Definitions

Question 1

What is a security

Howey test

Answer 1

-Investment of money
-Common enterprise
-Expectation of profit
-3rd party effort

Ach. 2.3

Not a security:
FIXED insurance products
Collectibles
Art
Condos (used as personal residence)
Commodities (ex: gold bullion)
Currencies

Question 2

Investment advisor

ABC rule

IA- 1092 roles defined as IAs

Answer 2

Almost always a firm and NOT a sole proprietor

-Provides advice or analysis on securities
-As a regular part of business
-For compensation

Note: discretionary accounts (3 As: action, amount, asset) are considered advice.
Advice can be proactive client convo, trading on client’s behalf via POA, or managing a pooled investment fund

Comp- most common:
-AUM (% of client’s portfolio)
-fixed fees
-hourly fees

Comp could be anything of value, e.g. provide investment advice to a law firm in exchange for legal representation

IA- 1092 defined as investment advisor:
Financial planner
Pension consultant
Athlete & celebrity advisor