SIE (Securities Industry Essentials) Practice Exam

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Which best describes the relationship between Federal and State securities laws?

Federal Securities Laws supersede State securities laws
State laws are more important than Federal laws
Federal and State laws are always in direct conflict
They are completely unrelated

The correct answer is: Federal Securities Laws supersede State securities laws

State securities laws regulate securities transactions within its own state, while Federal securities laws regulate securities transactions nationally. If there is a conflict between the two, Federal laws will take precedence over state laws. This is because the US Constitution's Supremacy Clause gives federal laws authority over state laws in matters of interstate commerce such as securities transactions. Therefore, option A is the best description of the relationship between Federal and State securities laws. The other options, B, C, and D, are not accurate as they do not reflect the hierarchy of authority between Federal and State laws.