Series 63 Not Reviewing NASAA Definitions

🧾 Series 63 – Not Reviewing NASAA Definitions
📘 Why Skipping Key Definitions Could Cost You the Exam

If you’re preparing for the Series 63 exam, one of the most overlooked yet critical sections is the NASAA definitions. Many test-takers focus too heavily on memorizing laws and exemptions and skip what seems like “simple” vocabulary. That’s a mistake. NASAA’s statutory definitions form the foundation of the entire exam.

Here’s why skipping them can hurt you—and what to prioritize.

❗ Why Definitions Matter

• Over 25% of Series 63 questions rely on knowing who qualifies as an agent, broker-dealer, investment adviser, or issuer.
• The Uniform Securities Act hinges on technical definitions that differ from everyday usage.
• Misunderstanding a single word in a question (like “nonissuer” or “security”) can flip your answer from right to wrong.

🧠 10 Must-Know NASAA Definitions (with Clarifications)

1. Agent: A natural person who represents a broker-dealer or issuer in effecting securities transactions. ➤ Note: Employees of issuers selling exempt securities may not need to register.
2. Broker-Dealer (BD): A firm or person in the business of buying/selling securities for self or others. ➤ Note: A BD must register in a state if it has even one retail client there.
3. Investment Adviser (IA): A person who gives securities-related advice for compensation. ➤ Exclusion: Banks, publishers, lawyers, and BDs may be excluded if advice is incidental.
4. Investment Adviser Representative (IAR): An individual who provides advice, solicits clients, or manages accounts on behalf of an IA.
5. Issuer: Any person who issues or proposes to issue a security. ➤ Trick: For certificates of interest in oil, gas, or mining titles, there is no issuer.
6. Security: Includes stocks, bonds, options, investment contracts, and even whiskey warehouse receipts. ➤ Remember: Not all investments are securities (e.g., whole life insurance ≠ security).
7. Nonissuer Transaction: A transaction where the issuer does not receive proceeds—i.e., secondary market trades.
8. Exempt Security: A security exempt from registration (e.g., U.S. Treasuries, munis, banks).
9. Exempt Transaction: A transaction not requiring registration or disclosure, even if the security is not exempt (e.g., unsolicited orders, private placements).
10. Solicitor: A person who receives compensation for referring clients to an IA—must meet disclosure and often registration requirements.

✅ How to Review NASAA Definitions Effectively

• Use flashcards with both the term and a real-world example.
• Review tricky distinctions, like the difference between a federal covered adviser and a state-registered IA.
• Test yourself on what triggers registration vs. exclusion vs. exemption.

🚫 Mistakes to Avoid

• Confusing excluded vs. exempt status
• Assuming terms are used like they are in real life
• Ignoring “no issuer” scenarios (common exam trap)
• Skipping definitions in the final review week

🎓 Preparing for the Series 63?
Don’t leave points on the table. Master definitions with targeted flashcards, mnemonics, and mini-quizzes at:
👉 https://finra-exam-mastery.com

Know the terms. Pass the test. Get licensed.