Series 65 Regulation Summary Sheet
- April 1, 2025
- Posted by: 'FINRA Exam Mastery'
- Category: Finance
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📄 Series 65 Regulation Summary Sheet
The Series 65 exam tests your understanding of state and federal regulations that govern investment advisers, their representatives, and their interactions with clients. This summary sheet provides a quick-reference guide to the most important regulatory concepts you need to master.
🧑⚖️ Regulatory Bodies and Acts
| Regulator / Act | Description |
|---|---|
| NASAA | North American Securities Administrators Association – develops the Series 65 exam and sets state regulatory standards. |
| SEC | Securities and Exchange Commission – oversees federal securities regulation and RIAs with $100M+ AUM. |
| Uniform Securities Act (USA) | Model legislation adopted (wholly or partially) by U.S. states to regulate securities activities. |
| Investment Advisers Act of 1940 | Federal law that regulates RIAs and defines fiduciary obligations. |
| Securities Act of 1933 | Governs the registration of new securities issues. |
| Securities Exchange Act of 1934 | Regulates secondary market activities and created the SEC. |
📋 Registration Rules
| Rule | Summary |
|---|---|
| Federal vs. State RIA Registration | RIAs with AUM ≥ $100M register with the SEC; under $100M register with the state. |
| Investment Adviser Representative (IAR) | Always registers at the state level, regardless of the firm’s SEC or state registration. |
| Broker-Dealers vs. Investment Advisers | BDs are transaction-based (commissions); IAs are advice-based (fees). |
| Exemptions | Firms with no physical office in a state and ≤ 5 clients in 12 months may be exempt from state registration (de minimis rule). |
🔐 Fiduciary Responsibility and Ethics
| Topic | Description |
|---|---|
| Fiduciary Standard | Advisers must always act in the best interest of clients. Higher than suitability standard. |
| Disclosure Obligations | Advisers must disclose conflicts of interest, fees, disciplinary history, affiliations, and methods of compensation. |
| Form ADV | Required filing for all RIAs. Part 1 = business details; Part 2 = client-facing brochure. |
| Custody Rule | If adviser has custody of client funds/securities, surprise audits by independent accountants are required. |
| Soft Dollar Arrangements | Must provide benefits that assist the adviser in investment decision-making. Must be disclosed to clients. |
📝 Common Forms and Filings
| Form | Use |
|---|---|
| Form ADV | Main registration document filed by advisers. |
| Form U4 | Used to register IARs with states. |
| Form U5 | Termination of registration. |
| Form CRS (Customer Relationship Summary) | Must be delivered to retail clients outlining services, fees, conflicts, etc. (for dual registrants). |
⚖️ Prohibited Practices
- Misrepresentation or omission of material facts
- Insider trading
- Front-running
- Churning
- Unreasonable or excessive fees
- Failing to disclose conflicts of interest
- Borrowing from or lending to clients (with limited exceptions)
🛡️ Client Protections and State Authority
| Authority | Power |
|---|---|
| Administrator | The state securities regulator – has broad power to deny, suspend, or revoke registrations. |
| Cease and Desist Orders | Can be issued without a prior hearing. |
| Summary Orders | Used for delaying registration effectiveness during an investigation. |
| Statute of Limitations | 3 years from violation date OR 2 years from discovery, whichever comes first. |
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