Regulation Flashcards
What act allowed the SEC to Regulate investment advisors?
From Investment Advisory Act of 1940
RIA registration requirement with under 100 million under management
Register with state of office domicile (not home).
Need to register in multiple states.
If state doesn’t have provisions, must register with SEC
An investment advisor is
-A person who gives advice, reports, or analysis regarding securities
-in the Business of providing security services for a cost
-ABC-advice business compensation
SEC states compensation
Is receipt of economic benefit
Exceptions to file as an investment advisor
-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)
Financial reform bill
SEC is barred from regulating Index Equity Annuities (IEA)
States will regulate
Investment managers not may be required to register
ADV part 1
Applicant
Location
Disciplinary action
Background
Form of business
Investment philosophy
Adv part II
Brochure that discusses business structure, relationships, fees, services, conflict of interest, method of analysis and investment strategies, risk of loss, brokerage practices
Adv II change
Must be delivered to clients within 120 days of the fiscal year
Adv II delivery
Before or at the time an RIA enters into an advisory agreement
Closing an RIA
Submit form ADV-W
Records must be kept of 5 years
An individual Selling securities to or for a client.
Needs to be FINRA registered not just registered with the SEC
Series 6 allows a person to sell
UIT, Open-end mutual funds, and variable products
Not closed end funds
What is a Void contract?
A void contract was never valid. It’s not enforceable because it lacks one or more requirements for being enforceable
Voidable contract
One party has the option of voiding the contract if desired where the other party is bound by the contract
Agent
A legal rep for insurance company
Expressed authority
Written, explicit direction from principal (insurance company) to the agent
Implied authority
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
Apparent authority
Rises out of neglect of the principal for allowing a person to act as an agent
Law of agency
Compliance with the rules of the insurance company
Action of a insurance broker
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
Realistic
If the answer is not likely then choose the logical answer
Rftq
All the time
Chapter 11
Generally for individuals who exceed chapter 13 because of debt limits or don’t have a source of income
Chapter 13
Reorganization of payments to creditors and are reduced to a more manageable level.
Creditors cannot harass debtors
Debtor is not required to relinquish assets
Chapter 7
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
Chapter 7
means test
-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
Chapter 7 stipulations
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
Chapter 7 Bankruptcy property/investment exclusions and requirement
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
Express authority
Written, explicit direction from Insurance company or principal to agent
