Uniform Securities Agent State Law (Series 63) Practice Exam

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Study for the Uniform Securities Agent State Law (Series 63) examination with flashcards and multiple choice questions, each question includes hints and explanations. Prepare effectively and ace your exam!

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Which authority oversees federal covered advisors?

The Securities and Exchange Commission (SEC)
The Financial Industry Regulatory Authority (FINRA)
State securities regulators
The Internal Revenue Service (IRS)

The correct answer is: The Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) is the correct choice for overseeing federal covered advisors. Federal covered advisors are typically investment advisors who manage assets above a certain threshold—currently $110 million in assets under management—allowing them to register with the SEC rather than with individual state securities regulators. This registration with the SEC comes with specific regulatory requirements and ongoing compliance obligations that are overseen by the SEC. The SEC has the authority to enforce federal securities laws and protect investors, thereby ensuring that advisers meet various standards of conduct. While the Financial Industry Regulatory Authority (FINRA) plays a significant role in regulating broker-dealers and enforcing rules related to brokerage practices and the conduct of registered representatives, it does not oversee investment advisors, particularly those who are federally covered. State securities regulators focus on state-registered advisors and local requirements rather than federal covered advisors. The Internal Revenue Service (IRS) is primarily concerned with tax regulations and compliance, not with the oversight of investment advisors or securities laws.