2. Federal Regulations Governing Investment Advisors

Question 1

Under the investment advisors act of 1940 when is a firms registration required to be electronically filed or renewed?

Answer 1

Within 90 days of the advisers fiscal year end

Question 2

Is having discretionary power over the clients account considered having custody?

Answer 2

No

Question 3

Is an investment advisor who has full discretionary authority over the clients funds considered having custody?

Answer 3

Yes

Question 4

What is schedule F of form ADV?

Answer 4

Advisor education disclosure

Question 5

True or false: the USA prohibits IAR’s from being compensated on the basis of a share of capital gains or appreciation of the funds of a client.

Answer 5

True

Question 6

True or false: NASAA model rules regarding performance-based compensation exemptions allows performance fees

Answer 6

True

Question 7

True or false: the USA and the NASAA model rules allow for performance-based fees

Answer 7

The NASAA does however the USA does not.

Question 8

The investment advisors act of 1940 allows for performance-based fees

Answer 8

True

Question 9

Name the items included on a customers order ticket

Answer 9

1. Any conditions are terms dictated by the client,
2. the time the order was entered and received,
3. the registered Representatives ID number

Question 10

Under the USA a person whose advice is limited to US government agency securities is defined as a:

Answer 10

Investment advisor and must register with the administrator. There is no exemption or exclusion under the USA for a person providing advice solely related US government securities.

Question 11

Under the investment advisors act of 1940 a person is exempt from registration as an investment visor if he or she renders advice about securities to no more than:

Answer 11

15 persons in a 12 month period.