Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 66 > 66-4 > Flashcards

66-4 Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 66 flashcards
1
Q

Is an adviser to a mutual fund considered an IA under the USA?

A

No, mutual funds advisers are federally covered and are excluded from the IA definition at the state level.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

True or False: An adviser to a mutual fund would register in the state where the fund is domiciled.

A

False. The IA must be registered with the SEC, not a state.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

True or False: The CEO of an advisory firm who establishes investment policy for the firm must register as an IA.

A

False. The CEO would be considered an IAR, not an IA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Is an employee of a securities firm who manages accounts for a fee considered an IAR?

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Is an employee of a BD who solicits new customers for an IA considered an IAR?

A

Yes. Anyone who solicits investment advisory service is considered an IAR.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

True or False: An agent for a BD who solicits client trades would not be considered an IAR under the USA.

A

True. There is no indication that the agent is managing accounts and charging a fee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Individuals employed by an IA who only perform ____________________ duties are excluded from registration under the USA.

A

clerical duties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

An individual employed by an IA to manage the research dept. would be required to register as an ______ under the USA.

A

IAR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Is an employee of an IA who answers the telephone and does clerical work considered an IAR?

A

no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

An electronic system used to register investment advisers is called ___________________________________________.

A

Investment Adviser Registration Depository (IARD).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A surety bond may be required if an investment adviser has _____________ or __________ of client assets.

A

discretion or custody

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In place of a surety bond, the Administrator will accept a deposit of _______ or _____________.

A

cash or securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

True or False: A successor advisory firm must pay a new filing fee, but need not file a new application.

A

False. The successor firm must update its application, but not pay a new filing fee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The application for registration of an agent or IAR becomes effective in _____ days.

A

30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

The application for registration of an agent or IAR becomes effective in _____ days.

A

30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

IA records must be kept for at least ____ years.

A

5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Investment advisers with custody must have an annual audit done by a(n) ____________________.

A

independent CPA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

If a BD’s net capital falls below the required minimum, it must notify the Administrator within ___ business day(s).

A

1 day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

An IAR has an office in State A and has 4 clients who reside in the state. Is the IAR required to register in State A?

A

yes, since there is an office in the state

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

An IAR of a federal covered adviser has an office in State B with 4 clients who live in State B. Where must he register?

A

Must register in State B since he has an office there

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

An IAR has no place of business in State A, but has 6 or more individual clients in State A. Where must she register?

A

She must register in any state where she has 6 or more individual clients (even if she has no office in the state).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

An IAR of a federal covered adviser has no office in NY, but has 6 or more clients living in NY. Must he register in NY?

A

No. IARs of federal covered advisers are only required to register in states in which they have an office.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

An IAR of a state-registered IA has no office in NJ, but has 6 or more clients living in NJ. Must she register in NJ?

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Identify 2 significant creations that are credited to the National Securities Markets Improvement Act (NSMIA).

A

Federal Covered Advisers and Federal Covered Securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Who manages accounts, solicits services, or makes recommendations on behalf of a registered investment adviser?

A

An investment adviser representative (IAR)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

An ___________________________________ is to an investment adviser what an ________ is to a BD.

A

An investment adviser representative (IAR) is to an investment adviser what an agent is to a BD.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

When does the de minimis exemption from registration apply for an IA that has no place of business in a state?

A

When an IA has no more than 5 non-institutional clients in the state in the previous 12 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Does the de minimis exemption apply to investment adviser representatives?

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

IAs with no place of business in a state, and whose clients are ____________ are not required to register in that state.

A

institutions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What requirements may states impose on IAs that are registered with the SEC?

A
  1. File with the state any documents that were filed with SEC, 2. File Consent to Service of Process, 3. Pay state fees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

If an IA is registered with the SEC, is registration required in any state in which it intends to do business?

A

No. The National Securities Markets Improvement Act (NSMIA) exempts federal covered advisers from state registration.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Regardless of assets under management, IAs must register with the SEC if any client is a ______________________________.

A

registered investment company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Under the USA, the de minimis exemption limits an IA to no more than ____ clients within the previous _____ months.

A

5 clients; 12 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

If an IA meets the IA definition in a state, are there any exemptions from registration under the USA?

A

Yes, no office in the state and a) its clients are institutions or b) 5 or fewer retail clients in the last 12 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Is there a registration exemption for IARs doing business in a state if employed by an IA registered in another state?

A

Yes, if the IAR has no office in the state and has 5 or fewer retail clients in the state in the past 12 months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

For how long does the registration of a state-registered adviser remain in effect?

A

Until December 31, unless renewed by the adviser

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

IAs file their applications electronically through the ___________________________________.

A

Investment Adviser Registration Depository (IARD).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Is an IAR who is employed by a federal covered adviser required to register in the state?

A

Yes. IARs of federal covered advisers must register in any state in which they have a place of business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

An IA must maintain its books and records for a minimum of ____ years.

A

5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

If employed by a federal covered IA, is an IAR required to register in all states in which she is conducting business?

A

No. If the IAR has no place of business in the state, no state registration is required.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

True or False: An IA with fewer than 15 retail clients in the past 12 months is exempt from registering under the USA.

A

False. The USA de minimis exemption for advisers is 5 or fewer individual clients.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

True or False: If an adviser’s only clients are insurance companies, it is exempt from SEC registration.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What type of information will be found in an investment adviser’s ADV Part I?

A

Firm name, # of employees, nature of business, history of officers/directors, legal/disciplinary action in past 10 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Any material changes to Form ADV must be filed ___________.

A

within 30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What types of changes would be considered material changes that require prompt amendment of an adviser’s ADV?

A

Significant items, such as a name or location change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

When are non-material (routine) changes to Form ADV required to be filed?

A

within 90 days after the end of the IA’s fiscal year.

47
Q

Identify some non-material (routine) changes to Form ADV.

A

A change in the number of discretionary accounts or a change in the dollar amount under management by the adviser

48
Q

When is Form ADV-W filed?

A

When an adviser withdraws its registration

49
Q

With what system do IAs file their registration applications?

A

The Investment Adviser Registration Depository (IARD)

50
Q

ADV Part I is a disclosure document for use by the _____ and the ________________.

A

SEC and the Administrator

51
Q

Who operates the IARD?

A

FINRA

52
Q

When an adviser files Form ADV with the SEC, when does registration become effective?

A

Within 45 days of filing, the SEC will either grant the registration or institute denial proceedings.

53
Q

When should routine changes to an adviser’s ADV be filed?

A

Within 90 days of the end of the adviser’s fiscal year

54
Q

When should significant changes to an adviser’s ADV be filed?

A

Promptly (within 30 days)

55
Q

What types of changes would be considered significant changes to the adviser’s ADV?

A

Change in fees, custody, and the name or location of adviser

56
Q

When must a federal adviser file an updating amendment to determine continued eligibility for SEC registration?

A

Within 90 days of the end of the adviser’s fiscal year

57
Q

Define the local exemption from SEC registration for an IA.

A

All clients reside in the state where the IA’s office is located, and no advice is given for exchange-listed securities.

58
Q

For how long does the registration of an adviser registered with the SEC remain in effect?

A

Until it has been withdrawn, cancelled, or revoked by the SEC.

59
Q

The IA Act of 1940 requires IAs to retain notices, ads, or other communications circulated to more than _____ clients.

A

10 clients

60
Q

The IA Act of 1940 stipulates that any communication directed to more than ____ person(s) is considered advertising.

A

1 person

61
Q

Identify the acronym: NRSRO

A

Nationally Recognized Statistical Ratings Organization

62
Q

Identify the acronym: IAR

A

Investment Adviser Representative

63
Q

What is Form ADV?

A

The form filed by investment advisers for registration

64
Q

Identify the acronym: IARD

A

Investment Adviser Registration Depository

65
Q

What is Form ADV-W?

A

The form filed by investment advisers to withdraw registration

66
Q

What is Form ADV-E?

A

Form filed by an independent public accountant after auditing the records of an IA maintaining custody of client assets

67
Q

What’s notice filing?

A

The process in which information that is filed with the SEC is also filed or shared with the Administrator.

68
Q

What is the federal law that governs investment advisers?

A

The Investment Advisers Act of 1940

69
Q

True or False: An IA firm acquired by a competitor must pay a new filing fee.

A

False. The purchasing firm must update its application, but a new filing fee is not required.

70
Q

What form do IAs file to register?

A

Form ADV

71
Q

With whom would an IA register if it has $20 million under management and advises an investment company?

A

Any IA who advises an investment company must register with the SEC.

72
Q

Where do IAs send their registration forms?

A

The Investment Adviser Registration Depository (IARD)

73
Q

What are the minimum educational requirements for those rendering investment advice?

A

There are no minimums; however, the SEC and Administrator may require disclosure of educational backgrounds.

74
Q

What is updated at the annual renewal of an IA’s registration?

A

Assets under management, the number of accounts, clients, employees, and IA representatives

75
Q

What is Form ADV-NR?

A

Form required for IAs with general partners who are nonresidents of the U.S.; gives the SEC the right to receive legal papers.

76
Q

If an IA has $50 million under management and 10 individual clients in FL, is it required to register with the SEC?

A

No, the IA meets the de minimis exemption under SEC rules (i.e., fewer than 15 clients).

77
Q

For how long must an IA maintain records?

A

5 years

78
Q

Define solicitor.

A

Any person who, directly or indirectly, solicits any client for, or refers any client to, an IA.

79
Q

May a solicitor receive compensation from an IA?

A

Yes, if the IA is registered, a written agreement exists, and a court has not limited the solicitor’s activities.

80
Q

May an IA use testimonials in its promotional material?

A

No

81
Q

Define testimonial.

A

An advertisement in which an individual recommends the IA’s services based on personal experiences with the firm.

82
Q

An newly hired investment adviser representative wants to put the initials “IAR” on her business card. Is this allowed?

A

No. However, she may spell out “Investment Adviser Representative.”

83
Q

Give some examples of institutional investors.

A

Banks, S&Ls, insurance or investment companies, investment advisers, or entities with at least $50 million in assets

84
Q

List some of the records that must be retained by an IA for five years.

A

Journals, blotters, ledgers, position records, and trade confirmations

85
Q

True or False: If a new IA’s registration became effective on April 1, it must renew on April 1 of the following year.

A

False. State registrations expire annually on December 31 and then must be renewed.

86
Q

True or False: An IA is required to disclose the educational background of all of its IARs to its clients

A

False

87
Q

If an IA’s office is in State A, but its only clients are insurance companies, with whom must it register?

A

With the Administrator in State A. IAs whose only clients are insurance companies are exempt from SEC registration.

88
Q

What record must an investment adviser maintain regarding its IARs?

A

The initial application for each IAR

89
Q

True or False: An Administrator will inspect all advisers’ books and records on an annual basis.

A

False. Administrators lack the resources to inspect all IAs’ books and records annually.

90
Q

The publisher of a financial publication that provides personalized advice is considered a(n) __________________.

A

Investment Adviser

91
Q

If an IAR has no place of business in a state, he must register in the state if he has more than ____ clients there.

A

five

92
Q

When may an investment adviser charge fees that are different from other advisers?

A

When the fees are disclosed and are determined to be reasonable

93
Q

True or False: An IA that maintains custody of customer assets must submit to an unannounced annual audit by a CPA.

A

True. At the completion of the audit, the CPA must file Form ADV-E with the SEC.

94
Q

Is an adviser required to register in a state in which it has no office, but has accredited investors who reside there?

A

Yes. Since the USA does not recognize accredited investors as institutional investors, IA registration is required.

95
Q

Does an IA that only accepts clients with at least $1 million under management need to register?

A

Yes. There is no exemption on the state or federal level if all of an IA’s clients have $1 million under management.

96
Q

Investment advisers typically charge fees based on the _____________ over a specified period.

A

average value

97
Q

Under the USA, when must a balance sheet be provided to a client?

A

A balance sheet must be provided if the IA collects prepaid fees of $500 or more, 6 months or more in advance.

98
Q

True or False: An IA with 5 or fewer retail clients in the state in the past 12 months need not register under the USA.

A

True. However, this is provided that it has no place of business in the state.

99
Q

When does an Administrator require an adviser to include its balance sheet in its ADV Part 2?

A

If the firm has custody of a client’s funds or collects prepaid fees of $500 or more, 6 months or more in advance

100
Q

If an IA is no longer eligible for SEC registration, it has ____ days to file ADV-W and register at the state level.

A

180 days

101
Q

If ABC Advisers has $112 million under management, it must register with ________.

A

the SEC

102
Q

True or False: If an IA’s clients are institutions (e.g., banks and BDs), it is exempt from registration under the USA.

A

True, provided it has no offices in the state

103
Q

Is an IA always required to include a balance sheet in Part 2 of its Form ADV?

A

No, balance sheet only required if it collects prepaid fees

104
Q

Part 2 of Form ADV may be used as the disclosure document that is provided to the IA’s ________.

A

clients

105
Q

What is Part 2 of Form ADV?

A

The portion of an IA’s application that may be used to satisfy the Brochure Rule (disclosure requirement)

106
Q

If a firm provides advice solely based on U.S. government securities, is it required to register as an IA with the SEC?

A

No. U.S. government securities advisers are excluded from the IA definition under the IA Act of 1940.

107
Q

True or False: The manager of an IA’s human resources department is considered an IAR.

A

False

108
Q

When an IA initially registers, who is automatically considered registered?

A

The officers and directors of the advisory firm

109
Q

True or False: A BD who promotes wrap accounts to its clients would have to register as an IA under the USA.

A

True. Since the wrap account involves a fee for advice, the BD must register as an IA.

110
Q

What is required of an IA if there has been a minority change in firm ownership?

A

Provide written notification to clients and the Administrator

111
Q

An investment adviser with more than $___________ under management must register with the SEC.

A

$110 million

112
Q

Is an IA managing more than $110 million in assets with only insurance companies as clients subject to SEC registration?

A

No. An SEC exemption is provided to IAs whose only clients are insurance companies.

113
Q

What is the purpose of an annual updating amendment.

A

To determine if an IA is eligible for continued SEC registration; it is filed within 90 days of its fiscal year end

114
Q

What must a federal covered adviser do if its assets under management fall below $90 million?

A

Withdraw its federal registration and register with a state Administrator(s)

Series 66 (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions