Unit 5

Question 1

Under the Investment Advisers Act of 1940 and the NASAA Model Rules, advisers are prohibited from charging performance fees that are tied to gains in the account. However, an exception is made for _________________.

Answer 1

qualified clients

Question 2

What is a qualified client?

Answer 2

A qualified client is an institutional or retail client with at least $1.1 million under management with the adviser or one with a net worth in excess of $2.2 million.

Question 3

______________________ are exempt from SEC registration, but are still required to complete a notice filing with state Administrator(s) and pay a fee. They are advisers to private funds with less than $150 million in assets under management and advisers to venture capital funds.

Answer 3

Exempt reporting advisers (ERAs)

Question 4

An investment adviser is required to maintain a record of the names and addresses of any person to whom it has sent any notice, circular, advertisement, offering, report or publication if the number of persons is _________.

Answer 4

10 or fewer