Part 1 Flashcards
Not a person
Dead, Minor, mentally incompetent
Release IA-1092
Financial planners, Pension consultants, and sports/ entertainment reps
Exclusions for IA
Banks, Savings institutions, and trust companies
“LATE”
Broker-Dealers
publishers of general and regular circulation
person advising on government securities
IAR’s
Federal covered investment advisers
Exempt from SEC
Intrastate: no advise, no clients are private funds, and registered with the state
Insurance companies
Exempt from State
De Minimis: No place of business, 5 or fewer clients in 12 months
No place of business & Only deals with the institution, BD, or other advisers
Snowbird exemption
Who is considered under the Federal/SEC
federal registered, covered adviser, and federal covered advisers
Form ADV Part 1A
Business name/ form organization
past 5 years of business and current affiliations of control
edu background
nature of business
balance sheets certified by independent public accountant
scope of authority of client funds
compensation arrangement
criminal record
how much of the business is investment advise
consent to service of process
filing fee
Form ADV Part 1B
State registered advisers only
90 Days
Annual updating amendment to Form ADV
Annual updating amendment to Form ADV
90 days
Form ADV-W
withdrawl
discretion
$10,000
Custody
$35,000
below net worth notify the admin within how many days
1 Day
file financial report with admin within how many days
1 day
recordkeeping
keep at the office for two years in physical forms
Supervisors
Principle
IAR Exclusions
Clerical and administrative personal
individuals providing only impersonal investment advice
research analysts if no advisory clients
IAR Exemptions State
De Minimis rule
Snowbird rule
IAR Exemptions Fed
Covered adviser, only registered in states where the IAR maintains a place of business
Broker-dealer definition
a person engaged in the business of effecting securities transactions of accounts of others or for own account
Broker Dealers
Register with Both SEC and states in which they do business
helps bring new issues to issue
broker-dealer, underwriter, and investment banker
BD exclusions
agents
issuers
banks, savings institutions or trust companies
internet broker-dealer- general advise
BD with no office in the state who limits clients to issues of the security, other BD’s or institutional investors
BD’s Exemptions
USA: Canadian BD: limited registration
SEC exchange Act of 1934: intrastate BD
Define agent
individuals representing a broker- dealer in effecting or attempting to effect purchases or sales or securities
individuals representing an issuer in effecting or attempting to effect purchases or sales of securities
Agent exclusions (representing BD)
clerical and administrative personnel
Board member or capital contribution only
Agent exclusions (USA- representing issuers)
an individual who represents an issuer in effecting transactions
exempt under USA
securities issued by one of the five specified exempt issuers
employees of the issuer and no compensation is recieved
Agent exemptions
Bd is exempt from registration- agent doesn’t register
snowbird
client moves- agent cannot be registered in state if broker-dealer is not
no de minimis
registration effect date (SEC)
Noon of the 30th day
BD recordkeeping requirments
3 years
at the principals office for 2
Define an investment contract
invesment of money
common enterprise where
a profit is anticipated
efforts of a third-party management
Not a security
insurance,
retirment plans IRA, 401K
collectibles
commodity futures and actual commoditites
condominium for primary residence
currency
Define Issuers
A person who issues or proposes to issue a security:
Primary transaction- money goes to issuer
can’t be government, corporation or partnership
Non-issuer
person other than an issuer
Security exemptions
US government, state and local municipal bonds, instrastate offering
Exempt transactions
private placement under reg D
Rule 501- accredited investor
USA security exemptions
short-term notes/ debt obligations
promissory notes (commerical paper)
USA security exemptions issued by exempt issuers
us government
municipalities
Canadian gov’t
foreign national governement with diplomatic relations
Banks, saving institutions, and trust companies
insurance companies
regulated public utilities comp
charitable, religious and nonprofit
exchange-listed securities
nasdaq traded secutity
investment companies registered under investment company act
securities or transactions exempt under the Securities act of 1933
Private Placement
10 offers in any 12cconsecutive months other than institutional clients
USA methods of registration
Notice filing, coordination, and qualification
Coordination
Effective at the same time as the SEC
effective at the same time
Coordination
offer
attempt to solicit & dispose of the purchase
Offer
Sale of rights, warrants, or convertible security is an offer of the underlying stock
Sale
Transfer of value
Sale
Purported gift of assessable stock (offer and sale)
Gift of non-assessable stock, stock dividend or stock split, bone fide pledge or loan, an act resulting from the approved merger or business reorganization
Not a sale
3 years
date of violation when something happened
date of the violations
3 year
2 years
date of discovery
date of discovery
2 years
30 days
rights of rescission
rights of rescission
30 days
Rescission
Made whole
Rescission
if fails to accept within 30 days then may not sue
State Penalties
$5,000 fine and 3 years jail
required disclosures
acting as a broker dealer
required disclosures
agency cross transactions
required disclosures
conflict of interest for BD, investment adviser,
required disclosures
Fees
Soft dollar
the economic benefit received from any source; fees, commissions, retainer, soft dollar
