Regulation

Question 1

SEC Regulates investment advisors

Answer 1

From Investment Advisory Act of 1940

Question 2

RIA registration requirement with under 100 million under management

Answer 2

Register with state of office domicile (not home).
Need to register in multiple states.
If state doesn’t have provisions, must register with SEC

Question 3

An investment advisor is

Answer 3

-A person who gives advice, reports, or analysis regarding securities
-in the Business of providing security services for a cost
-ABC-advice business compensation

Question 4

SEC states compensation

Answer 4

Is receipt of economic benefit

Question 5

Exceptions to file as an investment advisor

Answer 5

-Bank or holding company, Lawyer, accountant, engineer, teacher, publisher or newspaper
-broker dealer whose performance of advisory services is incidental
-security sales of solely the us gov’t
-intrastate advisor in unlisted securities
-an advisor whose only clients are insurance companies
-family offices (only family members, wholly owned by family, does hold itself out to the public as investment advisor)

Question 6

Financial reform bill

Answer 6

SEC is barred from regulating Index Equity Annuities (IEA)
States will regulate
Investment managers not may be required to register

Question 7

ADV part 1

Answer 7

Applicant
Location
Disciplinary action
Background
Form of business
Investment philosophy

Question 8

Adv part II

Answer 8

Brochure that discusses business structure, relationships, fees, services, conflict of interest, method of analysis and investment strategies, risk of loss, brokerage practices

Question 9

Adv II change

Answer 9

Must be delivered to clients within 120 days of the fiscal year

Question 10

Adv II delivery

Answer 10

Before or at the time an RIA enters into an advisory agreement

Question 11

Closing an RIA

Answer 11

Submit form ADV-W
Records must be kept of 5 years

Question 12

Selling securities

Answer 12

Needs to be FINRA registered not just registered with the SEC

Question 13

Series 6 allows a person to sell

Answer 13

UIT, Open-end mutual funds, and variable products
Not closed end funds

Question 14

Void contract

Answer 14

A void contract was never valid. It’s not enforceable because it lacks one or more requirements for being enforceable

Question 15

Voidable contract

Answer 15

One party has the option of voiding the contract if desired where the other party is bound by the contract

Question 16

Agent

Answer 16

A legal rep for insurance company

Question 17

Expressed authority

Answer 17

Written, explicit direction from principal (insurance company) to the agent

Question 18

Implied authority

Answer 18

The public believes that an agent works for a principle based on signs, rate books, email.
Agents have to carry out principals general business practices

Question 19

Apparent authority

Answer 19

Rises out of neglect of the principal for allowing a person to act as an agent

Question 20

Law of agency

Answer 20

Compliance with the rules of the insurance company

Question 21

Action of a broker

Answer 21

Not agents, authorities do not extend to the insurance company. Given that it is not obligated to pay the claim the carrier would refund the premium

Question 22

Realistic

Answer 22

If the answer is not likely then choose the logical answer

Question 23

Rftq

Answer 23

All the time

Question 24

Chapter 11

Answer 24

Generally for individuals who exceed chapter 13 because of debt limits or don’t have a source of income

Question 25

Chapter 13

Answer 25

Reorganization of payments to creditors and are reduced to a more manageable level.
Creditors cannot harass debtors
Debtor is not required to relinquish assets

Question 26

Chapter 7

Answer 26

Bankruptcy code that allows debtor to claim federal or state exemptions

-Homestead (house and adjacent land)
-Limited amount of personal property
-Wages due to the head of a family
-Limited equity in motor vehicles
-Pension and retirement plan rights
-Cash value of life insurance and annuities
-Disability benefits
-Property held tenancy by entirety

Question 27

Chapter 7 means test

Answer 27

-If average monthly net income is greater than $10k, chap 7 not an option
-If average monthly net income is less than $6k, chap 7 is allowed
-If net monthly income is between $6k and $10k, chap 7 can be filed if net monthly income is less than 25% of all non-priority unsecured debt
-all chapter 7 filers need a consumer class prior to filing

Question 28

Chapter 7 stipulations

Answer 28

In addition to means test, a debtor must
-get counseling within 6 months of filing
-the filer or debtor must provide tax returns and detailed projections along with retirement accounts (particularly over $1 million , education accounts (opened within 2 years or non child/non-grandchild)
SEP, SIMPlE, Erisa plans, deferred compensation plans are generally exempt

Question 29

Bankruptcy

Answer 29

SEP, SIMPlES, ERISA protected
Ira’s protected up to $1 million
529 acct open more than two years to be exempt
Everyone must complete consumer credit counseling prior to filing for chapter 7

Question 30

Express authority

Answer 30

Written, explicit direction from Insurance company or principal to agent