NASAA Series 66 Cheat Sheet - Combined State Law Rules, Ethics, and Decision Workflows

Series 66 is a combined exam. It rewards fast classification (who/what/which rule), clean disclosure decisions, and consistent ethics instincts. Use this cheat sheet with the Syllabus and Practice .

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Series 66 in 60 seconds (what the exam rewards)

• Role clarity: IA/IAR vs BD/Agent (and what each can and can’t do).
• State law triggers: registration/exemptions + administrator authority.
• Ethics: avoid misleading statements, manage conflicts, protect client assets.
• Best answer pattern: disclose + document + escalate when facts are missing.

    flowchart TD
	  A["Scenario"] --> B["Classify role<br/>IA / IAR / BD / Agent"]
	  B --> C["Classify product/activity<br/>security? recommendation? custody?"]
	  C --> D["Apply rule trigger<br/>registration / exemption / disclosure"]
	  D --> E["Choose safest compliant next step"]
	  E --> F["Document + retain records"]

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Official topic weights (use for time allocation)

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1) The minimum formulas and relationships you need

Total return / HPR

$$ HPR = \frac{(P_1 - P_0) + I}{P_0} $$

Current yield (bond)

$$ CY = \frac{\text{Annual Coupon}}{\text{Market Price}} $$

CAPM (high level)

$$ E(R_i) = R_f + \beta_i (E(R_m) - R_f) $$

Sharpe ratio

$$ \text{Sharpe} = \frac{R_p - R_f}{\sigma_p} $$

Remember: Series 66 cares less about math tricks and more about choosing a product/strategy that matches constraints.

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2) Strategy anchors (how recommendations are tested)

KYC + constraints checklist

• Objectives
• Time horizon
• Liquidity needs
• Risk tolerance and capacity
• Tax status
• Knowledge/experience

Asset allocation (high level)

• Diversification reduces unsystematic risk.
• Correlation drives diversification benefit.
• Rebalance to keep risk aligned to the plan.

    flowchart TD
	  A["Client profile"] --> B["Set objectives + constraints"]
	  B --> C["Select allocation"]
	  C --> D["Choose vehicles<br/>cost, tax, liquidity"]
	  D --> E["Monitor + rebalance"]

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3) Combined state law: the workflows that score points (Topic IV)

A) IA / IAR vs BD / Agent (fast separation)

B) Registration and exemption workflow

    flowchart TD
	  A["What is the actor?"] --> B{"IA/IAR<br/>or BD/Agent?"}
	  B -->|"IA/IAR"| C["Check adviser definition<br/>advice + business + compensation"]
	  B -->|"BD/Agent"| D["Check BD/agent triggers<br/>effecting transactions"]
	  C --> E["State vs federal covered (concept)"]
	  D --> F["State registration + disclosures"]
	  E --> G["Ongoing compliance<br/>records, supervision"]
	  F --> G
	  G --> H["Antifraud always applies"]

C) Securities and exemptions (how to think)

• Start by classifying: security vs non-security (as framed by the outline).
• Then classify: exempt security vs exempt transaction.
• If exempt, the safe move usually still includes: deliver required disclosures, avoid misleading statements, document basis.

D) Advertising and performance claims

    flowchart TD
	  A["Ad / post / pitch deck"] --> B["Is it fair and balanced?"]
	  B --> C["Disclose fees, risks, assumptions"]
	  C --> D["Avoid guarantees and cherry-picking"]
	  D --> E["Supervisory review/approval"]
	  E --> F["Retain records"]

E) Custody and discretion

F) Unethical business practices (classic traps)

• Misrepresentation / omission
• Unauthorized trading
• Churning
• Front-running
• Insider trading / MNPI misuse
• Conflicts without disclosure

When a red flag appears: stop -> escalate -> preserve records -> document.

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What to do next

• Use the Series 66 syllabus as your checklist.
• Build speed with timed mocks .
• If you’re building a licensing stack: U.S. roadmap .

Not legal advice. Exam outlines and rules can change; confirm current requirements with official sources.

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