Securities License Exam Manual - Part 1
SEC Release IA-1092 Expanded Definition of IA to include:
1. Financial Planner 2. Sports and Entertainment 3. Pension Consultant
Define Investment Adviser
1. Gives Advice on Securities 2. Gives Advice on regular basis 3. Receives Compensation
What is NOT a Person?
1. Minor 2. Deceased Person 3. Mentally Incompetent
3 Things defined as NOT being a person
1. Minors 2. Deceased Individual 3. Mentally Incompetent
Define Investment Counsel
2 criteria must be met: 1. Principal business must be giving investment advice and adviser must provide investment supervisory services. 2. Running model portfolios for clients with daily monitoring would meet both requirements
De Minimus Exemption
Advisers with NO place of business within the state are NOT defined under act as advisers if they have NO more than 5 clients within a 12-month period.
Blue-Sky laws
Enactment to Part of USA Model State Securities Legislation and created an enactment of several securities state laws
State Law Exemptions
IAs exempt from registration with the state Administrator are those who have NO place of business in the state, but are registered in another state.
Institution
Includes banks, trust companies, savings, and loan associations, insurance companies, investments companies i.e., mutual funds, employee benefit plans with assets of at least 1,000,000.
Federal Law Exemptions Include:
Intrastate Advisers (ONLY within ONE State) Advisers to Insurance Companies
Who is excluded as Investment Adviser?
Lawyer Attorney Teacher Engineer Broker-Dealer - receiving NO Compensation Agents - NO Wrap Fee or Compensation
Administrator
Office or Agency - Has responsibility for administering securities laws of the state
Wrap Fee Program
Program where client is charged a specified fee, or fees, not directly based on transactions in a client's account.
Publishers Excluded from Definition of Investment Adviser
Publishers of general circulation newspapers and magazines are excluded from the definition of investment adviser, especially because the entire publication is devoted to impersonal investment advice. Important Key - Published Regularly (NOT upon market events).
What level are the Investment Advisors Act of 1940 related to?
Regulations on the Federal Level
What level are the Uniform Securities Act (USA) related to?
Regulations on the state level
Blue Sky Laws
State Level anti-fraud regulations that require issuers of securities to be registered and to disclose offerings. The Blue Sky Laws follow the Model USA and are superseded by Federal Security Laws
