chapter 2
Some registered investment advisers are federal covered, while others register on a state by state basis. In the case of a state-registered investment adviser having its only office in Oregon with no offices in any other state, the authority of the office of the Administrator would include A) requiring IARs to pass a qualification exam B) the Idaho Administrator requiring registration of IARs who make telephone calls to residents of Idaho C) requiring each IAR to provide a statement of financial condition D) requiring the IA to renew its consent to service of process when paying the annual fee
A) requiring IARs to pass a qualification exam As you know from being here right now, this test is required by the Administrator. What about the Idaho Administrator? Well, maybe the IARs are making 5 or fewer calls in any 12-month period. Maybe they are calling institutional clients domiciled in Idaho. In any event, if you have to choose between an answer that is 100% right all of the time (qualification exams) and one that is right only some of the time. Go for the 100%.
An individual has been employed by a broker-dealer to make cold calls to solicit prospects for the firm's new wrap fee program. Under the USA, it is true to state that this individual A) would be defined as an investment adviser representative B) is not defined as an investment adviser representative because he is only making cold calls C) would be permitted to use the term investment counsel D) does not need supervision because he is only making cold calls
A) would be defined as an investment adviser representative As we know, when a broker-dealer offers wrap fee programs, the exclusion from the definition of investment adviser is lost. Any individual soliciting for that program would be considered an investment adviser representative and would need adequate supervision. Cold calling is about as far as you can get from the role of an investment counsel.
Which of the following individuals employed by an investment adviser would be required to be registered as an IAR? A) An intern who receives no compensation whatsoever B) A chief compliance officer (CCO) who has no sales duties C) The night watchman D) The vice president of human resources
B) A chief compliance officer (CCO) who has no sales duties Any individual performing the functions of an investment adviser representative must be so registered. Among those duties is supervisory responsibility, and the CCO has the job of ensuring that the firm and all of its employees follow the rules. Although executive officers are generally automatically registered as IARs, that is only the case when the job function is one involving activities relevant to IARs (and human resources is not one of them).
If an investment adviser representative of a federal covered adviser that transacts business in a state terminates employment with that investment adviser, which of the following statements is TRUE? A) Both the representative and the investment adviser must notify the Administrator. B) No notice to the Administrator is required. C) The representative must notify the Administrator. D) The investment adviser must notify the Administrator.
C) The representative must notify the Administrator. It is the investment adviser representative's responsibility to notify the Administrator. The advisory firm is not registered with the state; only the representative is registered
When an investment adviser representative terminates employment with a federal covered investment adviser and then registers with a different federal covered investment adviser in the state where the individual has an office, A) the investment adviser representative and the employing adviser must notify the Administrator promptly B) the investment adviser representative and the federal covered advisers must notify the Administrator promptly C) only the terminating investment adviser must notify the Administrator D) only the investment adviser representative must notify the Administrator promptly
D) only the investment adviser representative must notify the Administrator promptly If you are working for a registered investment adviser within a specific state, that state securities Administrator wants to know who you are. The problem becomes a question of who is responsible for notifying the state securities Administrator of your employment. A federal registered investment adviser is exempt from registration at the state level and therefore has very little contact with the state. If you go to work for a federal registered investment adviser, it becomes your duty to notify the state securities Administrator that you are working there, as well as when you terminate.
Under the Uniform Securities Act, if the Administrator does not deny an application for registration and no disciplinary proceeding is underway in regard to it, how many days after filing the application as an investment adviser representative does registration generally become effective? A) 10 B) 7 C) 5 D) 30
D) 30 Registration becomes effective 30 days after the application is filed unless the Administrator begins a proceeding or issues a stop order before that time. The Administrator may specify an earlier date, or if an application must be amended, the Administrator may extend the date to 30 days after the amendment was filed.
Which of the following regarding the registration of investment advisers and their representatives is TRUE? A) ABC Advisers, Inc., registered with the Administrator, employs an investment adviser representative who left the employment of another investment advisory firm 6 months ago. ABC must notify the Administrator of this association promptly. B) ABC Advisers, Inc., is an investment advisory firm registered with the Administrator; therefore, its representatives need not be registered with the Administrator. C) An investment adviser representative, terminated his employment with ABC Advisers and, 6 months later, was employed as an advisory representative by KLM, a federal covered adviser. Each firm is required to notify the Administrator of each event. D) XYZ Advisers, Inc., is a federal covered investment advisory firm registered with the SEC; therefore, its representatives need not be registered with the Administrator.
A) ABC Advisers, Inc., registered with the Administrator, employs an investment adviser representative who left the employment of another investment advisory firm 6 months ago. ABC must notify the Administrator of this association promptly. Only state-registered investment advisory firms are required to notify the appropriate state Administrator when employment is terminated or begun. In the case of investment adviser representatives of federal covered advisers, notification is the responsibility of the adviser representative. Investment adviser representatives of both state and federal registered investment advisers must be registered with the appropriate state Administrator(s), unless otherwise exempted. In the case of agents, not only the broker-dealers but also the agents must notify the Administrator.
According to the Investment Advisers Act of 1940, which of the following is always a natural person? A) An investment adviser representative B) An investment adviser C) The city of Chicago D) A broker-dealer
A) An investment adviser representative Natural persons are human beings. An adviser representative must be an individual. Although there are broker-dealers and investment advisers organized as a sole proprietorship, almost all are structured under some type of business form. A city is never an individual.
Under the Uniform Securities Act, any partner, officer, or director of a registered investment adviser is an investment adviser representative if a function of the position involves I. offering advice concerning securities II. managing client accounts or portfolios III. determining securities recommendations for representatives to disseminate IV. supervising personnel engaged in advisory activities but not directly dealing with the public A) I, II, III and IV B) I and II C) I, II and III D) I only
A) I, II, III and IV The Uniform Securities Act defines persons associated with an investment adviser, who offers advice concerning securities, as an investment adviser representative. This includes any partner, officer, or director. The definition also includes persons who manage client accounts or portfolios, determine securities recommendations, or supervise personnel engaged in the above activities.
Washington, Adams, and Jefferson, Inc. (WAJI) is an investment adviser whose principal and only office is in Alexandria, VA. WAJI's sole business is advising institutional investors. Rutherford Buchanan is employed by the firm in the main office and has the responsibility of servicing the firm's bank and insurance company clients. Which of the following statements is correct regarding Rutherford's licensing requirements? A) Rutherford must register as an IAR of WAJI with the state of Virginia. B) Rutherford is exempt from registration because he has fewer than 6 retail clients. C) Rutherford is exempt from registration because his only clients are institutions. D) Rutherford cannot register as an IAR of WAJI because providing advice exclusively to institutions exempts the firm from registration.
A) Rutherford must register as an IAR of WAJI with the state of Virginia. Regardless of whom the clients are, Rutherford has a place of business in Virginia and that requires registration with the Administrator as an IAR. If WAJI does business in other states where it does not have a place of business, it is exempt from registration because the only clients are institutions. If WAJI is not registered in the state, Rutherford can't register as their IAR. The de minimis exemption for fewer than 6 retail clients only applies when there is no place of business in the state.
Long Range Planning (LRP) is a covered investment adviser doing business in all 50 states. Fred Fergus is an IAR with LRP and splits his time between an office in State A and State D. Fred has retail clients as follows: I. 16 clients in State A II. 12 clients in State B III. 6 clients in State C IV. 4 clients in State D Fred would have to register as an IAR in A) States A and D B) States A, B, and C C) States A and C D) States B and C
A) States A and D In the Investment Advisers Act of 1940, it states that "no law of any State requiring the registration, licensing, or qualification as an investment adviser or supervised person of an investment adviser shall apply to any person that is registered under section 203 as an investment adviser, or that is a supervised person of such person, except that a State may license, register, or otherwise qualify any investment adviser representative who has a place of business located within that State." Therefore, when employed by a covered adviser, the only time that state registration is required is when the individual functioning as an IAR has a place of business in the state. Had this been an IAR with a state-registered adviser, registration in all of the states would have been required (the de minimis would not cover State D because there is a place of business there).
Howard Robard is an investment adviser representative with Hughes & Company, a state-registered investment adviser having its principal office in State O and offices in States P and D. Howard works out of an office in State P and has 4 retail clients there. In addition, Howard has 25 retail clients in State D, 6 retail clients in State M, and 1 retail client in State O. Howard would be required to register as an investment adviser representative in A) States P, D, and M. B) State P. C) States D and M. D) States P, D, M, and O.
A) States P, D, and M. Individuals working as IARs for state-registered investment advisers must register in any state in which they (the IAR) maintain a place of business as well as any other state in which they serve more than 5 retail clients (the de minimis exemption). With an office in State P, registration is required there, regardless of the number of clients. In both States D and M, the de minimis has been exceeded so registration is required there. The fact that the IA's principal office is in state O has no bearing on Howard and, with only 1 retail client there, he qualifies for the de minimis exemption.
As used in the regulations, the term impersonal investment advice means A) 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 B) investment advisory services provided by a team of advisers C) investment advisory services provided strictly by subscription D) investment advisory services provided where the client does not know the identity of the investment adviser representative
A) 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
Strategic Capital Asset Managers (SCAM) is an investment adviser registered with the SEC. Registration as an investment adviser representative would be required of an employee who A) provides recommendations on securities to the firm's bank clients B) supervises the activities of clerical staff who file individual clients' transaction reports C) cleans the office on weekends D) presents seminars on the benefits of whole life insurance
A) provides recommendations on securities to the firm's bank clients Any employee of an investment adviser (SEC or state-registered) who makes recommendations of securities, regardless of the client, must register as an IAR. Supervisors only need to register when those they supervise are IARs, and clerical staff members are generally exempt from registration. Someone who presents a seminar on a nonsecurities product is not an IAR (although the individual would probably need an insurance license).
Under the Uniform Securities Act, which of the following would be included in the definition of an investment adviser representative? A) An individual who renders fee-based advice on precious metals B) A solicitor for an investment advisory firm who is compensated for the service rendered C) An employee, highly skilled in evaluating securities, who performs administrative or clerical functions for an investment adviser D) An agent who offers incidental advice on securities whose sole compensation is from commissions on transactions
B) A solicitor for an investment advisory firm who is compensated for the service rendered A solicitor is considered an investment adviser representative under the Uniform Securities Act. An employee who performs only clerical or administrative functions is not an investment adviser representative. Precious metals are not securities and, therefore, a person advising on them is not considered an investment adviser representative. An agent is a representative of a broker-dealer, and as long as the only form of compensation is sales commissions based upon transactions, registration as an investment adviser representative is not required.
Which of the following is (are) NOT exempt from registration as an investment adviser representative in the state in which they conduct business? I. A Certified Financial Planner who prepares financial plans and whose only compensation is commissions II. An insurance agent who prepares comprehensive financial plans and receives commissions on any insurance products purchased by his clients III. A broker-dealer with extensive business in the state IV. A mutual fund company with offices and clients in the state A) I, II, III, and IV B) I and II C) III and IV D) I only
B) I and II A Certified Financial Planner who prepares financial plans for commissions must register in the state as an investment adviser representative. An insurance agent who prepares comprehensive financial plans for commissions is also acting in the capacity of an investment adviser representative and must register accordingly. In both cases, these individuals are holding themselves out as offering investment advice because, at least in the eyes of the USA, there is no such thing as a comprehensive financial plan that does not involve securities. The commissions they receive are considered indirect compensation for the rendering of investment advice. Broker-dealers and mutual fund companies are not investment advisers under the Uniform Securities Act.
Under the Uniform Securities Act, any partner, officer, or director of a registered investment adviser is an investment adviser representative if that individual does which of the following? I. Offers advice concerning securities II. Manages client accounts or portfolios III. Determines securities recommendations for representatives to disseminate IV. Supervises personnel engaged in the above activities but does not sell these services to the public A) II and III B) I, II, III, and IV C) I and II D) I and IV
B) I, II, III, and IV The Uniform Securities Act defines any individuals associated with an investment adviser as investment adviser representatives if they manage accounts or portfolios, determine securities recommendations, or supervise personnel engaged in the above activities, including any partner, officer, or director who offers advice concerning securities. Persons who manage client accounts or portfolios, determine securities recommendations, or supervise personnel engaged in the above activities are investment adviser representatives.
The Uniform Securities Act authorizes the state Administrator to require I. either oral or written qualification examinations of investment adviser representatives and officers of investment adviser partnerships or corporations II. officers of investment advisers to pass a qualification examination IV. an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in the state investment adviser representatives to pass a qualification examination A) III and IV B) I, II, III, and IV C) I only D) I and II
B) I, II, III, and IV The state Administrator may require qualification examinations for officers of investment advisers, as well as its representatives, and may require them to publish an announcement in one or more newspapers published in the state. The Administrator may also require either an oral or written examination.
Which of the following is required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser? A) Form U4 B) State licensing fee C) Renewal notice to the SEC D) Consent to service of process
B) State licensing fee All investment adviser representatives are registered with the states, not the SEC. Renewal requires the payment of the annual renewal registration or licensing fee. The consent to service of process is a permanent document submitted with the initial application for registration.
Gibraltar Advisers is a federal covered investment adviser with offices in 13 states. However, Nancy, a Gibraltar employee who solicits accounts for Gibraltar out of an office in one of those states, is required to complete the NASAA examination and register at the state level. Why might this occur? A) The state securities Administrator has stricter standards than federal standards and requires investment associates to register at the state level. B) The Uniform Securities Act requires investment adviser representatives employed by federal covered advisers, including solicitors, to register at the state level, regardless of whether the firm is required to register at the state level, as long as the IAR has a place of business in the state. C) The state securities Department is required to register all individuals serving professionally in the investment industry. D) All employees of Gibraltar must register at both the state and federal level.
B) The Uniform Securities Act requires investment adviser representatives employed by federal covered advisers, including solicitors, to register at the state level, regardless of whether the firm is required to register at the state level, as long as the IAR has a place of business in the state. Certain individuals employed by investment advisers, including those whose only function is to solicit advisory business, are deemed to be investment adviser representatives. Even though the firm does not have to register in any state, IARs must register in each state in which they have a place of business.
Esther Watson has recently been hired by Robinson, Ibbotson, Carlson and Hanson (RICH), an investment adviser registered with the SEC. RICH has offices in 17 states and Esther works in the branch located in State A. If no exemption is available, Esther will have to register as an IAR with A) the SEC because RICH operates in more than 15 states. B) the Administrator of State A. C) the Administrators of each of the 17 states. D) the FINRA.
B) the Administrator of State A. Unless qualifying for an exemption, employees of investment advisers must register as an IAR in any state in which they have a place of business. This is a state-level registration so the SEC or FINRA are not involved in any way.
An investment adviser representative of a federal covered investment adviser registers with A) the NASAA. B) the Administrator. C) the FINRA. D) the SEC.
B) the Administrator. Registration of IARs is done solely on the state level. IARs register with the Administrator of each state in which they are required to be registered.
Jay Cooke is an investment adviser representative with a state-registered investment adviser. Jay operates out of an office in State Y. He would be required to register in State Z if, during the previous 12 months, he had A) no more than 5 retail clients who were residents of State Z. B) fewer than 6 retail clients who were residents of State Z. C) 6 or fewer retail clients who were residents of State Z. D) 5 or fewer retail clients who were residents of State Z.
C) 6 or fewer retail clients who were residents of State Z. The de minimis exemption applies when, during the preceding twelve-month period, the IAR has had no more than 5 retail clients. There are 3 ways of stating that: No more than 5 Five or fewer Fewer than 6
Under the Uniform Securities Act, all of the following are required to be registered as investment adviser representatives EXCEPT A) a vice president of ABD Advisers, Inc., who serves on the firm's advisory committee B) an individual who furnishes investment advice to clients of ABD Advisers, Inc. C) ABD Advisers, Inc. D) an employee who solicits new customers for ABD Advisers, Inc.
C) ABD Advisers, Inc. The Uniform Securities Act defines an investment adviser representative as anyone who is a partner, officer, director, or other employee or person associated with an investment adviser other than clerical or ministerial personnel who (1) make recommendations or provide advice regarding securities; (2) manage accounts or portfolios of clients; (3) determine which recommendations or advice should be given; (4) solicits, offers, or negotiates for the sale of, or sells, advisory services; or (5) supervises any such persons. An individual or a firm may be registered as an investment adviser, but only an individual can be an investment adviser representative.
According to the Uniform Securities Act, which of the following would be defined as an investment adviser representative? I. John, who opens an investment advisory firm where he devotes his time exclusively to management responsibilities as the sole proprietor of the firm II. Paul, who works for a firm soliciting investment management accounts on behalf of several different investment managers III. Margaret, who works as a commission sales agent for a broker-dealer IV. Mark, an employee of AAA Broker-Dealers, who solicits brokerage clients for commissions on the basis of research conducted by his firm's securities analyst A) I and IV B) II and IV C) I and II D) II and III
C) I and II Paul, who works for a firm soliciting investment management accounts for several investment managers, would be defined as an investment adviser representative because he is acting in the capacity of a sales agent for investment advisers. John, as the owner of a sole proprietorship, is both an investment adviser and the firm's only investment adviser representative. Margaret would not be defined as an investment adviser representative because she functions as a registered agent for a broker-dealer. If she sold investment advice for the broker-dealer's investment management subsidiary, she then would be defined as an investment adviser representative. An agent of a broker-dealer, earning commissions on security sales, is not an IAR even if his primary selling tool for the brokerage business is the firm's outstanding research department.
Under the Uniform Securities Act, which of the following statements regarding the employment of investment adviser representatives by a state-registered investment adviser is (are) TRUE? I. The investment adviser must notify the Administrator whenever a representative is terminated. II. An investment adviser is not required to notify the III. Administrator when a representative begins employment. IV. The registration of a representative is effective only as long as the individual is employed by a registered investment adviser. A) I, II, and III B) III only C) I and III D) I only
C) I and III Whenever an individual begins or ends employment with a state-registered investment adviser, the investment adviser must notify the Administrator. A representative's registration is only valid while employed by a registered investment adviser.
Which of the following is (are) required to register with a state Administrator? I. Investment adviser representatives of federal covered advisers who have natural person clients and have a place of business in the state II. A person who only provides impersonal investment advice through newspaper columns, magazine articles, or financial publication of general and regular circulation III. An investment adviser registered in a different state and who has no place of business in the state, but has had fewer than 6 individual advisory clients in this state during the previous 12 months IV. A person who is an officer of a federal covered investment adviser and does not function as an investment adviser representative A) II and III B) I, II, III, and IV C) I only D) II only
C) I only The investment adviser representatives of a federal registered adviser are required to register in each state in which they have a place of business. Under state law, the publication of investment advice that is not based on the specific investment situation of each client excludes the publisher from the definition of an investment adviser. Based on this definition, the publisher of an investment advisory newsletter providing only impersonal investment advice available only on a subscription basis is not required to register with the Administrator. The Uniform Securities Act provides a de minimis standard exemption from state registration for advisers who have no place of business in a state and have fewer than six clients resident in the state over a 12 month period. A person employed as an officer of a federal covered investment adviser who does not function as an investment adviser representative is not required to register with state Administrators. Note: The automatic registration of officers, partners, and directors only applies to those individuals performing the functions of an investment adviser representative.
Registration of an investment adviser automatically confers registration on I. officers, partners, and directors of the firm who are functioning as IARs II. any employee who is functioning as an IAR III. clerical employees handling back-office operations IV. an employee who will be soliciting clients for the adviser A) I, II, and III B) I and III C) I only D) I, II, III, and IV
C) I only Under Section 202(a) of the Uniform Securities Act, registration of an investment adviser automatically constitutes registration of any investment adviser representative who is a partner, officer, or director, or a person occupying a similar status or performing similar functions. This only applies to those individuals who are listed on the firm's Form ADV Part 1, so we're limited to officers, partners, directors, or anyone else doing that type of job, regardless of what this IA has chosen to use as the title.
The registration of an investment adviser would automatically register which of the following as investment adviser representatives? I. Directors II. Officers III. Partners A) II and III B) I and II C) I, II, and III D) I and III
C) I, II, and III Section 202 (a) of the Uniform Securities Act states, "Registration of an investment adviser automatically constitutes registration of any investment adviser representative who is a partner, officer, or director, or a person occupying a similar status or performing similar functions." I would have preferred that the question indicate that these individuals are acting in a capacity that would require their registration, but on the exam, it probably won't be that clear.
The term "investment adviser representative" includes which of the following? I. A receptionist for an adviser II. An employee who solicits new business for an adviser III. A supervisor who oversees employees who manage client portfolios for an adviser IV. An investment advisory firm registered in the state of Texas A) I, II, III, and IV B) I, II, and IV C) II and III D) I and III
C) II and III An investment adviser representative is always an individual person. Employees who solicit business on behalf of investment advisers and those persons who supervise other employees are investment adviser representatives.
James Stillman is an investment adviser representative with Rock, Feller, and Standard (RFS), a covered adviser with its principal office in State O. Stillman works out of an office in State P and has 4 retail clients there. In addition, Stillman has 25 retail clients in State D, 6 retail clients in State M, and 1 retail client in State O. Stillman would be required to register as an investment adviser representative in A) States P, D, and M. B) States D and M. C) State P. D) States P and O.
C) State P. As an IAR for a federal covered investment adviser, Stillman is only required to register in those states in which he (Stillman) has a place of business. Please note that, as long as an IAR with a covered adviser does not maintain a place of business in a state, there is no numerical limit on the number of clients he can have and still be exempt from registering in that state.
Pontourny Advisory and Investment Services (PAIS) is a federal covered investment adviser. Its principal office is in State X. PAIS also maintains branch offices in States Y and Z. Brenda is the manager of the branch office in State Y. Some of the individuals being supervised by Brenda have clients in States X and Y, and others have clients in States Y and Z. Brenda must register as an IAR in A) States Y and Z B) States X, Y, and Z C) State Y D) States X and Y
C) State Y Those who supervise the activities of investment adviser representatives are themselves defined as IARs. An IAR representing a federal covered investment adviser need only register in the state or states in which she (the IAR) has a place of business. There is nothing in this question to suggest that Brenda has a place of business anywhere other than in State Y, where her branch office is located. Remember, when it comes to federal covered advisers, registration of their IARs is dependent on the IAR's place of business, not the location of their clients.
Under the Uniform Securities Act, which of the following is TRUE regarding registration of investment adviser representatives? A) Registration in the state where a representative has his business office enables the representative to do business in any state. B) A representative's registration remains in effect even during a period when the representative is not employed by a registered investment adviser. C) To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process. D) Representatives are automatically registered when they become employed by a registered investment adviser.
C) To register, a representative must submit a completed application for registration, a filing fee, and a signed consent to service of process. In general, representatives are not automatically registered when they become employed by an adviser. To register, they must file an application, a consent to service of process, and a filing fee. Registration is not effective during any period when the representative is not employed by a registered adviser, and the Administrator must be notified when a representative's employment begins or ends. Representatives must be registered in each state in which they do business.
Sally is registered as an agent with ABC Securities Co., a major brokerage house with offices in most states. ABC has recently introduced a fee-based asset management program and has asked Sally to devote one hour per day soliciting her existing clients for this program. Under the USA, Sally would A) not be required to obtain any additional licensing beyond her agent's registration B) only be permitted to solicit those clients who currently have discretionary accounts with ABC C) be required to obtain registration as a registered investment adviser representative D) be required to obtain registration as a registered investment adviser
C) be required to obtain registration as a registered investment adviser representative Once ABC Securities Co. begins offering a fee-based asset management program, it loses its exclusion from the definition of investment adviser. One could assume that a national firm like this would probably become a federal covered adviser. If Sally wants to solicit anyone, existing clients or not, for this type of program, she could not do so until registered as an investment adviser representative.
An individual is employed by a federal covered investment adviser for the sole purpose of giving advice related to monitoring investment portfolios, but only to qualified employee benefit plans. Under the Uniform Securities Act, this individual is A) defined as an IAR because the plan is qualified B) not defined as an IAR because the individual works for a federal covered investment adviser C) defined as an IAR because the individual is rendering investment advice D) not defined as an IAR because the plan is considered an institutional client
C) defined as an IAR because the individual is rendering investment advice Regardless of whom the advice is given to, unless there is some kind of exemption involved, individuals working for IAs (state or federal) must register as IARs in at least one state. It makes no difference if the plan is qualified or not.
An investment adviser hires 2 individuals to solicit new customers for the firm's wealth management service. Under the USA, A) soliciting is generally prohibited B) each of them would have to register as an investment adviser C) registration as investment adviser representatives is required D) they may begin soliciting as soon as they have passed their licensing examinations
C) registration as investment adviser representatives is required The definition of investment adviser representative includes individuals who solicit for the firm's advisory business.
An individual is currently registered as an agent with a broker-dealer. If the agent would like to offer wrap fee programs through the firm, all of the following statements are correct EXCEPT A) the agent would be defined as an investment adviser representative B) the broker-dealer would have to be registered as an investment adviser C) the agent would be defined as an investment adviser D) the agent would now come under a greater fiduciary responsibility
C) the agent would be defined as an investment adviser Once the broker-dealer decides to offer wrap fee programs, it is no longer excluded from the definition of an investment adviser and would become required to register on either the state or federal level. The agent would now become an IAR of the firm and, as such, would now carry the additional fiduciary responsibility incurred in the advisory business.
An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients A) when informed by the Administrator that the representative's registration is effective B) immediately C) when informed by the investment adviser that the representative's registration is effective D) within 48 hours
C) when informed by the investment adviser that the representative's registration is effective Passing the exams does not automatically give one an effective investment adviser representative's license. Notice is received by the investment adviser from the appropriate state and/or federal authorities and then, in accordance with that firm's procedures, advisory activity may start. The Administrator does not have direct contact with the individual.
Under the Uniform Securities Act, which of the following is NOT an investment adviser representative? A) A vice president of a state-registered investment advisory firm who supervises employees who solicit clients for the firm B) A natural person representing an SEC-registered investment advisory firm who has a place of business in the state and manages the account of a single client C) A director in a state-registered investment advisory firm who determines specific recommendations for clients D) A clerk employed by a state-registered investment advisory firm
D) A clerk employed by a state-registered investment advisory firm Clerical and ministerial personnel are specifically excluded from the definition of investment adviser representative. Specifically included in the definition are directors, officers, partners, associates, and employees of state-registered advisers who carry out investment advisory or solicitation functions or who supervise those functions. Also included in the definition are persons who perform similar functions for SEC-registered advisers and who have a place of business in the state.
Under the Investment Advisers Act of 1940, which of the following is excluded from the definition of a person associated with an investment adviser? A) A majority stockholder of an investment advisory firm B) An employee who manages client accounts for an investment advisory firm C) A minority partner of an investment advisory firm D) A clerk in an investment advisory firm
D) A clerk in an investment advisory firm Employees with no investment advisory functions, such as clerks and administrative personnel, are excluded from the definition of associated person.
Under the Uniform Securities Act, which of the following qualifies as an investment adviser representative? A) An employee, although highly skilled in evaluating securities, solely performs administrative or clerical functions for an investment adviser B) An individual who renders fee-based advice on precious metals C) An agent who offers incidental advice on securities as part of his sales commissions D) A solicitor for an investment advisory firm who is paid a fee for his services
D) A solicitor for an investment advisory firm who is paid a fee for his services If the goal is obtaining clients for the investment adviser, a solicitor is considered an investment adviser representative under the Uniform Securities Act. An employee who performs clerical or administrative functions only is not an investment adviser representative. Precious metals are not securities, and a person advising on them is not considered an IAR. An agent is a representative of a broker-dealer.
If a natural person files an initial application for state registration as an investment adviser representative on October 1, the registration will most likely expire A) the registration does not expire until the person resigns, retires, or is expelled by the Administrator B) on a date set by the Administrator of that state C) on the anniversary date of the following year D) December 31 of that year
D) December 31 of that year Although the Administrator may change the date, registrations typically expire on December 31 of each year. In this question, the registered person would have to renew his registration in 3 months. Thereafter, renewal would occur every 12 months on December 31.
According to the Uniform Securities Act, which of the following is an investment adviser representative? I. A clerical employee of the AAA Investment Management Company, an investment advisory firm registered in the state that offers investment portfolio services to the public II. An employee of AAA Investment Management Company who is properly registered under the USA and supervises analysts who provide research to clients III. An employee of a federal covered adviser with an office in the state who offers investment advice to the public IV. An agent of a broker-dealer with strong investment opinions who sells securities only on a commission basis A) III and IV B) I and II C) I and IV D) II and III
D) II and III An investment adviser representative means any partner, officer, director, or other individual, except clerical or administrative personnel, who is employed by an investment adviser that is registered or required to be registered. Therefore, unregistered personnel are not investment adviser representatives. An employee who supervises analysts who deal with the public must be an investment adviser representative. The employee of the federal covered adviser with an office in the state is also an investment adviser representative. The agent is an agent of a broker-dealer, not an investment adviser representative.
Which of the following persons are required to register in a particular state? I. An investment adviser who manages client accounts in excess of $100 million in value II. An investment adviser who manages client accounts and has less than $25 million in total assets under management III. An adviser to investment companies registered under the Investment Company Act of 1940 IV. An investment adviser representative with a place of business in the state A) I and III B) III and IV C) I and II D) II and IV
D) II and IV Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, advisers who manage clients with a total of less than $100 million under management are required to register with the state Administrator. Under Dodd-Frank, those who manage client assets of $110 million or more or advise registered investment companies are required to register with the SEC and are exempt from state registration. Those who manage at least $100 million, but not $110 million, have the option of registering with either the state or the SEC. Investment adviser representatives with a place of business in the state register with the state, whether or not their employer is federal covered.
DEF Investment Advisers, organized as a partnership, is currently registered with State Y. Marjorie is one of the partners and is registered as an IAR. If DEF were to register with State Z, A) Marjorie's registration as an IAR in State Z would become effective after passing the Series 65 or Series 66 exam. B) Because DEF is a state-registered investment adviser, Marjorie could only register in State Z if she was a resident of the state. C) Marjorie would be required to complete an application for IAR registration with State Z. D) Marjorie would automatically be registered as an IAR in State Z.
D) Marjorie would automatically be registered as an IAR in State Z When DEF's registration becomes effective in State Z, those individuals included in the filing are granted automatic registration - they don't have to file an individual Form U4. That filing includes the names and other pertinent information about all of the partners, officers, or directors who are already acting as IARs. Please note, it is not any IAR, it is only those listed or, as the rule states, those occupying a similar status, etc., who receive this treatment.
Under the Uniform Securities Act, which of the following statements regarding the consent to service of process is NOT true? A) Investment advisers and investment adviser representatives must file a consent to service of process to become registered. B) A consent to service of process makes legal process served on the Administrator as legally binding as process served on the registrant personally. C) A consent to service of process does not need to be supplied each time a registrant's registration is renewed. D) Only applicants whose principal office is in another state need to file a consent to service of process
D) Only applicants whose principal office is in another state need to file a consent to service of process All applicants for registration must file a consent to service of process regardless of where their principal office is located. A consent to service of process grants legal authority for the Administrator to receive legal notices on behalf of the registrant and applies to all securities professionals. The document is part of the initial registration and, once filed, does not have to be renewed.
An individual employed by or associated with an investment adviser that is registered or required to be registered under the Uniform Securities Act, or who has a place of business in this state and is employed by or associated with a federal covered adviser and whose only role is to solicit, offer, or negotiate for the sale of or sell investment advisory services would be considered A) an IAR only if soliciting noninstitutional clients B) a solicitor and required to register as an IA C) an administrative employee exempt from registration D) a solicitor and required to register as an IAR
D) a solicitor and required to register as an IAR The term "investment adviser representative" is quite broad and includes any partner, officer, director of (or a person occupying a similar status or performing similar functions) or other individual employed by or associated with an investment adviser that is registered or required to be registered under the USA, or who has a place of business in this state and is employed by or associated with a federal covered adviser; and who does any of the following: (1) makes any recommendations or otherwise renders advice regarding securities; (2) manages accounts or portfolios of clients; (3) determines which recommendations or advice regarding securities should be given; (4) solicits, offers, or negotiates for the sale of or sells investment advisory services; or (5) supervises employees who perform any of the foregoing.
To transact business in a state as an investment adviser representative, a person must A) be employed by a commercial bank located in the state B) be registered as an agent of a brokerage house and have passed the appropriate NASAA exam for IARs C) have passed the agent's exam and taken no other exams D) be registered as a representative of an investment adviser and have passed the appropriate NASAA exam for IARs
D) be registered as a representative of an investment adviser and have passed the appropriate NASAA exam for IARs To transact business in a state as an investment adviser representative, a person must be registered as a representative of an investment adviser and have passed either the NASAA Series 65 or Series 66 exam. One is not considered a registered investment adviser representative as a result of passing the Series 6 or 7 registered representative exam, or by virtue of employment with a bank.
Sharon Smith is an investment adviser representative with Highwater Advisers, a federal covered investment adviser with its principal office in State X. Sharon provides advisory services to a bank located in State X, a state in which she has no place of business. Under current regulations, A) because Sharon has a client in State X, registration as an IAR would be required in State X. B) because Highwater's principal office is in State X, Sharon would be required to register as an IAR in State X. C) because Sharon's client is a bank, she does not have to register as an IAR in State X. D) because Sharon has no place of business in State X, she does not have to register as an IAR in State X.
D) because Sharon has no place of business in State X, she does not have to register as an IAR in State X. The key is that Sharon is an IAR for a covered IA. When that is the case, the IAR is only required to register in states where she (the IAR) maintains a place of business. Sharon does not have a place of business in State X so no registration is required there. The fact that the client is a bank is of no relevance nor is the location of her employer's principal office.
Regional Financial Services, LLC, is registered as an investment adviser in States A, B, C, and D. They have just filed an application for registration in State E. Registration of this investment adviser in State E automatically confers registration as an IAR in State E on A) any employee who is functioning as an IAR in State A, B, C, or D B) clerical employees handling back-office operations C) an employee who will be soliciting clients for the adviser in State E D) officers, partners, and directors of the firm who will be functioning in State E as IARs
D) officers, partners, and directors of the firm who will be functioning in State E as IARs Under the Uniform Securities Act, registration of an investment adviser in a state automatically constitutes registration of any investment adviser representative who is a partner, officer, or director, or a person occupying a similar status or performing similar functions.