Question

A broker-dealer is physically located and registered in State A. The broker-dealer has an existing client in State A who is a student finishing undergraduate studies. The client has just been accepted to medical school in State B. Which statement is TRUE about the broker-dealer contacting the client while she is in medical school in State B?
A. The broker-dealer can contact the client while she is in medical school in State B without having to register in State B using the "existing customer" exemption
B. The broker-dealer can contact the client while she is in medical school in State B without having to register in State B because the client is attending a not-for-profit educational institution
C. The broker-dealer can contact the client while she is in medical school in State B without having to register in State B because of the reciprocity agreements that all States maintain regarding registration requirements
D. The broker-dealer must be registered in State B in order to contact the client while she is in medical school in State B

Answer 1

Answer:

D) The broker-dealer must be registered in State B in order to contact the client while she is in medical school in State B

Explanation:

Since the client will live in state B for an extended period of time, at least 4 years if she completes medical school, the broker-dealer must be registered in state B if he wishes to continue doing business with her.

If the client would have only gone to state B for a few months, then the broker could have still worked with her without registering in state B since the client could be considered on a vacation trip.