From Book Practice Questions Flashcards
Who of the following would not seek an exemption from registration under the investment advisers act of 1940?
A) someone whose only advisory clients are insurance companies
B) a person whose only offices are in a single state, whose only clients are residents of that state, and who does not render advice on securities traded in a national exchange
C) someone who only gives advice to venture capital funds
D) accountant whose advice is incidental to her accounting business and for which no separate fee is charged
D … accountant is excluded from IA definition so no need to apply for exemption.
Section 3(c)(1) of Dodd-Frank placed a limit on beneficial ownership of shares to not more than …
100
If a prospective client wanted to know what type of investment strategies are employed by an investment adviser, the information would be found in the adviser’s …
ADV Part 2A
In absence of any possible exemption, registration with the SEC would be prohibited for which of the following investment advisers?
A. Pension consultant managing $150 million
B. The IA under contract to an open-end investment company with $18 million in assets
C. IA whose assets under management are $103 million
D. IA who would be required to register in 17 states
A. … must be over $200 million for pension manager. 15+ states exempt;
In which of the following cases is it necessary to submit a new Form ADV rather than an amended one?
A) successor firm
B) change in principal office location
C) change from partnership to corporation structure
D) change in fee structure
A. … a material change. Others only need amended form.
NASAA considers a substantial prepayment of fees to be …
More than $500, 6 or more months in advance.
MMM has its principal office in State A and is also registered in STates B, C, & D. MMM exercises discretion on client accounts. As a result, they need to meet net worth & bonding requirements of…
A) state A
B) the SEC
C) the state with the highest bonding requirement
D) each state
State A … SEC requirements are meaningless because this is state registered firm
Under investment advisers act of 1940, regarding advisor record keeping, records must be maintained for ___ from the end of the fiscal year that the last entry was made.
5 years. 2 year minimum for record availability IN OFFICE.
BJS maintains no custody of customer funds or securities, requires no substantial prepayment of fees & doesn’t have investment discretion over clients’ accounts. Which of the following would have to be promptly disclosed to clients?
I. SEC barred VP of firm from associating with any firm in the investment business
II. BJS has just been fined $5k by the NYSE
III. A current civil suit filed against BJS by customer claiming unsuitable advice
I & II … III isn’t material yet even though it Could impair ability to meet contractual obligations in future
As called for on the NASAA Model Fee Disclosure Template, which of the following is not required to be disclosed on a broker/dealers fee chart?
A) commission schedule
B) account maintenance fee
C) charges to wire funds
D) postage& mailing charges
A. Commission schedule
FIG an IA in 7 states, acts as principal in trades recommended to clients sometimes. Under USA, FIG must ….
Receive consent of clients and disclose capacity no later than execution of trade
There is no such thing as a __ covered broker dealer. Being a member of a national stock exchange has no impact on a state registration.
Federal
ABC Investment Advisers is organized as a partnership with 7 equal partners. With 2 partners leaving, ABC must notify …
The other party to the contract of the change in partners in a Reasonable time, the advisory clients in this case.
Unless a specific exemption is referred to in the question, fees based on a___ or ____ in an account are prohibited.
share of capital gains or appreciation
Filing of the annual updating amendment to Form ADV with the appropriate regulatory body is within __ of the end of the advisers fiscal year WHILE delivery of the IAs brochure to the customer is due within __ days of the end of the adviser’s fiscal year.
90; 120
Neither broker dealers or IAs can _____ in a prospectus.
Highlight critical information
Which of the following would not be included in the safe harbor provisions of Section 28(e) of the securities exchange act of 1934?
A) proprietary research
B) third party research
C) rent
D) seminar registration fees
Rent
Accredited investor only needs ___ per year earnings over past __ years AND ___ in net worth excluding primary residence. WHILE a Qualified client must have either ___ in account with the IA OR__ in net worth excluding primary residence.
$200k; 5; $1 million
$1.1 million; $2.2 million
Which of the following advisers have custody of customer funds or securities as defined in the IA Act of 1940?
A) adviser received the proceeds of sales in the customer’s account
B) adviser receives $1500 fee as prepayment for the next contract year
C) adviser has investment discretion over the account
D) all are true
A) access to customer’s funds is custody
An IA with custody of customer funds & securities must send account statements on a ___ basis.
Quarterly 🪙
ABC Advisers provides investment advice. Therefore, under the Code of Ethics, all of its directors, officers, & partners are
Access persons
If you’re an IAR and also invest in your own personal account, you must report …
Any transactions on a quarterly basis
An IA who falls under the requirements of Section 13(f) of the Securities Exchange Act of 1934 must file Form 13F ….
Quarterly… think of 13 weeks being in a quarter LINKED to 13 in Section 13(f)
Amazon leaks some inside information to some key employees but not the public. An employee tells the agent servicing his brokerage account, and the agent tells another one of his customers who then trades on the insider information before it becomes public. Who is guilty of insider trading?
The Amazon employee, BD agent, and the customer making the trade
Under regulation S-P, if an IA sends a customer an initial privacy notice that contains an opt-out provision, the firm may not disclose non public personal information about that customer for ___ days from the mailing.
30
When an IA registers in a new state, which of the following are automatically registered as IARs?
A) employees functioning as IARs in at least 1 state
B) officers, partners, & directors of the firm who are functioning as IARs
C) clerical employees stuffing the envelopes with research reports
D) any employee soliciting clients for the adviser
B
If an IAR goes to work for another IA in the same state, ___ have to notify the Administrator.
Both IAs… both the old and new state registered firms have to inform Administrator.
When an IARs permanent residence changes, updates must be made to info on file with regulatory bodies via filing a __ in __ days.
U4; 30
U5s are for terminations
ADV & BD forms are for ___ while U4 forms are for __ with U5 forms for __
Firms; people; terminations
Which of the following persons is defined as an agent by the USA?
A) silent partner of a BD whose only relationship to the firm is as contributer of capital
B) clerk at a BD who is authorized to take orders for stock, but not bonds
C) VP of diversity training for a BD who is not authorized to solicit or transact securities business
B
Under the USA, which of the statements regarding the registration of a successor firm is true?
A) the appropriate filing fee must be included with the application
B) the successor firm must be in existence before the filing of the application
C) the registration of the successor firm will be effective until the December 31 renewal date without payment of a registration fee
D) all of the above
C … no filing fee necessary with registration still effective for remainder of year.
Jane is agent registered in States A & B. was sitting in her office in State A, she contacts a client living in state B,. Client agrees with make the purchase. Jurisdiction belongs to. 
State A administrator and state B administrator
Jane has another State A based client who spends winters in State C. Jane and her broker dealer don’t have any place of business in state C. Jen sends a research report recommending a purchase of XYZ stocks. Sally authorizes this transaction while in state C. So…
Both state A and State C administrators have jurisdiction
An ad for new securities placed in Arizona republic newspaper with 60% readership in Cali is under ___ jurisdiction, or ____ if 70% of readers are in CA.
Az administrator; no jurisdiction
A state securities administrator has jurisdiction over a securities offering if …
The offering originated in the state or if the offering was accepted in the state
