Chapter 3 - Advertising and Record Retention Rules Flashcards
The administrator by rule or order may require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other communication addressed or intended for the distribution to prospective investors, including clients and prospective clients of an IA, unless the security or transaction is ____________.
Exempted. I.e., Federal Covered Security
__________ are considered advertising and IA and BDs must keep a record of both current and past revisions.
Websites
If the firm intends to make a website available in all 50 states, this is considered advertising, and the firm would be required to register with the ______ and coordinate or file in states where advertising takes place.
SEC
True or False: The state administrator has authority to require the filling of advertising of federal Covered Security by the issuer.
False. The state administrator does not have the authority to require the filing of advertising for federal covered securities by the issuer. Federal covered securities are generally exempt from state registration and review requirements, including the filing of advertising materials.
True or False: Unit Investment Trusts (UITs) must file advertising & sales literature.
True. Unit Investment Trusts (UITs) must file advertising and sales literature. This requirement is in place to ensure that all promotional materials are accurate, not misleading, and comply with regulatory standards. This helps protect investors by providing them with reliable information about the investment products they are considering.
True or False: All records must be preserved for a period determined by the state administrator or federal law (5 years for IAs).
True
True or False: If an IA is registered with the SEC, the administrator does not have control over which books and records the IA firm is required to create and maintain.
True
True or False: Books and records of a BD that must be maintained include Order tickets, ledgers of all assets, liabilities, income and expense accounts, blotters, and other records of all purchases and sales of securities.
True
Broker-dealers (BDs) are required to keep different types of records for varying lengths of time, as specified by the SEC’s rules:
- Blotters (records of all purchases and sales of securities): Must be kept for at least 6 years.
- Trade confirmations: Must be kept for 3 years.
- General ledgers: Must be kept for 6 years.
- Customer account records: Must be kept for 6 years after the account is closed.
- Order tickets: Must be kept for 3 years.
Broker-dealers are required to maintain blotters, which are records of all purchases and sales of securities, for at least _____ years.
6
For BDs: All written communications relating to the firm’s business, including emails, must be retained for ______ years.
3
For BDs: Records of all orders (both executed and unexecuted) must be kept for ____ years.
3
For BDs: Customer account records must be maintained for at least ______ years after the account is closed.
6
For Investment Advisers. All client agreements, transaction records, performance records, advertising materials and compliance policies must be maintained or kept for ______ years.
5
True or False: A BD would not have to keep a record of the names of persons receiving promotional or sales literature.
True
True or False: IAs are not required to keep records of communications, including emails, that involve advisory activity that are sent to clients.
False. Investment Advisers (IAs) are required to keep records of communications, including emails, that involve advisory activity and are sent to clients. This is part of their obligation to maintain accurate and comprehensive records under regulatory requirements.
