IA - Regs Flashcards
LATE Exclusion
(State Law)
Lawyers
Accountants
Teachers
Engineers
Excluded From State Registration IF
Advice is Incidental
and
Doesn’t Charge a Fee for Advice
Advisor’s Net Worth Includes
(State Law)
Only Business Assets
(MUST BE TANGIBLE ASSETS)
Not Personal
Home
Furnishings
Cars
etc…
Who files FORM ADV-E
and
When must it be filed?
(State Law)
Filed by the auditor of IA if the IA has Custody of clients funds
Must be filed with in 120 days of the audit
IA Brochure/ ADV must be given when
Federal - At time of sell
State - At time of sell
AND
if under 48 hrs before time of sell client must also be given
5 day penalty-free withdrawal period
Brochure OR ADV Part 2A
+
ADV Part 2B
Must be given
When is IA Brochure/ADV not required to be given to new Client
(State Law)
If client is:
-An Investment Company
or
-Advice is “Impersonal” and cost less than $500/yr
Qualified Client
An Individual with at least $1.1 million AUM
OR
$2.2 Million in net worth
IA’s can charge these people a Performance Based Fee
(under Federal Law)
Qualified Purchaser
An individual who owns more than $5 million worth of securities
Are Securities Sold to Qualified Purchasers Federal or State Covered
Federal
IA’s can charge performance-based fee’s to whom
(Federal Law)
Only to Qualified Clients
(+$1.1 million AUM or +$2.2 million Net Worth)
When IA is a Partnership
AND
Changes its Partners
it must…
(Federal Law)
Notify the Admin and its clients
(Assignment)
What form do IA’s Use when Registering
Form ADV
(part 1)
How to determine if IA needs State or Federal Registration
If they have an Investment Company as a client
= Federal
OR
If they are required to Register in +15 states
=Federal
if not:
Their AUM
-Under $100 million = State
-Over $110 million = Federal
-In-between 100-110 = IA gets to choose
IA provides Advice to Private Funds
What’s the benchmark for determining if they are
Exempt Reporting Adviser (ERA) (Exempt)
(Federal)
Over $150 Million AUM = Not ERA
Under $150 Million = ERA
(I believe its AUM of the Private Fund Not Advisor)
ERA’s must file with who and how?
(Federal)
Exempt from Federal Filing
Must file with State Admin
via
Notice Filing and Paying the state filing fee
Are The following Required To Register (Federally)
-Hedge Funds
-Private Funds
Both are Exempt from Federal Registration
(Usually they have criteria they must meet)
2 types of Private Funds that are Exempt from Registration
and their requirements for being exempt from registration
(basically how can they remain Private not Public)
(Federal Law)
Requirements for Both:
-No Felonies (usually)
-AUM under $150 million
3(C)1:
-No More Than 100 Investors
-Each Investor must be a “Qualified Client”
(Must Have either
+1.1 million AUM or
2.2 million Net Worth (Excluding Home))
3(C)7:
-No More Than 2000 Investors
-Each Investor must be a “Qualified Purchaser”
(Must Have +$5 million AUM)
Does IAR leaving IA to go to another IA Constitute Assignment of Client Contracts
(Federal)
No
When Performance-based Fee’s are Allowed they must be…?
(not the Qualified Client Rule)
(Federal)
when they are
-not misleading
and
-justified with appropriate records
Books and records may be stored using cloud services as long as
-regulators are given notice within 24 hours
and
-have cost-free access
IA is state Registered…
Which States Must an IAR register in
(State Law)
all states in which the IAR has a place of business
or
has more than five non-institutional clients
IA is Federally Registered…
Which States Must an IAR register in
(State Law)
all states in which the IAR has a place of business
ONLY
(not ones where they
have more than five non-institutional clients)
IAR Registers by filing which Form
Form U4
Client of IAR gives IAR username/Password so the IAR can make trades
Does IAR now have:
-Limited/Full Discretion
-Custody
(Federal)
-Limited Discretion - Yes
-Custody - No
Client lets IAR withdraw Funds / Securities from their Account
Does IAR now have:
-Limited/Full Discretion
-Custody
(Federal)
-Full Discretion - Yes
-Custody - Yes
