NASAA Model Rules Testable for Investment Advisers
With the core registration and administrative framework covered, the final piece is understanding which North American Securities Administrators Association (NASAA) model rules may be tested in connection with investment adviser (IA) regulation on the Series 63.
Testable NASAA Model Rules
The Series 63 test specifications identify several NASAA model rules that apply to investment adviser regulation:
| Model Rule | Subject | Year |
|---|---|---|
| 102(a)(4)-1 | Unethical Business Practices of Investment Advisers, Investment Adviser Representatives (IARs), and Federal Covered Advisers | 2019 |
| 203(a)-2 | Recordkeeping Requirements for Investment Advisers | 2011 |
| 502(c) | Contents of Investment Advisory Contract | 2013 |
| 102(e)(1)-1 | Custody Requirements for Investment Advisers | 2013 |
| N/A | Investment Adviser Information and Security Privacy Rule | 2019 |
Exam Tip: Gotchas
- You do NOT need to memorize model rule numbers. The Series 63 tests the subjects they cover, not the citation numbers.
- Federal covered advisers are NOT exempt from ethical standards. Model Rule 102(a)(4)-1 applies to IAs, IARs, AND federal covered advisers for unethical business practices.
Where These Rules Are Covered in Detail
These model rules are explored in depth in later units:
- Unethical business practices (Model Rule 102(a)(4)-1) - covered in Unit 16: Prohibited Activities and Conflicts of Interest
- Custody requirements (Model Rule 102(e)(1)-1) - covered in Unit 15: Customer Funds, Custody, and Discretion
- Disclosure and brochure requirements - covered in Unit 11: Required Disclosures and the Brochure Rule
- Advisory contract contents (Model Rule 502(c)) - covered in Unit 11
Exam Tip: Gotchas
- This unit establishes authority, not detail. The specifics of custody, contracts, and disclosure are tested in later units; here the focus is on the Administrator's power to impose these requirements through rules and orders.
Key Takeaway for This Unit
For now, the important point is that the Administrator's authority to impose IA-specific requirements through rules and orders extends to:
- Recordkeeping - what records must be maintained and for how long
- Custody - how client funds and securities must be safeguarded
- Advisory contracts - what terms must be included in advisory agreements
- Privacy - how client information must be protected
- Ethical standards - what constitutes unethical business practices
These model rules give the Administrator a detailed regulatory toolkit beyond the broad provisions of the Uniform Securities Act (USA) itself.