Series 63 cheat sheet (NASAA): registration triggers, securities definitions, exemptions, communications rules, remedies, and ethical practices with decision workflows and quick diagrams.
Use this as your “what do I do next?” playbook. Pair it with the Study Plan, Glossary, and Official Resources.
Quick links:
| If the question is really about… | Ask first… | Usually strongest answer direction |
|---|---|---|
| adviser or broker status | who is acting and what activity are they performing? | classify the role before discussing registration or ethics |
| security status | is the instrument itself likely a security? | classify the product first, then check exemption or filing logic |
| registration | is the issue actor registration, security registration, or transaction exemption? | identify the bucket before choosing the rule |
| a communication | what claim or omission makes this risky? | fix the disclosure or stop the communication before anything else |
| an ethics / fraud stem | what customer-protection step is missing? | disclose, document, and escalate rather than improvising |
flowchart TD
A["Scenario"] --> B["Classify the actor<br/>IA / IAR / Broker-Dealer / Agent"]
B --> C["Classify the object<br/>Security? Exempt?"]
C --> D["Trigger check<br/>Registration / notice filing / exemption"]
D --> E{"Red flag?<br/>Misleading statement, conflict, custody, discretion"}
E -->|"Yes"| F["Stop, disclose, escalate, preserve records"]
E -->|"No"| G["Proceed with compliant action"]
F --> H["Document + retain an audit trail"]
G --> H
| Topic | Weight |
|---|---|
| Topic I - Investment Advisers (state vs federal covered) | 5% |
| Topic II - Investment Adviser Representatives | 5% |
| Topic III - Broker-Dealers | 12% |
| Topic IV - Agents of Broker-Dealers | 13% |
| Topic V - Securities and Issuers | 9% |
| Topic VI - Remedies and Administrative Provisions | 11% |
| Topic VII - Communication with Customers and Prospects | 20% |
| Topic VIII - Ethical Practices and Obligations | 25% |
| Term | What it means (high level) | Common trap |
|---|---|---|
| Administrator | State securities regulator | “It’s federal so the state has no authority” (states still enforce antifraud; may require notice filings) |
| Investment Adviser (IA) | In the business of providing securities advice for compensation | Confusing general education with personalized advice; missing “compensation” |
| Federal covered adviser | Adviser covered by federal law (state role often shifts to notice filings/fees) | Answering “state registers them like everyone else” |
| Investment Adviser Representative (IAR) | Individual who gives advice / manages accounts / solicits for an IA | Treating clerical/admin staff as IARs |
| Broker-dealer (BD) | Business of effecting transactions in securities for others or its own account | Treating a firm as BD when activity is excluded/exempt |
| Agent | Individual representing a BD or issuer in soliciting/handling securities transactions | Mixing up agent vs IAR role boundaries |
| Security | Broad category (stocks, bonds, notes, investment contracts, etc.) | Assuming “it’s not a security because it’s new/crypto/limited” |
When you’re unsure: identify role -> identify activity -> identify jurisdiction -> check exemptions -> document.
flowchart TD
A["Advice about securities?"] --> B{"In the business<br/>and for compensation?"}
B -->|"No"| C["Not an IA (likely)"]
B -->|"Yes"| D["Potential IA"]
D --> E{"Federal covered?"}
E -->|"Yes"| F["State: notice filing/fees (typical)<br/>Antifraud still applies"]
E -->|"No"| G["State registration required (typical)"]
G --> H["IARs: register where required<br/>(place of business / doing business)"]
F --> H
High-yield exclusions to recognize (don’t over-commit on details):
flowchart TD
A["Securities transaction activity?"] --> B{"Effecting transactions<br/>for others / own account?"}
B -->|"No"| C["Not a BD (likely)"]
B -->|"Yes"| D["Potential BD"]
D --> E{"Exclusion/exemption?"}
E -->|"Yes"| F["Document basis<br/>+ comply with antifraud"]
E -->|"No"| G["Register BD"]
G --> H["Agents: register where required<br/>+ maintain disclosures"]
| Often treated as a security | Often treated as non-security | Notes |
|---|---|---|
| Stock, bond, note, debenture | Insurance policy (traditional) | Variable products can blur lines; focus on the outline’s intent |
| Investment contract | Real estate by itself | “Investment contract” hinges on expectation of profits from others (conceptual) |
| Limited partnership interests | Collectibles (typically) | “Not a security” doesn’t remove antifraud if marketing is misleading |
Think in two buckets:
Exam habit: if something is exempt, the safest next step often includes documentation, required disclosure, and antifraud compliance.
flowchart TD
A["Draft communication"] --> B["Identify type<br/>advertising vs correspondence"]
B --> C["Check for prohibited claims<br/>guarantees, omissions, MNPI"]
C --> D["Add balanced risk + fee disclosure"]
D --> E["Supervisory review/approval"]
E --> F["Retain records"]
| Track | Trigger | Exam-safe phrasing |
|---|---|---|
| Administrative | registration violations, supervision failures, unethical conduct | administrator can deny/suspend/revoke + issue orders |
| Civil | investor harm, rescission, private lawsuits | liability can include rescission/damages |
| Criminal | willful fraud, serious misconduct | criminal penalties can apply for willful violations |
SIPC note (test-friendly): SIPC relates to broker-dealer insolvency and custody protection, not market losses.
| Concept | What it is (high level) | Typical safe move |
|---|---|---|
| Custody | holding/controlling client funds or securities | follow custody rules; segregate; document; escalate |
| Discretion | ability to decide what/when/how much to trade | obtain written authorization and supervise |
| Trading authorization | permission to place trades (not necessarily discretion) | confirm scope; document; retain records |
flowchart TD
A["Client assets / trade authority issue"] --> B{"Custody?"}
B -->|"Yes"| C["Apply custody controls<br/>segregation, recordkeeping"]
B -->|"No"| D{"Discretion?"}
D -->|"Yes"| E["Written discretionary authority<br/>supervision + audit trail"]
D -->|"No"| F["Non-discretionary<br/>confirm instructions + document"]
Answer selection tip: if you see MNPI, customer complaint, or suspicious activity cues, the safe move is usually:
Not legal advice. Exam outlines and state rules can change; confirm current requirements with official sources.
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