NASAA Series 65 / 66 Dump Sheet - Federal laws, regs, ethics & accounts

Sep 25, 2026

NASAA Series 65 / 66 dump sheet summarizing key federal securities laws relevant to investment adviser and broker-dealer activities. Covers the Securities Act of 1933 primary-offering disclosures, exempt securities and transactions under Regulation D, and the Securities Exchange Act of 1934 prohibitions on fraud and market manipulation. Includes the Investment Advisers Act of 1940 registration and filing rules, SEC Release IA-1092 reiterating the adviser definition, insider trading limits, compensation structures, and associated civil and criminal penalties.

LanguageEnglish

CategoryExam

FormatPDF

Pages1

Reading Time3 min

AccessFree to download

Securities Act of 1933

Primary market legislation

Exempt securities and exempt transactions

Securities Exchange Act of 1934

Secondary market legislation

Fraud and market manipulation

Investment Advisers Act of 1940

Coverage and registration

Unique rules and effective date

SEC Release IA-1092 and related penalties

Reaffirmed definition (ABC rule)

Federal criminal penalties and insider trading

Investment adviser compensation

Permitted fees and performance fees

Commissions, wrap programs, and soft dollar rules

Broker-dealer compensation

Agency commissions and principal markups

Fee disclosure exclusions

NASAA SERIES 65 / 66 DUMP SHEET Federal laws, regs, ethics & accounts Securities Act of 1933 | Primary market legislation
Requires issuers to make disclosures by prospectus Registration ﬁled, then a 20-day cooling-oﬀ period:
• Allowed: indications of interest, tombstone ads, red herring (preliminary prospectus)
• Prohibited: sales, recommendations, advertising Exempt securities:
• Government securities
• Bank, savings & loan securities
• Non-proﬁt, religious securities
• Commercial paper (270 days or fewer) Exempt transactions:
• Regulation D private placement (35 or fewer non-accredited investors)
• Accredited investors:
• $1 million net worth (excluding residence)
• $200k (single) / $300k (joint) income for 2+ years
• Financial institutions
• Non-ﬁnancial organizations with $5 million+ in assets
• Oﬃcers, directors, or partners of the issuer
• Series 7, 65, or 82 holders | | | --- | --- | Securities Exchange Act of 1934 | Secondary market legislation
Regulates securities markets and their participants Created the SEC
All forms of fraud are illegal and prohibited Market manipulation is prohibited:
• Spreading false rumors • Pump and dump schemes
• Painting the tape / matched • Marking the open or close orders | | | --- | --- | Investment Advisers Act of 1940 | Deﬁnes and regulates federal covered advisers Covered advisers register with the SEC
Must make a notice ﬁling with the state administrator Unique rules (compared to the USA):
• Excluded: advisers only giving advice on US government securities
• Exempt: intrastate advisers (no advice on exchange-listed securities)
• Exempt: advisers only serving insurance companies
• Registration eﬀective 45 days after ﬁling | | | --- | --- | SEC Release IA-1092 Reaﬃrmed the investment adviser deﬁnition (ABC rule) Considers the following investment advisers: • Financial planners • Pension consultants • Athlete & celebrity advisers Federal criminal penalties (5-10-5 rule) Penalties if willfully violating the law (per violation): • 5-year statute of limitations • $10,000 maximum ﬁne • 5-year maximum jail sentence Insider Trading Act of 1988 | Trading on material, non-public information is prohibited $25 million maximum ﬁne (ﬁrms)
$5 million maximum ﬁne, 20-year maximum jail sentence (individuals)
Treble civil penalties (3× proﬁt made or loss avoided) | | | --- | --- | Investment adviser compensation | May collect from any client: | | | --- | --- | | • Fixed fees • Hourly fees • AUM fees Performance fees only from qualiﬁed clients:
• $1 .4 million invested with the adviser
• $2 .7 million net worth
Commissions only through an aﬃliated broker-dealer Wrap fee programs:
• Trading and management fees “wrapped” into one fee Soft dollar compensation:
• Disclose if compensated for sending trades to a broker-dealer
• Allowed: research, newsletters, investing software, seminar access
• Prohibited: travel or hospitality expenses, oﬃce equipment | | Broker-dealer compensation Agency (broker) transactions = commissions Principal (dealer) transactions = markups/markdowns Not included in the fee disclosure template: • Commissions • Markups/markdowns • Advisory fees if dual registered as an IA [achievable.me](achievable.me)

FAQs

What disclosures does the Securities Act of 1933 require during a securities registration process?

Issuers must make disclosures by prospectus filed with the registration, followed by a 20-day cooling-off period. Indications of interest and tombstone ads are allowed, while sales, recommendations, and advertising are prohibited.

What major activities are prohibited under the Securities Exchange Act of 1934?

All forms of fraud are illegal and prohibited. Market manipulation is also prohibited, including spreading false rumors, pump and dump schemes, painting the tape/matched orders, and marking the open or close orders.

How may investment advisers be compensated, and what soft dollar compensation limits apply?

Advisers may collect fixed, hourly, or AUM fees. Performance fees apply only for qualified clients, and commissions must be handled through an affiliated broker-dealer. Soft dollar compensation requires disclosure and allows items such as research, newsletters, investing software, and seminar access, while travel or hospitality expenses and office equipment are prohibited.

Sep 25, 2026

Uploaded by Alex Sinclair