The highest-leverage section for exam preparation. Covers the Investment Advisers Act of 1940 — the ABC test for IA definition, LATE exclusions, broker-dealer exclusion, exclusion vs. exemption, federal vs. state registration thresholds ($110M mandatory SEC, $100M–$110M buffer, $90M withdrawal), Form ADV parts and delivery timing, custody rules (constructive custody via fee deduction, qualified custodians, surprise examination, net worth requirements), and recordkeeping. Investment Adviser Representative regulation includes IAR definition, registration by firm type (state-registered vs. federal covered), Series 65 exam requirements, professional designation waivers (CFP, CFA, ChFC, PFS, CIMA), and the 2-year re-registration window. Broker-dealer regulation covers the BD/agent structure, Regulation Best Interest (four obligations: Disclosure, Care, Conflict of Interest, Compliance), the IA fiduciary vs. BD Reg BI comparison, and Form CRS. The Uniform Securities Act covers Administrator powers (cease-and-desist without prior notice, 15-day hearing), penalties ($5,000 civil, $5,000/$3yr criminal), securities registration methods (coordination, qualification, notice filing), exempt securities, exempt transactions, and the universal application of antifraud rules. Communications and advertising covers the SEC Marketing Rule — testimonials and endorsements, performance advertising (net required, gross optional), multi-year presentation requirements, soft dollar rules, proxy voting, and contract assignment. Ethics and fiduciary obligations covers fiduciary duty (duty of care, duty of loyalty, ongoing nature), conflict of interest management (eliminate vs. disclose), and prohibited practices (guarantees, churning, front-running, unauthorized trading, insider trading, borrowing restrictions, performance fee qualifications, and the code of ethics requirements for access persons).

Study Priority Framework: Candidates with limited preparation time should allocate resources proportional to exam weight. Laws & Regulations (Section IV) and Client Strategies (Section III) together constitute 60% of the exam and contain largely rule-based content amenable to systematic study. Chapters 13 (IA Regulation) and 18 (Ethics & Fiduciary) are the two highest-yield individual chapters on the entire exam and should be mastered first. The investment vehicle chapters (Section II) reward functional understanding over memorization — focus on the relationships (bond price/yield inverse, duration, yield hierarchy) rather than isolated facts. Economics (Section I) is the lowest weight section and should receive proportionally less study time.

Key Regulatory Numbers Every Candidate Must Memorize: $110M AUM → mandatory SEC registration; $100M–$110M → optional buffer; $90M → withdrawal trigger; $5,000 → civil and criminal fine maximum; 3 years → criminal imprisonment; 15 days → hearing after cease-and-desist; 120 days → annual ADV update; $35,000 → net worth with custody; $10,000 → net worth with discretion; $1,000 → testimonial written agreement threshold; 72% (94/130) → passing score.