Overview Flashcards
Investment advisor Representative is any partner, officer, or other individual associated with an investment advisor who:
Makes recommendations or gives advice regarding securities, manages accounts or portfolios of clients, determines which recommendations or advice should be given, solicits/offers or negotiates the sale of investment advisor and services, supervises employees who perform any of these functions
Which is NOT a security
Fixed annuities, life insurance (term, while, universal), endowments, commodity futures contracts, an IRA/Keogh plan
Agents, issuers, and banks are not:
Broker dealers
Federal covered securities: require notice filing, consent to service of process, and payment of the fee?
Yes, if issued by a mutual fund. No, if issued by listed company (New York Stock Exchange, NASDAQ)
File Application (CRD or IARD) details:
Effective on the 30th day after filing, expires annually on December 31. Updated annually at renewal, amendments for material changes are filed promptly (30 days)
Consent to service of process
Filed once, not renewed. Grants administrator power of attorney to receive and process non-criminal legal complaints
Filing fee is paid (including successor firms?):
Paid annually. For successor firms, application must be filed, no additional filing fee for remainder of year)
Unacceptable soft dollar arrangements include:
Payment for marketing, travel expenses, meal and entertainment, salaries, accounting and licensing fees, computer terminals, correction of trading errors
To register with the SEC (or state), IAs must:
File Form ADV Pt. 1 and 2 through IARD (operated by FINRA)
Federal (IAA Act of 1940) exclusions from IA Definition:
Banks or bank holding companies (NOT SandLs or IA subsidiaries of banks or investment companies), professionals (lawyer, accountant,teacher, engineer), B-Ds and their REPS, bona fide publisher, US Government Securities Advisers
State exclusions from IA Definition (different ones)
Banks, S&ls, trust companies (NOT bank holding companies), B-Ds and their AGENTS, IARs, Federal Covered Advisers
State exclusions from IA Registration:
No place of business in state, institutional exemption, fewer than >5 non institutional clients over past 12 months
Federal exclusions from IA Registration:
Local exemption [all clients are resident of state] (remember no advice on EXCHANGE LISTED securities), insurance exemption, private funds with
US Mail or Telephone jurisdiction:
Two states max (originating state and state to which it is directed) NO forwarded mail
Television or radio jurisdiction:
One state only (state in which the camera/microphone is located)
Newspaper or magazine jurisdiction:
One state or no state (state in which the newspaper/magazine is published, unless more than two thirds of the circulation is outside the state)
Statute of limitations on taking action to recover damages made in violation of state registration:
Within three years of occurrence or two years of discovery, whichever comes first
One of the most common uses for a bypass trust:
Pass assets from the second deceased parents to his children
Both an offer and the sale:
Warrants, rights, gift of assessable stock (need disclosure of material facts)
State/Fed penalties
3 years/$5,000 state
5 years/$10,000 fed
5 for criminal violations (e.g. Fraud, state and fed)
Schedule 13D
Owners of more than 5% of company equity
Schedule 13F
Exercises discretion over $100,000,000+ must file on quarterly basis
Expected return (modern portfolio theory)
Possible return on the investment weighted by the likelihood that it will be realized
Futures details
Standardized quantity, variable quantity (as agreed), non-personal, may be offset