Under the USA exemption, an investment adviser with no place of business in the state is exempt if the only clients are five or fewer residents in the state during the preceding 12 months. Which option best describes this condition?

• A. Broker Dealers registered under the act
• B. Other Investment Advisers
• C. Institutional investors
• D. Five or fewer clients resident in the state during the preceding 12 months

Answer: (D)

The key idea is a specific state-level exemption for investment advisers with no place of business in the state. If the only clients in that state during the previous 12 months are five or fewer residents, the adviser is exempt from registration. This five-client limit is what triggers the exemption, recognizing that very limited, out-of-state activity doesn’t justify registering in the state.

The other descriptions don’t fit this exemption because they point to entities or client groups rather than the exact client-count condition required for this particular rule.