NASAA Series 66 Cheat Sheet - Combined State Law Rules, Ethics, and Decision Workflows

Series 66 is a combined exam. It rewards fast classification (who/what/which rule), clean disclosure decisions, and consistent ethics instincts. Use this cheat sheet with the Study Plan, Glossary, and Resources.

Quick links:

• Exam Guide
• Study Plan
• Glossary
• FAQ
• Resources

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Series 66 in 60 seconds (what the exam rewards)

• Role clarity: IA/IAR vs BD/Agent (and what each can and can’t do).
• State law triggers: registration/exemptions + administrator authority.
• Ethics: avoid misleading statements, manage conflicts, protect client assets.
• Best answer pattern: disclose + document + escalate when facts are missing.

Bookmark table: fastest Series 66 decision sort

    flowchart TD
	  A["Scenario"] --> B["Classify role<br/>IA / IAR / BD / Agent"]
	  B --> C["Classify product/activity<br/>security? recommendation? custody?"]
	  C --> D["Apply rule trigger<br/>registration / exemption / disclosure"]
	  D --> E["Choose safest compliant next step"]
	  E --> F["Document + retain records"]

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Official topic weights (use for time allocation)

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1) The minimum formulas and relationships you need

Total return / HPR

\[ HPR = \frac{(P_1 - P_0) + I}{P_0} \]

Current yield (bond)

\[ CY = \frac{\text{Annual Coupon}}{\text{Market Price}} \]

CAPM (high level)

\[ E(R_i) = R_f + \beta_i (E(R_m) - R_f) \]

Sharpe ratio

\[ \text{Sharpe} = \frac{R_p - R_f}{\sigma_p} \]

Remember: Series 66 cares less about math tricks and more about choosing a product/strategy that matches constraints.

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2) Strategy anchors (how recommendations are tested)

KYC + constraints checklist

• Objectives
• Time horizon
• Liquidity needs
• Risk tolerance and capacity
• Tax status
• Knowledge/experience

Asset allocation (high level)

• Diversification reduces unsystematic risk.
• Correlation drives diversification benefit.
• Rebalance to keep risk aligned to the plan.

    flowchart TD
	  A["Client profile"] --> B["Set objectives + constraints"]
	  B --> C["Select allocation"]
	  C --> D["Choose vehicles<br/>cost, tax, liquidity"]
	  D --> E["Monitor + rebalance"]

Strategy-fit quick-sort table

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3) Combined state law: the workflows that score points (Topic IV)

A) IA / IAR vs BD / Agent (fast separation)

B) Registration and exemption workflow

    flowchart TD
	  A["What is the actor?"] --> B{"IA/IAR<br/>or BD/Agent?"}
	  B -->|"IA/IAR"| C["Check adviser definition<br/>advice + business + compensation"]
	  B -->|"BD/Agent"| D["Check BD/agent triggers<br/>effecting transactions"]
	  C --> E["State vs federal covered (concept)"]
	  D --> F["State registration + disclosures"]
	  E --> G["Ongoing compliance<br/>records, supervision"]
	  F --> G
	  G --> H["Antifraud always applies"]

C) Securities and exemptions (how to think)

• Start by classifying: security vs non-security (as framed by the outline).
• Then classify: exempt security vs exempt transaction.
• If exempt, the safe move usually still includes: deliver required disclosures, avoid misleading statements, document basis.

D) Advertising and performance claims

    flowchart TD
	  A["Ad / post / pitch deck"] --> B["Is it fair and balanced?"]
	  B --> C["Disclose fees, risks, assumptions"]
	  C --> D["Avoid guarantees and cherry-picking"]
	  D --> E["Supervisory review/approval"]
	  E --> F["Retain records"]

E) Custody and discretion

F) Unethical business practices (classic traps)

• Misrepresentation / omission
• Unauthorized trading
• Churning
• Front-running
• Insider trading / MNPI misuse
• Conflicts without disclosure

When a red flag appears: stop -> escalate -> preserve records -> document.

Five things to remember under pressure

1. Series 66 usually tests recommendation logic and state-law process together.
2. A good product can still be a bad recommendation if it ignores client constraints.
3. Registration, custody, and discretion are separate issue buckets; do not blend them.
4. On law-and-ethics questions, the safer answer is usually the one with more disclosure and records.
5. If the math looks hard, the exam may really be testing whether you picked the right relationship first.

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What to do next

• Use the Study Plan as your reading order.
• Recheck overlapping legal and product terms in the Glossary.
• Use the FAQ for co-requisite, sponsorship, and retake questions.
• Verify live policy details with Resources.

Not legal advice. Exam outlines and rules can change; confirm current requirements with official sources.

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Practice this exam

Use this free guide for review, then Start Series 66 Practice on Finance Prep for timed questions, topic drills, and detailed explanations.