Let's look at another practice question. This one is somewhat difficult just because of the laborious language. Careful now.
Which of the following is not true concerning the registration requirements of securities professionals?
A.Broker-dealers with no place of business in a state and a limited number of non-institutional clients in a state must register.
B.Broker-dealers with no place of business in a state who limit their agents to selling exempt securities in a state need not register.
C.Investment advisers with no place of business in a state and whose only clients are institutional investors in a state need not register.
D.Investment advisers with no place of business in a state and a limited number of non-institutional clients need not register.
You've probably noticed that practice questions don't necessarily express things the way you learned them. You have to read some meaning into the words so that you think, "Oh yeah--the de minimis exemption. That's only for advisers, not broker-dealers." Once that fundamental concept comes to mind, you're half-way done. Broker-dealers need to be licensed in the state if they have any non-institutional (retail) investing clients. But, for advisers who are out-of-state, it's okay to have 5 non-institutional clients without being registered in that state. And, the out-of-state adviser can have as many institutional clients as it wants without having to register. Therefore, the answer is . . . B. The fact that the securities are exempt isn't going to relieve the broker-dealer of having to register, not if they have agents selling securities of any kind in the state.