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Series 65 (FIN-451) > Unit 9 > Flashcards

Unit 9 Flashcards

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Series 65 flashcards
1
Q

Definition of Investment Adviser

A

Any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities

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2
Q

Three “non-persons”

A

Minor, deceased individual, individual declared mentally incompetent

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3
Q

3 aspects of IAR three-prong test

A
  1. Gives advice to others on securities
  2. Does so as part of a regular business activity
  3. Receives compensation for performing this activity
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4
Q

Two criteria to qualify for “Investment counsel”

A
  1. Principal business of advisor must be giving investment advice
  2. Adviser must provide investment supervisor services
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5
Q

Who is included in definition of investment advisor after SEC Release IA-1092

A

Financial planners, pension consultants, sports & entertainment representatives

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6
Q

“Excluded” person

A

Someone who is not included in the definition of a financial adviser

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7
Q

“Exempted” person

A

Someone not subject to the registration provisions of the acts even though that person meets the definition

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8
Q

Federal covered investment adviser

A

Individuals who are solely under federal jurisdiction and are specifically excluded from the definition of investment adviser in the Uniform Securities Act

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9
Q

7 exclusions from definition of financial adviser

A
  1. Bank holding company 2. L.A.T.E. 3. Broker who receives no compensation for services 4. Publishers who qualify 5. Investment adviser representatives 6. Federal covered advisor 7. Anyone Administrator includes
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10
Q

Federal Law Exemptions

A

Intrastate advisers, advisors to insurance companies,

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11
Q

What qualifies a firm as a Large Investment Adviser

A

Those with at least $100m or more in AUM, registers with SEC

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12
Q

What qualifies a firm as a Small Investment Adviser

A

Those with under $25 million in AUM, registers with state

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13
Q

Mid-size Advisers

A

Those with AUM between $25m and $100m, registers with state

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14
Q

Exemptions from prohibition of registration under Dodd-Frank (4)

A
  1. Pension consultants providing services to benefit plans with at least $200m in assets
  2. Midsize advisers between $100m and $110m
  3. Advisers expecting to be eligible for SEC registration within 120 days of filing application
  4. Internet advisers
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15
Q

$20 million buffer

A

Once an adviser is registered with the SEC it doesn’t give up registration until reaching below $90m in AUM ($20 million below $110m requirement)

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16
Q

Time requirement to withdraw from SEC and register with state if AUM drops below $90m

A

180 days

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17
Q

Time requirement to register with SEC once AUM reaches above $110m

A

90 days

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18
Q

Investment Adviser Registration Process

A
  1. Submit application;
  2. Provide a consent to service of process
  3. Pay filing fees;
  4. Post a bond
  5. Take and pass an examination if required by the Administrator
19
Q

Part 2A in Form ADV

A

Primary disclousre document that requires advisers to create narrative brochures containing information about the firm (A for adviser)

20
Q

Part 2B in Form ADV

A

Requires advisers to create brochure supplements containing information about certain supervised bodies (B for bodies)

21
Q

What is included in Part 2A (7)

A

Compensation arrangements,
types of clients,
type of investments,
strategies,
methods of analysis used,
educational and business background, audited balance sheet

22
Q

Notice Filing

A

Administrator can require a federal covered adviser to file a copy of whatever has been filed with the SEC and pay a filing fee

23
Q

Renewal date for the state registration of investment advisers

A

December 31st

24
Q

How long for SEC registration to come into effect

A

45 days

25
Q

Form ADV-W

A

What an adviser files to withdraw registration

26
Q

When it is necessary to submit a new ADV form instead of an amended one

A

When a successor firm is involved

27
Q

What amount of prepayment for a contract of 6 months or more constitutes as a substantial repayment

A

$500

28
Q

Financial requirement for discretion

A

$10,000

29
Q

Financial requirement for custody

A

$35,000

30
Q

Surety bond

A

Issued by an insurance company who guarantees payment of a specified sum to an injured party when the securities professional causes damages by her actions or fails to perform

31
Q

Where state-registered adviser needs to meet financial requirements of the state

A

Only state where principal office is located

32
Q

Maintenance record retention requirement for investment advisers

A

5 years

33
Q

Supervised person

A

any of the IA’s officers, partners, directors, or any person who provides investment advice

34
Q

Associated person

A

All supervised persons excluding clerical and administrative employees

35
Q

What an IA might receive disciplinary action for

A

Failing the supervise the IAR

36
Q

Criteria to be considered investment counsel

A
  1. Principal business must be providing investment advice 2. The nature of the advice must provide continuous investment advice to clients based on their individual needs
37
Q

How many days after an adviser’s registration is filed does it usually become effective?

A

45

38
Q

2 Exemptions for state-registered investment advisers to not file in a state

A
  1. DiMinimus exemption 2. Only institutional clients
39
Q

LATE exclusion

A

Lawyer, accountant, teacher, engineer

40
Q

When investment adviser must notify Administrator of a drop below required minimum net worth

A

Close of business the following business day

41
Q

Asset requirement for pension consultants to decide whether to be registered with the SEC or the state

A

$200m

42
Q

Who Chief compliance officer (CCO) generally does not have responsibility for the actions of

A

Agent registered with a broker dealer

43
Q

Whose responsibility it is to keep documents

A

Investment adviser

44
Q

Order of events when net worth falls below $35,000 (2)

A
  1. By the close of the next business day after discovery, notice of the deficiency must be sent to the Administrator of the state in which the principal office of the adviser is located
  2. By the close of business two days following, send a detailed financial report to the Administrator

Series 65 (FIN-451) (21 decks)

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