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Series 66 > 66 - 1 > Flashcards

66 - 1 Flashcards

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Series 66 flashcards
1
Q

Is a certified public accountant who provides tax advice considered an IA under the USA?

A

No, CPAs are excluded from the IA definition.

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2
Q

True or False: A publisher of a financial magazine is considered an IA under the USA.

A

False. Publishers of newspapers/magazines are excluded from the IA definition.

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3
Q

Is an organization that provides ratings of securities and is nationally known considered an IA under the USA?

A

No

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4
Q

Is an attorney who exclusively provides estate planning services considered an IA under the USA?

A

No. Provided the attorney’s advice is incidental to his profession, he is excluded from the IA definition.

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5
Q

True or False: A BD making recommendations about investing in various securities is an IA under the USA.

A

False. Since the BD is not charging a fee for the advice, it is excluded from the IA definition

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6
Q

True or False: According to the USA, a BD providing asset allocation plans to its clients for a fee is an IA.

A

True. Since the BD is receiving specific compensation for its advice, it is considered an IA.

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7
Q

True or False: The USA defines a bank providing investment recommendations to its clients as an IA.

A

False. Banks are excluded from the IA definition.

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8
Q

True or False: A firm producing investment research for BDs to deliver to clients is considered an IA under the USA.

A

True. Since advice is being provided, as a business, and compensation is received, the ABC test is met.

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9
Q

True or False: The USA classifies an agent of a BD who also manages wrap accounts as an IA.

A

No. IAs are firms, not individuals.

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10
Q

According to the USA, who is included under the term “person?”

A

Any legal entity, including individuals (clients/agents/IARs), BDs, IAs, issuers, corporations, and partnerships

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11
Q

What type of advice may lawyers, accountants, teachers and engineers provide and not be considered an IA?

A

Advice that is incidental to their profession. If a separate fee is charged for the advice, the exclusion is lost.

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12
Q

List the 4 categories of professionals who are excluded from the IA definition.

A

Lawyers, accountants, teachers, and engineers (remember L A T E)

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13
Q

As it applies to a BD or IA, what does the term “exclusion” mean in the USA?

A

Exclusion signifies that a person does not meet the definition of a BD or IA in the state.

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14
Q

What are the 3 components that must be met for a firm to be defined as an IA?

A

1) Provide advice regarding securities, 2) Do so as a business 3) Receive specific compensation (the ABC test)

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15
Q

Identify who IS NOT considered a person under the USA.

A

Minors, incompetents, securities, and the deceased

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16
Q

Under the USA, are banks and bank holding companies excluded from the IA definition?

A

No. Banks, savings institutions and trust companies are excluded, but bank holding companies are not.

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17
Q

Identify who is considered a person under the USA.

A

Business entities, issuers, estates, governments, individuals (e.g., clients, IARs and agents)

18
Q

What is the 3 pronged test for determining whether a firm meets the IA definition?

A

A-B-C. A = advice/analyses, B = business, C = compensation

19
Q

What type of advice may lawyers, accountants, teachers, and engineers provide and not be considered an IA?

A

Advice that is incidental to their profession. If a separate fee is charged for the advice, the exclusion is lost.

20
Q

True or False: Bank holding companies are not considered IAs under the Investment Advisers Act of 1940.

A

True

21
Q

True or False: Bank holding companies are excluded from the IA definition under the USA.

A

False

22
Q

What is the general definition of an investment adviser?

A

A firm that provides advice/analyses regarding securities, as part of a business, and for compensation

23
Q

According to the USA, who is included under the term person?

A

Any legal entity, including individuals (clients/agents/IARs), BDs, IAs, issuers, corporations, and partnerships

24
Q

Under the IA Act of 1940, are banks and bank holding companies excluded from the IA definition?

A

Yes

25
Q

True or False: Bank holding companies are not considered IAs under the USA.

A

False. They are excluded from the definition under the IA Act of 1940, not under the USA.

26
Q

Identify the acronym: USA

A

Uniform Securities Act

27
Q

Identify the acronym: IA

A

Investment Adviser

28
Q

Identify the acronym: NSMIA

A

National Securities Markets Improvement Act

29
Q

Identify the acronym: NASAA

A

North American Securities Administrators Association

30
Q

What is the ABC Test for investment advisers?

A

The test that defines an IA as a firm that provides Advice as part of a Business for Compensation

31
Q

Identify the acronym: RIA

A

Registered Investment Adviser

32
Q

True or False: The states may make rules that are more restrictive than SEC (federal) rules.

A

False. NSMIA prohibits states from making requirements that are more restrictive than existing federal requirements.

33
Q

Define investment supervisory services.

A

The giving of continuous advice as to the investment of funds on the basis of the individual needs of each client.

34
Q

Is an accountant defined as an IA?

A

No. Accountants are excluded from the IA definition if their advice is incidental to their business.

35
Q

Identify the acronym: LATE

A

Lawyers, Accountants, Teachers and Engineers—these are the professionals excluded from the IA definition.

36
Q

Is the publisher of a newspaper required to register as an investment adviser?

A

No. Publishers are excluded if the newspaper has general circulation and any advice is impersonal and untailored.

37
Q

List the entities that make up NASAA.

A

All 50 U.S. states, the U.S. Virgin Islands, Puerto Rico and the District of Columbia, Canada and Mexico

38
Q

True or False: Washington D.C. is a member of NASAA.

A

True

39
Q

True or False: The U.S. Virgin Islands are a member of NASAA.

A

True

40
Q

True or False: Puerto Rico is a member of NASAA.

A

True

41
Q

Define impersonal advisory services.

A

Services costing less than $500 per year that are not tailored to meet the investment objectives of a specific client

Series 66 (12 decks)

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