Investment Advisers Act Of 1940

Front 1

Excluded people/jobs from IA Act 1940?

Back 1

Lawyers, accountants, teachers, and engineers who give incidental advice to their regular practice; and who do not charge separately for this advice are excluded.

Front 2

A investment adviser who renders advice solely to investment companies registers with ________

Back 2

SEC only

Front 3

Persons who give advice solely to ______________ is EXEMPT.

Back 3

insurance companies

Front 4

EXEMPT = Register with _______________

Back 4

neither state or SEC

Front 5

An investment adviser whose only clients are pension plans and had no office in the State would be_______________

Back 5

exempt from that state registration

Front 6

de minimis exemption on STATE VS FEDERAL LEVEL.

Back 6

STATE- 5 CLIENTS IN 12 MONTH PERIOD//FED. - 15 CLIENTS IN 12 MONTH PERIOD

Front 7

The SEC does not exempt an adviser who gives advice to _______________ companies

Back 7

investment

Front 8

SEC EXEMPT Y/N?:

U.S. Government securities

Back 8

YES

Front 9

SEC EXEMPT Y/N?:

Intrastate adviser

Back 9

YES

Front 10

Investment adviser AKA ____________

Back 10

PORTFOLIO MANAGER

Front 11

Investment advisers that manage $100,000,000 or more of assets are subject to _______ only.

Back 11

SEC

Front 12

If a IA render advice to investment companies only then __________ register.

Back 12

SEC

Front 13

An investment adviser that solely follows and recommends listed securities is subject to _____________________________ registration.

Back 13

either state or SEC depening on other factors to

Front 14

$__________________ or more = SEC registration is a must

Back 14

$100,000,000

Front 15

Licensing of investment adviser representatives occurs at the _________ level only

Back 15

state

Front 16

Investment adviser registration applications filed with the SEC must be granted; or a proceeding started to deny registration; within ____ days of filing.

Back 16

45

Front 17

What forms and fees are paid to register as an investment adviser with the SEC?

Back 17

Form ADV Part 1 and 2 must be filed, along with a non-refundable filing fee

Front 18

Posting a _______ bond is only required for _______registration

Back 18

surety, state

Front 19

In form Form ADV for SEC Registration Y/N?

- The approximate number of advisory clients

- The market value of the portfolios managed

- Names and addresses of the adviser's clients

- The compensation basis to the adviser

Back 19

Y, Y,N,Y

Front 20

The name of firm, address, phone number, officers, shareholders, States where the adviser is registered is in Form _____ Part __

Back 20

ADV, 1

Front 21

Form ADV Part 2A aka _______ is made up of __________________________

Back 21

Brochure......investment adviser's policies, fees, educational, types of investments, types of clients, method of analysis used, conflicts of interest

Front 22

Form ADV Part 2B aka _______ is made up of __________________________

Back 22

Brochure Supplement.... educational and work background of the key personnel who make investment decisions or manage accounts.

Front 23

ADV Part 2B is about _____________ personal who _____________ or ______________

Back 23

key, who make investment decisions or manage accounts

Front 24

There is no listing of the ___________ of the adviser in the Form ADV.

Back 24

customers

Front 25

Any arrangement between the IA and the market timing firm or any conflict of intrest must be disclosed in the _________________________

Back 25

Form ADV Part 2A

Front 26

Under SEC rules established by NSMIA, an individual that files a registration application will be denied if the applicant has been in jail for over _________ year (s)

Back 26

1 year (National Securities Markets Improvement Act )

Front 27

An investment adviser that is registered with the SEC under the Investment Advisers Act of 1940 moves to a new location. An amendment to Form ADV MUST be filed with the SEC in what time frame?

Back 27

prompt

Front 28

If IA headquarters moves at all the ______ and _______ must be told.

Back 28

SEC, clients

Front 29

Form ADV-W

Back 29

file to withdraw from registration

Front 30

Form ADV Part 1 and also Part 2 (the Brochure) if there are any changes, within _____ days of the adviser's fiscal year end.

Back 30

90

Front 31

If the SEC suspends or revokes an adviser's registration under the Investment Advisers Act of 1940, an appeal may be filed in ______ Court within ____ days.

Back 31

Federal, 60

Front 32

Investment Counsel

Back 32

term used by investment adviser if the giving of advice is the primary business of the firm

Front 33

When must a customer receive a "Brochure" and a "Brochure Supplement" ?

Back 33

at, or prior to, entering into the advisory agreement.

Front 34

Investment advisory contracts must be in _________ under the Investment Advisers Act of 1940.

Back 34

writing

Front 35

Does the customer have the right to rescind the contract for 30 days? (UNDER IA ACT OF 1940)

Back 35

NO

Front 36

IA may provide for a fee that is partially based upon capital gains for customers who have at least $_____________ of assets invested; or who have a net worth of $_____________

Back 36

$1,000,000, $2,000,000

Front 37

This is interesting. There is no such thing as "binding ________" - only "binding __________."

Back 37

mediation, arbitration

Front 38

______________ you can reject the 3rd party's ruling and appeal.

Back 38

mediation

Front 39

The ___________ of an investment adviser account to another investment adviser must be approved by the customer in ANY SITUATION.

Back 39

transfer

Front 40

If account is transfered betwer IAR to another IAR in the same firm: Do you need customer approval?

Back 40

No

Front 41

Under the Investment Adviser's Act of 1940, an investment adviser that advertises itself as a "fee only" adviser would he be permitted to collect hourly fee for time worked on a account?

Back 41

Yes

Front 42

Under the Investment Adviser's Act of 1940, an investment adviser that advertises itself as a "fee only" adviser would he be permitted to collect 12b-1 fee ?

Back 42

No

Front 43

When can IA get commissions on client trades?

Back 43

where the adviser has a separate broker-dealer entity

Front 44

If an investment adviser wishes to charge a performance fee = increase ______ of investments in the account.

Back 44

risk

Front 45

If an adviser accepts $_______ or more of prepaid fees, for ____ months or more of service in advance, then a balance sheet must be included in the "Brochure".

Back 45

$1,200, 6

Front 46

If an adviser accepts $1,200 or more of prepaid fees, for 6 months or more of service in advance, then a balance sheet must be included in the Form ADV Part __

Back 46

2A

Front 47

A refund of ________ fees must be given if the contract is cancelled prematurely

Back 47

prepaid fees

Front 48

MAX amount of prepaid fees to be accepted is ________________

Back 48

there is no set amount, just reasonable and close to similar IA

Front 49

When must a adviser must file a balance sheet with the Form ADV Part 2A filed with the SEC?

Back 49

If an investment adviser, for the first time, will take custody of client funds or securities; or if the adviser takes $1,200 or more of prepaid advisory fees, 6 months or more in advance of rendering services

Front 50

When balance sheet with the Form ADV Part 2A filed with the SEC, it must be down in what time frame?

Back 50

prompt

Front 51

"Brochure Rule" it applies to what type of contracts?

Back 51

written, oral, electronic

Front 52

Fees charged and conflicts of interest will be found in the ____________

Back 52

brochure

Front 53

When must provide an audited balance sheet be given to clients? When is this given?

Back 53

advisor takes custody, annually

Front 54

If first time, the adviser will accept $1,200 or more of prepaid fees 6 months or more in advance of services rendered filing of __________ with _______________. This done ___________

Back 54

ADV Part 2A ,with an audited balance sheet, promptly

Front 55

The "Brochure Rule" is not required for providers of so-called "_______________" that require payment of $______ or less.

Back 55

impersonal advisory services, $500

Front 56

When will advice not be allowed as impersonal advisory services?

Back 56

if it is specfic to customer's situation

Front 57

Is delivery of the brochure under the "Brochure Rule" required for contracts with investment companies?

Back 57

No

Front 58

Is delivery of the brochure under the "Brochure Rule" required for advisory contracts with pension plans?

Back 58

Yes

Front 59

Is delivery of the brochure under the "Brochure Rule" required for prepaid advisory fees requiring payment in advance of MORE THAN $500?

Back 59

Yes

Front 60

Is delivery of the brochure under the "Brochure Rule" required for prepaid advisory fees requiring payment in advance of LESS THAN $500?

Back 60

No

Front 61

The solicitor must provide the customer with a copy of what 2 things?

Back 61

adviser's "Brochure" in addition to a copy of the solicitor's "Brochure"

Front 62

Can the solicitor cannot be a person subject to statutory disqualification under the Securities Acts?

Back 62

No

Front 63

The __________ in most States, he/she must be registered either as an adviser or as an adviser representative.

Back 63

solicitor

Front 64

Does the solicitor register with the SEC?

Back 64

No

Front 65

DEFINE: Solicitor

Back 65

locate, introduce, or refer potential purchasers or sellers

Front 66

If a Finder locate, introduce, or refer potential purchasers or sellers then the finder is a _____________

Back 66

Solicitor

Front 67

Solicitor relationship must be disclosed in what form?

Back 67

Form ADV 2A

Front 68

If an investment adviser uses a paid solicitor, there must be a ___________ between the solicitor and the adviser.

Back 68

written agreement

Front 69

Solicitor's brochure discloses what?

Back 69

solicitor's brochure details the nature of the relationship between the solicitor and the adviser, and any additional cost the customer must pay for the solicitor's services

Front 70

Does the customer sign the Solicitor's brochure ? Adviser's brochure?

Back 70

Yes to both

Front 71

When is the use of a third party solicitor by an Investment Adviser not allowed?

Back 71

if the solicitor is subject to statutory disqualification as defined under the Investment Advisers Act of 1940

Front 72

Solicitor must register as

Back 72

registered in that State as an investment adviser or be registered as an investment adviser representative

Front 73

When can the solicitor be subject to statutory disqualification?

Back 73

under suspension or has been expelled by another regulator; been enjoined in a court of law from being in the securities business; been convicted of a misdemeanor or felony involving securities or monies within the past 10 years.

Front 74

An IA that wishes to pay a cash referral fee to a broker-dealer in return for each of the broker-dealer's customers that signs an advisory contract with that firm this can be done ONLY if:

Back 74

if the existence of the referral fee arrangement is disclosed at the time that the advisory contract is signed

Front 75

Disclosure of an impaired financial condition to customers by an investment adviser is only required for advisors who ____________________

Back 75

have custody of funds

Front 76

IA must disclose any disciplinary actions by self-regulatory organizations that resulted in suspension, expulsion, or the imposition of fines in excess of $__________

Back 76

2,500

Front 77

Discloser rules for partners of firm?

Back 77

same as for IA in general

Front 78

What pleas must be disclosed to customers for disciplinary actions?

Back 78

resulted in a guilty or "no contest" plea

Front 79

Does not matter if a advisor had ________ of client funds for ___________ disclosure.

Back 79

custodu, disciplinary actions

Front 80

Does a IA need prior permission from the SEC to take custody of funds?

Back 80

No

Front 81

How must a IA with custody of client's funds be audited?

Back 81

surprise basis, annually

Front 82

The disclosure document for taking custody of clients funds would be the ____________

Back 82

Form ADV Part 2A

Front 83

If an investment adviser maintains an account that will hold customer securities positions at a broker-dealer, but the broker-dealer does not know who the individual customers are, this is a(n):

Back 83

omnibus account

Front 84

Prime brokerage is used by __________, where the hedge fund uses a clearing "prime broker" to ______________ and _________________

Back 84

hedge funds, settle all trades, maintain custody of the positions.

Front 85

If adviser takes custody of customer funds or securities; account statements must be sent to the customer by the adviser at least ________

Back 85

quarterly

Front 86

Form ADV-E

Back 86

independent auditor's annual report of verification of customer funds held in custody by an investment adviser filed with SEC

Front 87

After completing the examination, the _______ must sign and file Form ADV-E (as in "Exam") with the SEC within ____ days.

Back 87

auditor, 30

Front 88

Rule 206(4)-2

Back 88

covering advisers that take custody of client funds

Front 89

Can specific prior recommendations be used in IA ads?

Back 89

No

Front 90

_______________ are prohibited in investment adviser advertising.

Back 90

Paid testimonials

Front 91

Can IA use illustrative performance charts of past performance in Ads?

Back 91

Yes

Front 92

Time requirement for showing past performance in IA Ads?

Back 92

there are none

Front 93

What expenses must be shown to use past performance in IA ads?

Back 93

shown must deduct all expenses that a customer would incur

Front 94

When is the use of customer names allowed by an investment adviser to promote the sale of the firm's advisory services ?

Back 94

the customer consents to such disclosure

Front 95

The only disclosure of customer information that may be made without customer consent is required disclosures to _______________________

Back 95

gov. bodies (IRS)

Front 96

The IA advertisement cannot show that ______________________can determine which securities to buy or sell, or when to buy or sell.

Back 96

graphs, charts, computer programs, etc

Front 97

Under the Investment Advisers Act of 1940, copies of all advertising, notices and circulars must be retained if distributed to at least ____ people for ___ years.

Back 97

10, 5

Front 98

Soft Dollar can not soley benefit the ___

Back 98

IA

Front 99

If IA sells out of its own inventory then it is a ______________ transaction which is ___________ (allowed or not alllowed)

Back 99

principal, allowed

Front 100

Each client must be sent an __________ statement identifying the total number of agency cross transactions effected; and the remuneration received by the adviser for these transactions

Back 100

annual

Front 101

To effect an agency cross transaction, Does written consent from the client need to be obtained?

Back 101

Yes

Front 102

Agency cross transactions _____________ (cannot/ can) been recommended to both the buyer and seller by the investment adviser

Back 102

cannot

Front 103

The records required to be retained by an investment adviser that takes custody include:

general ledger

Back 103

Securities received and delivered ledger

Front 104

The records required to be retained by an investment adviser that takes custody include:

Trade Ledger

Securities record (a record of each aggregate security position held, broken down by each customer owning part of the position and the physical location of that position)

Back 104

Securities record (a record of each aggregate security position held, broken down by each customer owning part of the position and the physical location of that position)

Front 105

The records required to be retained by an investment adviser that takes custody include

Confirmation copies of all customer trades

Back 105

Customer account statements showing all purchases, sales, securities positions, and cash debits and credits to the account

Front 106

Investment adviser sends any notice, circular or other advertisement to more than 10 persons, the adviser is not required to keep _________________________

Back 106

to keep a record of the names and addresses

Front 107

If IA sends ad material to notice that is distributed to persons named on any list, the adviser must keep __________________________

Back 107

a memorandum describing the list and the source of the list

Front 108

The Investment Advisers Act of 1940 requires that records be maintained for how many years?

Back 108

5

Front 109

The SEC policy regarding emails maintains that emails that are ______________ be kept on record for __ years.

Back 109

personal/business, 5

Front 110

Insurance companies lend monies under the provisions of Regulation ___ of the ________________

Back 110

G, Federal Reserve Board.

Front 111

Criminal violations of the Investment Advisers Act of 1940 are punishable by a fine of ____ and ___ years in jail.

Back 111

$10,000, 5

Front 112

What must happen to be "in the business" of giving investment advice?

Back 112

(1)this must be a regular activity of the firm or person;

(2) advice must be rendered about securities;

(3) person must be compensated for giving such advice.

Front 113

Which are considered to be compensation received by an investment adviser?

1) commission received on the sale of a life insurance policy to an advisory client

2) interest paid on a margin loan by an advisory client

Back 113

1

Front 114

Which are considered to be compensation received by an investment adviser?

1) fee for creating a financial plan that is refundable if the client purchases an annuity contract

2) shares of stock received from a client for creating an asset allocation plan

Back 114

1,2

Front 115

A person who is in the business of giving advice about which type of investments is defined as an "investment adviser" under SEC Release IA-770?

Back 115

securties (stocks/bonds)

Front 116

Is real estate a security?

Back 116

No

Front 117

Are commoditites a security?

Back 117

No

Front 118

"3-prong" test

Back 118

determine if one must register with the SEC as an investment adviser

Front 119

"3-prong" test

Back 119

1. Is advice being given about a security? Is compensation being received for such advice?

3. Is the person giving advice "in the business" of doing so?

Front 120

A person who advises customers on the selection of a broker-dealer to effect their recommended trades ____________(is not/is) an investment adviser.

Back 120

is not

Front 121

. A person who advises customers on the selection of an investment adviser _____________ ( is not/is) an investment adviser.

Back 121

is

Front 122

A person who issues reports about securities to customers ________________ ( is not/is) an investment adviser.

Back 122

is

Front 123

A person who is a estate planner receives a fee for setting up an investment trust for a client ________________ ( is not/is) an investment adviser.

Back 123

is not

Front 124

Is a insurance agent who receives a commission for selling life insurance that was part of an overall financial plan for which there was no charge to the client a IA. (Y/N?)

Back 124

Yes

Front 125

Does the SEC views subscription investment newsletters as "investment advisers" ?

Back 125

Yes

Front 126

A __________ IA would prepare the financial plans outside of the scope of his or her employment with the broker-dealer

Back 126

statutory investment adviser

Front 127

Investment adviser Release IA-1092 specifically includes advisers to ________and _______, and advisers to ________ plans, as investment advisers that must register with the SEC

Back 127

advisers to entertainers and athletes, and pension plans

Front 128

Is financial planner that provides general financial planning for a fee a IA?

Back 128

Yes

Front 129

Is someone a IA if they only gives advice on U.S. Government securities?

Back 129

No

Front 130

Broker-dealers and their registered representatives are ___________ from the definition of an investment adviser as long as they do not charge separately for advisory services.

Back 130

excluded

Front 131

Broker-dealers and their registered representatives are excluded from the definition of an investment adviser as long as _______________________________

Back 131

they do not charge separately for advisory services.

Front 132

Who administers the Investment Advisers Act of 1940?

Back 132

SEC

Front 133

Does a IA need to comply with the custody rules if the firm is already a registered broker-dealer?

Back 133

No

Front 134

Investment advisory contracts, under the Investment Advisers Act of 1940 need to detail which states advisor is registered?

Back 134

No, Form ADV Part 1

Front 135

The adviser to the __________________ (regardless of the dollar amount) need only register with the SEC;

Back 135

investment companies

Front 136

Under the Investment Company Act of 1940, an investment adviser's contract is initially set for __________ and renewal is every _____________

Back 136

2 years; and is subject to renewal every year thereafter

Front 137

TRF (Trade Reporting Facility), Bloomberg, and Reuters are all examples?

Back 137

Securities Information Processors