not require additional registration under the Uniform Securities Act.