Series 65 Registration Rules: Who Registers Where and Why

The Laws, Regulations & Ethics section makes up 30% of the Series 65 exam, and registration rules are the backbone of that section. Candidates who nail this topic pick up a significant number of guaranteed points. Those who confuse the categories — broker-dealers versus advisers, state registration versus federal — tend to fail here more than anywhere else.

This post breaks down each category of person, the rules that govern them, and the specific numbers the exam tests.

The Four Categories of Persons

The Uniform Securities Act (USA) recognizes four categories of registrants. Each has its own rules and the categories do not cross-pollinate — a rule that applies to an agent does not automatically apply to an IAR.

Broker-Dealers

A broker-dealer must register in a state if it has an office in the state, has clients who are residents of the state, or solicits residents of the state (including by mail or phone).

A broker-dealer does not need to register in a state if it has no office there and its only clients in that state are institutions or other broker-dealers. The key exemption to memorize: no office + no retail clients = no registration required.

Agents

An agent must register if they are associated with a broker-dealer and either accept orders or solicit the purchase or sale of securities. An agent must also register if they work for a non-exempt issuer and sell or solicit securities.

An agent does not need to register if their duties are purely clerical — they do not accept orders, solicit, or advise. A silent partner in a broker-dealer does not need to register as an agent. An agent working for an exempt issuer (like a municipality) does not need to register.

Investment Advisers

This is where the exam gets specific. Registration depends on assets under management (AUM):

• AUM above $110 million: Must register with the SEC only. The state has no registration authority over federally covered advisers.
• AUM between $100 million and $110 million: The adviser has a choice — register with the SEC or continue with state registration.
• AUM between $25 million and $100 million: Must register with the state. This group is explicitly prohibited from registering with the SEC.
• AUM below $25 million: Must register with the state unless they would be required to register in 15 or more states, in which case SEC registration becomes available.

The $20 million buffer rule: if a federally covered adviser's AUM drops below $90 million, it must withdraw from SEC registration and register with the state. It has 180 days to complete that transition.

State-registered advisers are exempt from state registration if they have no office in the state AND have no more than 5 retail clients in that state in any rolling 12-month period. This is the de minimis exemption.

Investment Adviser Representatives (IARs)

An IAR is any individual who gives investment advice on behalf of an investment adviser. Officers, directors, and partners of an investment adviser are automatically registered as IARs.

A federally covered IAR must register with the state in any state where they maintain an office. If they have no office in a state, they do not need to register there even if they have clients there.

A state-registered IAR must register in a state where they have either an office or retail clients who are residents.

Net Capital Requirements

The exam tests specific dollar amounts:

• Investment adviser with investment discretion only: $10,000 net capital
• Investment adviser maintaining custody of client assets: $35,000 net capital
• An adviser with both discretion and custody: $35,000 satisfies both requirements

Books and Records Retention

The retention periods differ by registrant type and the exam tests both:

• Investment advisers: 5 years total; first 2 years in the principal office and readily accessible
• Broker-dealers: 3 years total; first 2 years readily accessible

Registration Mechanics

All registrations expire on December 31 of each year and must be renewed. The effective date for a new registration is noon on the 30th day after a complete application is filed, unless the administrator acts before then.

When a registration is withdrawn, it becomes effective 30 days after notice is given. For agents, either the agent or the broker-dealer can give notice. For state-registered IARs, the IA (not the IAR) notifies the administrator. For federally covered IARs, the IAR notifies the state administrator directly.

The Exam Approach

When you see a registration question, work through it in order:

1. What type of person is this? (BD, agent, IA, or IAR)
2. Does the triggering condition apply? (office, clients, solicitation)
3. Does an exemption apply? (no office + no retail clients, de minimis, etc.)

The most common error candidates make is applying the de minimis exemption to the wrong category. The 5-client de minimis rule applies to investment advisers, not agents. A separate set of rules governs agents.

Master this framework and you will answer the majority of registration questions correctly, regardless of how the exam phrases them.