Unit 6

Question 1

NASAA’s Statement of Policy on Unethical Business Practices provides that the entering into, or renewal of, an investment advisory contract would need to include disclosure of:

Answer 1

-All FEES and services provided
-The TERM of the contract
-A FORMULA for computing the advisory fee
-The amount of PREPAID FEES to be returned in the event of an early termination of the contract
-The fact that NO ASSIGNMENT of the contract will be made without the consent of the client
-Whether the contract grants DISCRETIONARY POWER to the adviser
-The fee for managing EQUITY securities may be higher than for fixed-income securities

Question 2

Is receiving a list of investors that recently purchased an initial public offering considered soft-dollar compensation?

Answer 2

No.