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Series 66 take 2 > Videos section 6 > Flashcards

Videos section 6 Flashcards

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Series 66 flashcards
1
Q

disclosure of capacity

A

BDS must disclose capacity(agent or principal)

IA acting as principal or agent in purchase or sale of recommended securities

a. written disclosure to client before completion of transaction
b. client consent before completion of transaction

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2
Q

Agency Cross Transaction

A

a. clients need written consent
b. written disclosure to client before completion of transaction
c .can’t recommend to both sides

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3
Q

BD conflict of interest

A
  1. owned products
  2. incentives(trips)
  3. financial interest in security
  4. favorable research report

have to disclose all of these things

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4
Q

IA conflict of interest

A
  1. disclose ownership in recommended securities
  2. disclose gifts or incentives
  3. must notify clients if they are representative of a BD and will recommend purchase of products through that BD and receive a commission
  4. recommending products of only BD or insurance company who they are associated
  5. disclose client can execute through other BD’s
  6. disclose amount of compensation when transaction is through BD with who the advisor is associated
  7. compensation when received through issuer comp from sale of non securities products
    8 must disclose personal trades if advise inconsistant with clients
  8. if advisor benefits from recommendation

need to disclose these things

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5
Q

Bd disclosure of fees

A

disclose when customer account opened
must be up to date
fee changes typically 30 days in advance

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6
Q

disclosure methods

A

chart
list
table
narrative

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7
Q

typical fees not included on template

A

markups/down
commissions
advisory fees

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8
Q

Guaranteed security vs performance guarantee

A

guaranteed means someone besides issuer guaranteeing.

CAN’t guarantee that you make a profit

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9
Q

IA contracts

A

FEDERAL AND STATE

  1. services to be provided
  2. duration of contract
  3. advisory fee
  4. formula for computing the fee
  5. amount of prepaid fee returned
  6. discretion?
  7. no waiver of fees for underperformance
  8. contract only assigned with consent of client
  9. Corporation has pledge of securities is assignment
  10. partnership change to minority interest(notice sent)
  11. majority change(consent needed)

cheat sheet

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10
Q

IA contracts and brochures written requirements

A

written requirement and renewal

  1. required under usa
  2. not required under IA act of 1940
  3. Required under Investment COMpany act 1940
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11
Q

Brochure rule on it and updated

A 
ADV 2a(describes firm)
ADV 2b(personnel)

Updated annually at time of updating amendment

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12
Q

wrap fee brochure

A

wrap fee brochure based on appendix 1 form adv 2a
must be provided in lieu of standard brochure and must disclose that wrap fee may cost more than purchasing services separate

must identify whether any of its related persons is a portfolio manager in the wrap fee program, and if so, describe associated conflicts

Material changes to wrap fee programs must be filed promptly with the administrator

every investment advisor(state or fed) must update the info on file within 90 days of the end of the advisor’s fiscal year.even nonmaterial info needs to be included here

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13
Q

What is on soliciters brochure

A
  1. soliciter name
  2. name of IA
  3. relationship between 2
  4. fact that soliciter will recieve compensation, terms of agreement, and whether client will pay specifc charge or a higher advisory fee because solicter recommended ia to client
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14
Q

regulatory concerns for social media including emails texts

A

content not method

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15
Q

broker dealer ads

A

can’t be deceptive or misleading

can’t highlight prospectus

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16
Q

IA ads identification needs

A

once it goes to more than one person it is considered ad

identification needs

  1. name
    b. name of preparer if outside firm
    c. date of first use
    d. past performance if no assurance of future results and include all gains and losses
17
Q

Testimonials

A

IAS and reps can’t use, BDS and agents can

18
Q

free service

A

offers of free service is fine if its free with no obligation
no hedges unless catastrophe clause

19
Q

titles

A

no using RIA or IAR

can put registered investment advisor

20
Q

outside ads

A

must disclose if you get info from outside firm

charts and formulas must address limitations and difficulties

21
Q

The SEC has determined that advertising regarding past recommendations made by investment advisers is misleading if

A

must reflect fees
state actual market conditions
disclose specific group of clients
ads must show min of 1 years past performance

22
Q

Agent of Bd earning commissions on security sales is not an IAR even if

A

his primary tool for the brokerage business is the firms outstanding research department

23
Q

USA defines guaranteed as meaning

A

guaranteed as to payment of principal, interest, or dividends

24
Q

corporation and obligations to inform

A

they have none. this applies to partnerships

25
Q

brochure legal and disciplinary

A

Everybody disclose material legal or disciplinary in past 10 years including fines 2,500 or more

26
Q

brochure exemptions

A

no brochure if clients are
investment co
impersonal advice as long as cost under 500

27
Q

that brochure must include balance sheet if

A

that brochure must include balance sheet if

1. advisor requires prepayment 1200 (500 usa) 6 months or more in advance or if custody(USA)

28
Q

Material changes in brochure fed

A

Material changes in brochure, must delivery within 120 days after end of fiscal year
1. free current brochure
or summary of material changes
can be delivered electronically
if no material changes, no brochure or summary

29
Q

brochure delivery state

A

Deliver current brochure and supplement before or at time of contract

If not delivered 48 hours in advance, client has 5 business days right to rescind without penalty.(USA)
advisor can keep annual fee/365 by amount of days.

30
Q

brochure and material change

A

material change prompt amendment

31
Q

devoting time and disclosure

A

There is nothing wrong with an investment adviser devoting time, even a majority of the time, to nonadvisory pursuits, as long as it is disclosed.

32
Q

who has to know about a change in fee of with brochure

A

you have to send the new brochure to the clients effected by the change

If fed- sec would also need a copy
state- wouldn’t

33
Q

What is ok in Lue of standard brochure

A

Form ADV Part 2A and Part 2B

34
Q

What form for wrap fee programs.

A

Part 2, Appendix 1 is used for investment advisers who offer wrap fee programs.

Series 66 take 2 (28 decks)

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