Series 65

the written discretionary power must be ________, before discretion may commence

"in hand" not in the mail

Under the USA, what are the maximum penalties for a securities-related felony?

$5,000 and 3 years imprisonment

If there should be any change on a Form U4, an amandment must be filed within _________

30 days

Under the Investment Advisers Act of 1940, an adviser's registration usually becomes effective how many days after it is filed?

45

When must a Form 13F be filed within

45 days of the end of the quarter

Under the Investment Advisers Act of 1940, for how many years must records be kept after the end of the fiscal year in which an entry was made?

5 years

Under the Uniform Securities Act, most books and records of investment advisers must be maintained for

5 years, the first 2 in the firm's principal office

What does the underwriting role of a broker-dealer allow them to earn?

A spread, the difference between the public offering price and what they pay the issuer, or recieve a commision on the sales, which they then pay their agents who actually made the sales to the clients

The antifraud provisions of the USA apply to

ANY person who acts fraudulently in connection with the offer, sale, or purchase of a security, even in the case of an isolated nonissuer transaction

According to the Investment Advisers Act of 1940, which of the following is always a natural person

An investment adviser representative

According to the Investment Advisers Act of 1940, which of the following is always a natural person?

An investment adviser representative

What is the balance sheet equation

Assets = liabilities + shareholders' equity

The agent has engaged in unehtical conduct if he/she induces a client to trade securities in transactions that are excessive in size or frequency in view of what three things?

FInancial resources (status), investment objectives, and character of the client's account

Exemptions for IARs

If the IAR does not maintain a place os business in the state and, during the preceding 12-month period has had no more than five retail clients Snowbird exemption If the individual is a covered investment advisor, IAR registration is only required in those states where the individual has a place of business

Under the Investment Advisers Act of 1940, who is not excluded from the definition of investment adviser when their investment advice is solely incidental to the individual's profession?

Insurance Agents

Which two of the following are services provided in a wrap fee program?

Investment advisory and brokerage execution

Do short-term or long-term bond prices react more to a change in interest rates?

Long-term because of the compounding effect over a much longer period

Individuals who do any of the following meet the definition of an IAR

Makes any recommendation or otherwise renders advice regarding securities Manages accounts or portfolios of clients determines which recommendation or advice regarding securities should be given solicites, offers, or negotiates for the saele of or sells investment advisory services supervises employees who perform any of the foregoing

Under the Uniform Securities Act, when does investment advisor registration become effective?

Noon, 30 days after the applicated has been filed, providing the registration is not in the process of denial

When an investment advisor registers in a new state, who of the following is automatically registered as IARS?

Officers, partners, and directors of the firm who are functioning as IARs

A federal covered investment adviser registered with the SEC that has offices in 5 states must do what?

Pay state filing fees if required by the administrator and notice file in any of those states where required by the administrator

Which of the following is NOT affected by the issuance of a bond

Shareholders' equity

specifically excluded from the definition of prospectus

Tombstone advertisements

What form needs to be filed to register as an IAR

U4

When does the LATE exclusion apply?

When incidental advice is given in the practice of a profession

Under the Uniform Securities Act, if no denial or proceedings are pending, when does an investment adviser registration become effective?

When the Administrator so orders, but not to exceed 30 days

When is it the case that an indiivdual acts as both the IAR and investment advisor?

When the business is organized as a sole proprietorship

prospectus

a communication made in writing or by radio or television that offers a security for sale

Who must a new discretionary account be approved by

a designated supervisory person

Under the NASAA Model Rule on recordkeeping for investment advisers, the firm must keep a copy of a research report along with

a memorandum describing the list and its source

The three non-persons

a minor, a deceased individual, and an individual declared mentally incompetent by the courts

broker dealer

a person engaged in the buisness of executing securities transactions

To come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over

a portfolio of at least $100 million of 13(f) securities

Even if the BD does not maintain a place of business in the state ______

a single retail client means registration is required

Under the NASAA Model Rule on Business Continuity and Succession Planning, which of the following investment advisers should be most concerned about succession planning?

a sole proprietorship

In the securities industry, the term "discretionary" refers to an

account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades

In the case of investment adviser representatives of federal covered advisers, the notification of employment or termination is the responsibility of who

adviser representative

Persons not included in the definition of broker-dealer are...

agents, issuers, banks, savings insitutions, and trust companies

Reticent Asset Management (RAM) is claiming an exemption from registration with the state because it is an adviser to private funds. One of the requirements to qualify for this exemption is

all investors must be qualified clients

Under Rule 206(4)-7, it is unlawful for an investment adviser registered with the Commission to provide investment advice unless the adviser has adopted and implemented written policies and procedures reasonably designed to prevent violation of the Advisers Act by the adviser or any of its supervised persons. Under this rule, investment advisers are required to perform a review of the adequacy of the policies and procedures established pursuant to this section and the effectiveness of their implementation no less frequently than

annually

Wrap Fee Program

any advisory program generally established by a broker-dealer, under which a specified fee or fees not based directly upon transactions in a client's account is charged for investment advisory services and the execution of client transactions

Definition of IAR

any partner, officer, director, or other individual employed by or associated with an investment adviser and is registered or required to be registered under the Unofrm Securities Act

Definition of broker dealer

any person engaged in the business of effecting transactions in secuirites for the accounts of others or for its own account.

statutory disqualification.

any person who would be unable to register as a securities professional because of prior conduct cannot act as a solicitor for a registered investment adviser.

A frequently-used metric by analysts is the yield, or credit spread. Common methods of computing this would be comparing

bonds of similar quality and different maturities; bonds of different quality and similar maturities

Any person iwth an established place of business in the state that is in the business of buying and selling seucirities for the accounts of others and/or for its own proprietary account is defined as a _______

broker-dealer

non-securities investments

commodities, collectibles (coins or stamps), precious metals, and real estate

Only a ______ can cite an individual to be in contempt of court

court

Market makers who buy and sell the same security simultaneously in their own accounts are manipulating the market by

creating false trading volume

On a balance sheet, dividends payable would fall under the category of

current liabilities

Under the Uniform Secuirites Act, persons providing investment advice do not have to register as investment advisors if they have no place of business in the state and they

deal only with institutional clients, have 5 or fewer noninstitutional client in the state during any 12-month period, deal only with other registered investment advisors

An adviser who has control of or discretionary power over client assets or who charges fees of more than $500 six or more months in advance is required to

disclose any condition that might affect its ability to carry out contractual obligations to its clients

There is no requirement that ________ be paid in order to register a security

dividends

The administrator does or does not approve custodial accounts?

does not

An IAR's registration is only valid while

employed by a registered investment adviser.

An individual who acts solely as an investmenr advisor representative is _____ from the definition of investment advisor

excluded

Equipment trust certificates issued by any regulated common carrier are always

exempt

If an investment adviser has no office in the state, and renders advice solely to broker-dealers, insurance companies, banks, investment companies, governmental agencies, or employee benefit plans with assets of $1 million or more the advisor is

exempt from registration with the state

Debts that will come due more than 1 year after the date on the balance sheet are known as

fixed (or long-term) liabilities

when employed by a covered adviser, the only time that state registration is required is when the inidividual functioning as an IAR

has a place of business in the state

If an IAR works for a covered IA, they only need to register

in states where the IAR maintains a place of business

Only a _____ can be an investment advisor representative

individual. the investment advisory firm is the legal person (entity) that the IAR represents in the performing functions

A state securities Administrator may not issue

injunctions

Do institutional or individual accredited investors qualify for the investment advisor exemption

institutional

Does an IAR or an investment advisor have financial requirements?

investment advisor

Does an IAR or an investment advisor have ongoing recordkeeping requirements?

investment advisor

When a broker-dealer offers wrap fee programs, the exclusion from the definition of _________ is lost

investment advisor

impersonal investment advice

investment advisory services provided by means of written material or oral statements that do not purport to meet the objectives or needs of specific individuals or accounts

Impersonal investment advice

investment advisory services provided by means of written material or oral statements that do not purport to meet the objectives orneeds of specific individuals or accounts

Under the Investment Advisers Act of 1940, an investment adviser who has custody of clients' funds and securities must

keep the clients' securities and funds segregated and identified

Is a bona fide gifts of securities considered a sale?

no

what is the limit on the number of institutional clients an investment advisor can have in a state without the need to register

no limit

The only type of transaction that may be executed for a customer of unknown financial status is

one that is customer initiated—an unsolicited trade

It would NOT be considered a prohibited or unethical business practice for an investment adviser to

pay a nominal fixed fee to certain professionals as a form of thanking them for client referrals

Three critical elements in the definition of investment advisor

person providing advice regarding securiites, receives compensation for doing so, and "being in the business"

What is the strongest action an Administrator can take without court action

revocation

Prohibited business practices under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents would NOT include

sharing in the profits and losses in a client's account without making a financial contribution to the account

Any issue from a ______ or ________ is always exempt

sstate or Canadian province

Under the USA, a state securities Administrator can

start an investigation against a registrant even if a violation has not yet occurred and subpoena witnesses living outside the state

It is only on the _____ level that iAR registers

state

Registration of IARs is done solely on the

state level

Only ______ are required to notify the appropriate state Administrator when employment is terminated or begun

state-registered investment advisory firms

The administrator may, by rule, forbid investment adviosrs registered in that state from what

taking custody of client funds

The primary components of a government's fiscal policy are

taxes and expenses

An investment adviser representative of a federal covered investment adviser registers with

the Administrator

To be discretionary, the agent must choose 1 or more of the following:

the action (buy or sell), the asset (the specific security), or the amount (number of shares).

Under the USA, every investment adviser organized as a partnership, must include in its contracts an agreement to notify clients within a reasonable period of time of

the addition or removal of any of the partners

An offer to sell describes

the attempt to dispose of a security for value

Causes listed in the Uniform Securities Act that could lead to the revocation of the registration of a broker-dealer would include

the conviction of a principal officer for a securities-related crime or the firm was unable to meet its obligations as they came due

For termination purposes, if the investment adviser is a state-registered adviser _______

the firm must notify the administrator

For termination purposes, if the investment advisor is a federal covered advisor ________

the investment advisor representative must notify the administrator

Qualified client

the investor must have a net worth of at least $2.1 million dollars or at least $1 million in assets under management with the advisor

securities issued by a savings and loan or building and loan are only exempt if

the issuer is authorized to do business in this state.

Administrator

the office or agency that has the complete responsbility for adminstering the securities laws of states

discount rate

the rate charged when banks borrow directly from the Federal Reserve.

In the case of a firm registered in both broker-dealer and IA, disclosures when acting as a principle or agent would not be required when

there was a transaction with a client of both entities, but the trade was not based upon advisory services rendered

Issuer definition

those entities, such as corporation and governments who raise money by issuing securities

Which type of prviate fund has no ceiling on the size of the fund before the advisor loses the exmeption?

venture capital funds

An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients

when informed by the investment adviser that the representative's registration is effective

The term "investment counsel" can be used by investment advisors

with a primary business of rendering investment advice or who perform investment supervisory services