Regulatory Bodies

State securities laws designed to protect investors from fraudulent securities sales and schemes. Originated in Kansas (1911) to prevent promoters from "selling the blue sky" with worthless offerings. Regulate securities and adviser registration within state borders, require securities offerings to register unless exempt or federal-covered, and grant state administrators broad anti-fraud authority that survives even after federal preemption.

Example: Under blue sky laws, a company planning an intrastate stock offering solely within Texas must regist...

Securities exempt from state registration requirements under the National Securities Markets Improvement Act (NSMIA) of 1996, including securities listed on national exchanges (NYSE, NASDAQ, etc.), investment company securities (mutual funds, ETFs), and securities sold under Regulation D Rule 506 offerings. States retain authority to require notice filing and filing fees but cannot impose merit review or substantive registration requirements. States maintain full anti-fraud enforcement authority over federal covered securities.

Example: Apple Inc. stock, listed on NASDAQ, is a federal covered security. If an issuer wants to offer Apple...

A self-regulatory organization (SRO) that regulates broker-dealers and their registered representatives through examination, enforcement, and rule-making authority. Operates under SEC oversight. Does NOT regulate investment advisers or registered investment advisers (RIAs). Administers qualification exams including Series 6, 7, 63, and 65.

Example: A stockbroker at a national brokerage firm must register with FINRA, pass the Series 7 exam, and com...

The association of state securities regulators that develops model rules like the Uniform Securities Act and administers qualification exams (Series 63, 65, 66). States regulate investment advisers with less than $100 million AUM and coordinate enforcement through NASAA.

Example: NASAA creates the Series 65 exam that investment adviser representatives must pass to register in th...

Simplified state filing procedure under NSMIA for federal covered securities (primarily mutual funds, closed-end funds, and UITs) and federal covered advisers. Requires filing copies of SEC registration documents, consent to service of process, and payment of fees, but is not full registration. States retain anti-fraud authority but cannot impose merit review or deny effectiveness. Federal covered advisers must notice file in states where they have retail clients.

Example: Vanguard Total Stock Market Index Fund is a mutual fund registered with the SEC under the Investment...

An offering of unregistered securities to a limited group of investors that is exempt from SEC registration requirements, primarily conducted under Regulation D. Most commonly structured as Rule 506(b) offerings (no general solicitation, up to 35 sophisticated investors plus unlimited accredited investors) or Rule 506(c) offerings (general solicitation permitted, only verified accredited investors). Securities sold are restricted and subject to resale limitations.

Example: A technology startup raises $25 million through a private placement under Rule 506(b) by selling equ...

The most comprehensive state securities registration method under the Uniform Securities Act, used when a security is not registered with the SEC. The state Administrator sets the effective date (the only registration method with this authority) and has the broadest grounds to deny registration, including unconscionable offering costs, fraudulent schemes, and misleading statements. Requires detailed disclosure including issuer information, use of proceeds, sales literature, and specimen certificates. Commonly used for intrastate offerings, small company offerings, and securities not subject to federal registration.

Example: A small technology startup in Colorado raising $3 million exclusively from Colorado residents throug...

SEC regulation providing exemptions from securities registration requirements for private placement offerings. Primary rules include Rule 506(b) allowing unlimited accredited investors plus up to 35 sophisticated investors without general solicitation, and Rule 506(c) allowing unlimited accredited investors with general solicitation permitted. Rule 504 permits offerings up to $10 million with fewer restrictions.

Example: A hedge fund raises $50 million through a Regulation D Rule 506(b) offering from 80 accredited inves...

The primary federal regulator of securities markets, investment advisers, and securities offerings established by the Securities Exchange Act of 1934. Enforces federal securities laws including the Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940. Regulates investment advisers with $110M+ AUM (mandatory; $100M-$110M optional) and oversees national securities exchanges.

Example: An investment adviser managing $120 million in client assets must register with the SEC using Form A...

Model state securities law created by NASAA that provides the framework for state securities regulation. Covers registration of investment advisers with less than $100M AUM, broker-dealers, and securities offerings at the state level. Coordinates with federal law through provisions for federal-covered advisers, notice filing, and the de minimis exemption (fewer than 6 clients in a state). Grants state administrators authority to investigate violations, issue orders, and enforce anti-fraud provisions.

Example: Under the Uniform Securities Act, an investment adviser managing $75 million must register with each...