This chapter covers the Laws, Regulations, and Guidelines (45%) section of the Series 66 exam: the single largest portion of the test.
The Administrator, a term used constantly throughout this chapter, means the chief securities regulator in each state: the state-level official or agency that enforces the Uniform Securities Act (USA). It is not a job title at a brokerage or advisory firm. The full breakdown of the Administrator's powers appears in Unit 30, Remedies and Administrative Provisions.
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 25 | Regulation of Securities and Issuers | Definitions, state registration requirements, exemptions and exclusions, state antifraud authority |
| 26 | Regulation of Investment Advisers | Definitions (IA, Exempt Reporting Adviser), notice filing requirements, registration/post-registration (books and records, maintenance), IAR supervision |
| 27 | Regulation of IA Representatives | Definition of IAR, registration/post-registration (activities requiring registration, exclusions, registration authority, maintenance, continuing education, reportable events) |
| 28 | Regulation of Broker-Dealers | Definitions, registration/post-registration requirements (activities requiring registration, exclusions), BD Agent supervision |
| 29 | Regulation of BD Agents | Definition of Agent of Broker-Dealer, registration/post-registration requirements (activities requiring registration, exclusions, update forms) |
| 30 | Remedies and Administrative Provisions | State administrator authority, administrative actions, other penalties and liabilities |
| 31 | Communication with Clients | Required disclosures (product disclosures, client disclosures), unlawful representations, performance guarantees prohibition, client contracts, advertising (social media, email, websites) |
| 32 | Ethical Practices and Fiduciary Obligations | Compensation (fees, commissions, performance-based, soft dollars, disclosure), client funds/securities (custody, discretion, trading authorization, standard of care, AML), custody obligations, conflicts of interest (loans, profit sharing, confidentiality, insider trading, selling away, market manipulation, personal trading, outside accounts, holdings/reports, political contributions, excessive trading, exploitation of vulnerable adults), cybersecurity, privacy, data protection, business continuity (disaster recovery, succession planning) |
Why This Chapter Matters
At 45% of the exam, this is the most heavily weighted section by far. Nearly half of all questions test your knowledge of securities laws, registration requirements, and ethical obligations. You cannot pass the Series 66 without mastering this material.
The exam tests the Uniform Securities Act (USA), federal securities laws, registration requirements for all four person types (IAs, IARs, BDs, agents), the Administrator's enforcement powers, and the ethical and fiduciary standards that govern the industry.
Exam Strategy
Focus on:
- IA definition and three-prong test: The most frequently tested concept in the entire exam
- Registration differences: IA (SEC or state) vs. BD (SEC + FINRA + state) - know the "OR" vs. "AND" distinction
- Exemptions vs. exclusions: Different concepts with different consequences
- Administrator powers: What requires notice/opportunity for hearing vs. what doesn't
- Fiduciary duty: IAs owe a fiduciary duty; BDs follow Regulation Best Interest (Reg BI); know the difference
- Prohibited practices: Sharing in client accounts, guarantees, churning, front-running