The Uniform Securities Act (USA) is the model law behind state (blue-sky) securities regulation: a template each state adopts and NASAA keeps current. It powers the biggest Series 66 section, since Laws, Regulations, and Guidelines is 45 of your 100 scored questions. This half of the section hinges on four role definitions (broker-dealer, agent, investment adviser, IAR), the exclusions from each, how securities register with a state, and the enforcement powers of the administrator.
The Series 66 splits its state-law material into two halves, and this guide covers the structural one: who counts as what, who registers where, how securities register, and what the administrator can do about violations. The conduct half (fiduciary obligations, compensation, custody, prohibited practices, and client communications) has its own guide: ethics and fiduciary obligations. Study them as a pair; NASAA draws all 45 law questions from the two combined.
What is the Uniform Securities Act?
The Uniform Securities Act is a model law, not a federal statute. Each state passes its own securities act built on the template, then enforces it through an official the act calls the administrator (titles vary: commissioner, director, secretary of state). NASAA, the association of those state regulators, maintains the model act and its amendments, which is why one exam can test “state law” across fifty different statutes.
State securities laws are nicknamed blue-sky laws: Kansas passed the first one in 1911 to stop promoters selling schemes backed by nothing but the blue sky itself, and the name stuck.
Federal law shares the field: the Securities Act of 1933 covers new offerings, the Investment Advisers Act of 1940 covers advisers, and the National Securities Markets Improvement Act of 1996 drew the modern boundary. Certain securities and larger advisers became “federal covered” and answer mainly to the SEC, while states keep registration authority over everyone else and antifraud authority over everything. (New to the exam itself? Start with what the Series 66 is.)
Who counts as a broker-dealer or agent?
A broker-dealer is any person (in practice, almost always a firm) in the business of effecting securities transactions for the account of others (as a broker) or for its own account (as a dealer). Most firms do both. Two neighbors travel with the definition: an underwriter buys securities from an issuer to distribute them to the public (or sells for an issuer in a distribution), and a market maker is a dealer continuously quoting both a bid and an ask in a specific security.
The definition excludes agents (individuals, covered next), issuers selling their own securities, and banks. Geography matters too: a broker-dealer registers in every state where it conducts securities business, but a firm with no office in a state whose only business there is with institutional investors, or with existing customers passing through, generally is not a broker-dealer in that state. Registering means filing with the administrator, paying fees, consenting to service of process, and meeting minimum net capital and bonding requirements.
An agent is always an individual, never a firm: a natural person who represents a broker-dealer or an issuer in effecting securities purchases or sales (FINRA calls the same person a registered representative). Clerical staff are not agents, and neither are individuals who represent issuers in exempt securities, in exempt transactions, or in employee benefit plan transactions when no commission is paid for soliciting.
Agents register through their employing firm on Form U4; the registration is not effective while the agent is between firms, the firm files Form U5 at termination, and material changes (a customer complaint, a disciplinary event) must hit the form promptly, generally within 30 days. The firm carries a matching duty: written supervisory procedures, designated principals over each office, and liability if it fails to supervise.
Broker-dealers and investment advisers are firms. Agents and IARs are always individuals. A corporation can never register as an agent, and an individual can be a broker-dealer only as a sole proprietor. Watch “person” (almost any legal entity) versus “individual” (a human being).
Agent and broker-dealer regulation is also the entire Series 63; our Series 66 vs Series 63 comparison shows how the exams divide the territory.
Who counts as an investment adviser or IAR?
An investment adviser is any person who meets a three-prong test: it provides advice about securities (or reports and research about them), it does so as a regular business, and it receives compensation, read broadly to mean any economic benefit. Miss any prong and the person is not an adviser.
The exclusions are exam gold: banks and bank holding companies; lawyers, accountants, teachers, and engineers whose advice is solely incidental to their profession (the “LATE” memory hook); broker-dealers whose advice is incidental to brokerage with no special compensation; and publishers of bona fide, general-circulation publications. Federal covered advisers are excluded too: they answer to the SEC instead.
The state-versus-SEC line is drawn in assets under management. An adviser under $100 million in AUM registers with the states; above $110 million it must register with the SEC; between the two sits a buffer where SEC registration is permitted but not required. A federal covered adviser does not register with any state; instead, states may require a notice filing, a copy of its SEC paperwork plus a fee, with nothing substantive stacked on top. Two softer categories are worth knowing: private fund advisers (only qualifying private funds, under $150 million in U.S. assets) skip full registration, and exempt reporting advisers file an abbreviated report instead.
For everyone else, registration runs through Form ADV. Part 1 is the regulator-facing data (ownership, business practices, AUM, disciplinary history). Part 2A is the brochure: the plain-English disclosure of services, fees, strategies, and conflicts that clients receive before or when they sign on. Part 2B profiles the people giving the advice. After registering, the adviser files an annual updating amendment within 90 days of its fiscal year end and keeps books and records for five years, the first two in its principal office.
An investment adviser representative (IAR) is the individual layer: anyone associated with an adviser who makes recommendations, manages accounts, decides what advice to give, solicits advisory clients, or supervises people who do. Clerical staff are excluded. IARs register with states on Form U4, and the most tested twist in the unit is this: even when the adviser is federal covered, its IARs still register with the state where they keep a place of business. There is no federal covered IAR. Many states also excuse an out-of-state adviser or IAR with no in-state office and only a small number of non-institutional clients there (a de minimis allowance).
The whole cast on one screen:
| Role | Who it is | Registers with | Key exclusions |
|---|---|---|---|
| Broker-dealer | Firm trading securities for customers or its own account | Every state where it does business, plus federally | Banks, issuers, agents; out-of-state firms serving only institutions |
| Agent | Individual representing a broker-dealer or issuer in trades | The state, on Form U4 through the firm | Clerical staff; issuer reps in exempt securities or transactions |
| Investment adviser | Firm advising on securities, as a business, for pay | States under $100M AUM; the SEC above $110M | Banks; LATE professionals; publishers |
| IAR | Individual advising, managing, soliciting, or supervising for an adviser | The state, even when the firm is federal covered | Clerical and administrative staff |
Turn Definitions Into Easy Points
CertFuel's adaptive question bank weights your Series 66 practice toward the 45-question laws section, then resurfaces the role definitions, exclusions, and registration rules you miss until the distinctions are automatic. The Exam Readiness Gauge shows when you are actually ready.
Choose Your PathHow do securities register under state law?
First, what counts as a security. The act lists the obvious ones (stocks, bonds, notes, fund shares, partnership interests, variable annuities, options) and then sweeps in anything that qualifies as an investment contract under the Supreme Court’s Howey test: an investment of money, in a common enterprise, with an expectation of profit that comes primarily from the efforts of someone other than the investor. Fixed annuities, whole life insurance, bank deposits, physical commodities, and collectibles are not securities.
An offer is any attempt to dispose of a security for value, including soliciting an offer to buy; a sale is the actual disposition for value. In an issuer transaction the proceeds go to the issuer (a new offering); in a non-issuer transaction they do not (ordinary secondary-market trades).
A security offered in a state must be registered there unless an exemption applies, and the act provides three ways in:
- Registration by coordination. The issuer registers with the state and the SEC (under the Securities Act of 1933) in parallel; the state registration becomes effective the moment the federal one does. Standard for IPOs sold in many states.
- Registration by qualification. Full, stand-alone state registration for offerings with no federal registration to coordinate with (typically purely intrastate deals); effective only when the administrator says so.
- Registration by filing (notification). A simplified route for seasoned issuers with an established track record: mostly a notice and a fee.
Federal covered securities skip state registration entirely: securities listed on national exchanges, shares of SEC-registered investment companies such as mutual funds, sales to qualified purchasers, and certain private offerings exempt under federal law. States may collect a notice filing and a fee but cannot demand registration.
Exemptions split in two, and the exam loves the distinction. Exempt securities are exempt because of what they are: U.S. government and municipal securities, plus securities issued by banks and insurance companies. Exempt transactions are exempt because of how the sale happens: isolated non-issuer trades, unsolicited orders, sales to institutional investors, transactions between issuers and underwriters, and private placements offered to a limited number of purchasers without general advertising. Private-offering questions often lean on the federal accredited investor definition: an individual with net worth above $1 million excluding the primary residence, or income above $200,000 ($300,000 with a spouse) in each of the last two years, plus institutions and certain insiders.
Every exemption on this page removes registration paperwork only. The state’s antifraud authority applies to every offer and sale inside its borders: exempt securities, exempt transactions, and federal covered securities included. Nothing is ever exempt from the antifraud provisions.
What can the state administrator do?
The exam tests both the reach of the administrator’s office and its limits.
Rules and orders. The administrator may make, amend, and rescind the rules, forms, and orders needed to enforce the act; they carry the force of law but may not contradict the act itself.
Investigations. The administrator may investigate inside or outside the state, publicly or privately, compel sworn statements and testimony, subpoena books and records, and ask a court to enforce a subpoena against anyone who refuses.
Registration actions. The administrator may deny, suspend, revoke, or condition any registration, but only on two findings together: the action is in the public interest and rests on a listed ground, such as a false or misleading filing, a felony conviction within the past ten years, a misdemeanor involving securities or dishonesty, an order from another regulator, insolvency, failure to supervise, or a willful violation of the act. Normal process is notice and an opportunity for a hearing; in an emergency a summary order can take effect first, and the person affected has 15 days to request a hearing before it becomes final.
Cease and desist orders. When someone is violating the act or about to, the administrator can order them to stop, with or without a prior hearing. If the order is ignored, the administrator must go to court, because the limits matter as much as the powers: the administrator cannot issue injunctions, award damages, or impose criminal penalties. Courts do all three.
Criminal and civil consequences. Willful violations are referred to prosecutors, and conviction carries up to a $5,000 fine and three years in prison per violation; willfulness is required, so negligence alone is never a crime under the act. On the civil side, a buyer sold securities unlawfully may recover what they paid plus interest, minus income received, by suing within two years of discovering the violation or three years of the sale, whichever comes first. A seller can cut off that liability with a rescission offer: returning the buyer’s money plus interest, made before the buyer sues.
How should you study this half of the laws section?
This is the most memorization-friendly material on the Series 66. Almost every question reduces to a definition, an exclusion, or a who-does-what: person versus individual, exempt security versus exempt transaction, registered versus notice-filed, administrator versus court. Precision reading beats cleverness, which makes these some of the most bankable points on the exam.
Three moves lock it in. Condense the definitions onto one page with our Series 66 cheat sheet, drill the word-level distinctions with our Series 66 flashcards guide, and pair this guide with its sibling on ethics and fiduciary obligations; the conduct half leans on every definition here. Then pressure-test yourself with a Series 66 practice test and slot this section into a full plan with how to pass the Series 66.