Could you please clarify the following? I saw different things from different sources and am a little confused.
Assume an IA is federally covered and has an office in state X, and its IAR has an office in state A and B, what states (even if by notice filing) do the IA and IAR must register? please explain also in a case when the IA is not federally covered.
Similarly, If an IA is federally covered and has an office in state X, and its IAR has no office in state A and B but has 20 clients in each state, where do the both parties must register? please explain also in a case when the IA is not federally covered.
Additionally, please explain how the same would work for BDs and agents. Thank you!!
Hi, I’d recommend spending some time to carefully review the textbook since this can’t be summarized in just a few bullet points. Most chapters in Section 5.3 are relevant; here’s a good place to start:
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I hope you’re well. I’ve read the entire textbook twice and made up the above scenarios to help simplify the concepts for myself. I’m trying to clarify the relationship between and a IA and a IAR concerning registration requirements, as I’ve encountered conflicting information from different sources.
My understanding is that a BD must be registered in every state where its agents are registered (disregarding exemptions/exclusions or if its notice filing/regular registration). So my conclusion is that agents and BDs are always registered in the same states. For IAs and IARs, my understanding is that an IA must be registered in every state where its IAR conducts business (disregarding exemptions/exclusions). However, for federally covered IA, my understanding is that it would only need to be registered in states where their IAR has an office. The IA wouldn’t need to be registered in states where their IAR do not have an office, even if the IAR has more than five clients in those states (again, I’m trying to describe a scenario with no exemptions/exclusions). In such cases, only the IAR would need to be registered in that particular state. On the other side, IARs are only concerned in registration where they are required according to their own operations, they wouldn’t need to register in all the states its IAs are registered.
Could you please confirm if my understanding is correct? I’m taking my exam soon and want to ensure I have it clear. Thank you!
Rather than trying to draw a connection between the registration of the BD/Agent or IA/IAR, it’s best to think of them as each having separate rules, regulations, exemptions, and circumstances.
Remote work has only complicated this further. For instance, it is not guaranteed that a broker-dealer will have an office in every location where an agent is present.
This article does a good job of explaining some of the complexities:
It is extremely unlikely that an exam question will give you this complicated a scenario; they’ll provide information on the relevant offices and clients without needing to draw the connection to employers/employees. For these rules and registration questions, it’s best to memorize the core information, take the questions at face value, and don’t overthink it!
Thank you Justin! That really helps. Breaking it down into separate parties definitely makes more sense. What threw me off was trying some additional online practice exams because I figured I had memorized many of the questions from Achievable, having answered plenty of them. But those other exams went deeper into the complications you described, which might have done more harm than good lol. Anyway, looking at BDs/Agents and IAs/IARs separately makes it all clearer. Thanks again!
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