Question

An IA Firm with no office in a state that has 5 or fewer clients might be subject to:

a) State-specific exemptions
b) Intensified federal scrutiny
c) Reduced client confidentiality
d) Regional marketing strategies

Answer 1

An IA Firm with no office in a state and 5 or fewer clients may be subject to state-specific exemptions due to the NSMIA, which limits state regulation while still requiring federal compliance and adherence to anti-fraud laws.

Step-by-step explanation:

An Investment Adviser (IA) Firm with no office in a state that has 5 or fewer clients might be subject to state-specific exemptions. This is in accordance with the National Securities Markets Improvement Act of 1996 (NSMIA), which preempts states from regulating firms that don't have a physical presence and have a de minimis number of clients. However, it's important to note that these firms must still comply with federal regulation and any applicable state anti-fraud laws.