Chapter 4 Flashcards
Ch 4 STATE REGULATIONS GOVERNING INVESTMENT ADVISERS AND IA REPRESENTATIVES
How many credits of Regulatory and Ethics continuing education must IARs complete each year?
SIX credits of Regulatory and Ethics continuing education (CE). THREE of the
six credits must specifically cover ethics.
What is the requirement for IARs who are not dually registered with FINRA regarding continuing education?
SIX credits of Products and Practices CE
This is required every year.
Can IAR continuing education credits be rolled over into the next year?
No
Any additional IAR CE credits earned in one year cannot be rolled over.
What is considered investment advice in relation to newsletters?
Regularly publishing newsletters on the best time to exercise options
This is deemed as providing investment advice.
Who is required to register as an IAR?
A person who serves on a committee making investment decisions for advisory customers
This includes those creating financial plans for a fee.
In which states must an IAR of a state-registered adviser register?
In all states where there is a place of business or more than five non-institutional clients
This is a requirement for registration.
What assets are excluded from an adviser’s net worth calculation?
Home, furnishings, and automobiles
Only business assets are included.
What does Schedule A of Form ADV (ADV-A) list?
Direct owners and executives of the investment adviser
It is only filed during an investment adviser’s initial registration.
Who files Form ADV-E and when?
The auditor of an IA maintaining custody of client funds or securities; within 120 days of the audit
This form is related to custody of client assets.
How often must state-registered investment advisers renew their registration?
Every year within 90 days of the calendar year-end
This requires filing an updating amendment to Form ADV.
When must advisory clients receive a brochure according to the USA?
At least 48 hours before signing a contract OR at the time of signing
If provided at signing, clients can cancel without penalty within five days.
Are brochures required for contracts with registered investment companies?
No
This also applies when providing impersonal advisory services costing less than $500 per year.
When must updates to an adviser’s brochure be sent to advisory clients?
At the IA’s year-end
This ensures clients have the most current information.
What form do IARs file to register?
Form U4
This is the standard registration form for IARs.
What does NASAA recommend regarding emails with personal identifying information?
Encrypt emails
This is a recommendation, not a requirement.
How long must IAs keep books and records?
Five years
This includes records of clients with whom the IA no longer does business.
Who are considered supervised persons of an IA?
Officers, directors, partners, and employees providing investment advice
These individuals fall under the supervision of the IA.
