Brainscape's Knowledge GenomeTM

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


See full index

Series 66 > Ch 4 State Regulations Governing Investment Advisers and IA Representatives Part II > Flashcards

Ch 4 State Regulations Governing Investment Advisers and IA Representatives Part II Flashcards

1
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

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

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

A

clients.

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

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

A

False. The manager’s responsibilities do not include providing advice about securities or managing accounts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
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. However, this is provided that it has no place of business in the state.

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

All investment advisory contracts must be in writing and include the ______________ for which services are contracted.

A

length of time

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

True or False: A BD that promotes wrap accounts to its clients must 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.

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

Under the IA Act of 1940, when must a balance sheet be provided to a client?

A

A balance sheet must be provided if the IA collects prepaid fees of $1,200 or more, six months or more in advance.

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

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

What record must an investment adviser maintain regarding its IARs?

A

The initial application for each IAR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
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
11
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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
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
13
Q

When is Form ADV-W filed?

A

When an adviser withdraws its registration

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

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

A

No. A balance sheet is required if the IA collects prepaid fees or has discretion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
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
16
Q

An IAR with no place of business in a state must register in the state if he has more than ____ retail clients there.

A

five retail clients there.

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

Under the USA, when must an IA provide a balance sheet to a client?

A

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

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

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

A

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

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

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

What document will an IA regularly provide to clients to notify them of the location of their securities?

A

The client’s account statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
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
22
Q

An IAR of a state-registered IA has no office in NJ, but has six clients who live in NJ. Must she register in NJ?

A

Yes. IARs of state-regulated IAs register where they have an office and where they have six or more individual clients.

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

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

Investment advisers typically charge fees that are based on the _______ _____ over a specified period.

A

average value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
An IAR of a federal covered adviser has no office in NY, but has six clients who live in NY. Must he register in NY?
No. IARs of federal covered advisers are only required to register in states in which they have an office.
26
True or False: The USA classifies an agent of a BD who also manages wrap accounts as an IA.
No. IAs are firms, not individuals.
27
ADV Part I is a disclosure document for use by the _____ and the ________________.
SEC and the Administrator.
28
What is Form ADV?
The form filed by investment advisers for registration
29
What types of changes are considered material changes that require prompt amendment of an adviser's Form ADV?
Significant items, such as a name or location change
30
A surety bond may be required if an investment adviser has _____________ or __________ of client assets.
discretion or custody
31
For how long must an IA maintain records?
Five years
32
If an IA's office is in State A, but its only clients are insurance companies, with whom must it register?
With the Administrator in State A. IAs whose only clients are insurance companies are exempt from SEC registration.
33
An IAR has no place of business in State A, but has six or more individual clients in State A. Where must she register?
She must register in any state in which she has six or more individual clients (even if she has no office in the state).
34
True or False: An IA with five or fewer retail clients in the state in the past 12 months must register under the USA.
False. No registration is required as long as the IA has no place of business in the state.
35
Does an IA that only accepts clients with at least $1 million under management need to register?
Yes. There is no exemption on the state or federal level if all of an IA's clients have $1 milllion under management.
36
True or False: An adviser to a mutual fund must register in the state in which the fund is domiciled.
False. A federal covered adviser must be registered with the SEC, not a state.
37
Give some examples of qualified custodians.
Broker-dealers, banks and trust companies. IAs may also be custodians, but usually are not.
38
Is there a limit to the amount of net worth the Administrator may require of an IA?
Yes. The Administrator may not set a requirement that exceeds the IA's home state.
39
True or False: An IA must physically deliver its brochure to clients at least annually.
False. At a minimum, the IA must (in writing) offer to deliver its brochure annually.
40
What types of changes are considered significant changes for an adviser's Form ADV?
Change in fees, custody, and the name or location of adviser
41
If an IA delivers a brochure at the time of contract signing, clients must be given ____ days to cancel without penalty.
five days
42
True or False: A BD making recommendations about investing in various securities is an IA under the USA.
False. Since the BD is not charging a fee for the advice, it is excluded from the IA definition.
43
The publisher of a financial publication that provides personalized advice is considered a(n) __________________.
investment adviser.
44
Identify some non-material (routine) changes to Form ADV.
A change in the number of discretionary accounts or a change in the dollar amount under management by the adviser
45
Under the USA, the de minimis exemption limits an IA to no more than ____ clients within the previous ___ months.
five clients within the previous 12 months.
46
May the Administrator set minimum net worth requirements for IAs?
Yes, but no state may impose a requirement that exceeds the requirement of the IA's home state.
47
What is Form ADV-NR?
Form required for IAs with general partners who are non-U.S. residents; gives the SEC the right to receive legal papers
48
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?
He must register in State B since he has an office in the state. The number of clients is not relevant.
49
Is an employee of a BD who solicits new customers for an IA considered an IAR?
Yes. According to the USA, any person who solicits investment advisory service is considered an IAR.
50
Under the Investment Advisers Act of 1940, when must an IA renew its registration?
Within 90 days from the IA's fiscal year-end
51
When does an Administrator require an adviser to include its balance sheet in its ADV Part 2?
If the firm has custody of a client's funds or collects prepaid fees of $500 or more, six months or more in advance
52
Who manages accounts, solicits services, or makes recommendations on behalf of a registered investment adviser?
An investment adviser representative (IAR)
53
When must a federal adviser file an updating amendment to determine continued eligibility for SEC registration?
Within 90 days of the end of the adviser's fiscal year.
54
Give some examples of institutional investors.
Banks, S&Ls, insurance or investment companies, investment advisers, or entities with at least $50 million in assets
55
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?
Yes, since the IAR has an office in State A. The client number is not relevant because of the office location.
56
Under the USA, all IA contracts must be __________ and must disclose __________ provided and related ______.
in writing and must disclose services provided and related fees.
57
Is an adviser required to register in a state in which it has no office, but has accredited investors who reside there?
Yes. Since the USA does not recognize accredited investors as institutional investors, IA registration is required.
58
In place of a surety bond, the Administrator will accept a deposit of _______ or _____________.
cash or securities.
59
When should routine changes to an adviser's ADV be filed?
Within 90 days of the end of the adviser's fiscal year
60
An annual updating admendment of Form ADV is filed with the SEC within __ days of the adviser's fiscal year end.
90 days

Series 66 (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions