Federal Securities Act

Under the Investment Advisers Act of 1940, if a registered investment adviser, for the first time, decides to require prepayment of $1,200 or more of advisory fees, 6 months or more in advance of rendering services, the adviser must: A. file an audited balance sheet promptly with the Securities and Exchange Commission B. file a new brochure with the Securities and Exchange Commission promptly C. file a new initial ADV application with the Securities and Exchange Commission D. notify customers no later than with the next trade confirmation

A. 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; then the adviser must file a balance sheet with the Form ADV Part 2A filed with the SEC. This filing is required "promptly."

An Investment Adviser Representative (IAR) is also a commissioned agent at a brokerage firm. The IAR has a young client who has a $250,000 account. The client has been trading the account aggressively himself and has been successful in the strategy. The customer now wants the IAR to take over the management of the account, with the IAR to be compensated on a performance basis. The IAR should tell this young client that the account: A. cannot be traded on a performance basis B. can be traded on a performance basis C. can be traded based only on a per trade commission charge D. must be closed

A. Performance fees are only allowed for wealthy clients (at least $1,000,000 invested; or a minimum $2,100,000 net worth) under the Investment Advisers Act of 1940 - so this client does not qualify. The account cannot be traded on a performance basis - a commission or fixed fee arrangement must be established.

Which ratio would be used to measure the financial leverage of a broker-dealer? A. Assets to Net Capital B. Loans to Net Capital C. Assets to Liabilities D. Net Income to Revenue

B. "Leverage" is the use of debt in the capital base of a business. The standard measure of leverage for a business is the Debt to Equity ratio. For a broker-dealer, equity is often measured by the firm's "liquid" equity, called net capital. It is the money that would be left over if all of the firm's liquid assets were converted to cash and this was used to pay off all liabilities. The ratio of debt to net capital would be a leverage measure for a broker-dealer.

Which of the following persons is LEAST likely to be defined as an investment adviser? A. A Certified Public Accountant who makes recommendation to customers of portfolio allocations in their 401(k) accounts after preparing their tax returns B. The publisher of an investment newsletter specializing in making small cap stock recommendations that is distributed to paid subscribers monthly C. A lawyer who offers financial planning services only to its existing customers at a discounted rate as compared to the rate charge to the customers for legal services D. A financial planner that sets up a website that includes a retirement calculator that, based on customer input to a series of questions, creates a basic financial plan at no charge to the customer; the site includes advertisements placed by brokerage firms and insurance companies.

B. Choice C is clearly an investment adviser because the lawyer is separately charging for financial planning services. Choice D is also an investment adviser, because a financial plan is being created that is unique to each customer and the adviser is being paid for the advice (by the advertisers instead of the customers, but the law doesn't care about this distinction - the fact is the planner is being compensated). Choice A is a bit vague - it doesn't say if the CPA is separately charging for the recommendation, so this choice could go either way. Choice B is more clear - this is a newsletter that is not making recommendations based on specific client situations, so it is not an "investment adviser." It is the best of the choices offered.

Under the Investment Advisers Act of 1940, if the SEC suspends or revokes the registration of an investment adviser registered, an appeal may be filed in Federal Court within how many days? A. 30 days B. 60 days C. 90 days D. 120 days

B. If the SEC suspends or revokes an adviser's registration under the Investment Advisers Act of 1940, an appeal may be filed in Federal Court within 60 days.

A corporate 8K Report covering a material event must be filed with the SEC: A. 1 business day following the event B. 4 business days following the event C. 5 business days following the event D. 10 business days following the event

B. The Form 8K is a corporate filing with the SEC for any significant event, such a declaration of a merger, divestiture, bankruptcy, etc. The Form 8K must be filed with the SEC no later than 4 business days after the event.

A Registered Investment Adviser has been in business for 15 years. The adviser, who trades options, uses graphs and charts during a presentation to a client that show that the adviser made a 30% return over the past 5 years. The adviser tells the client that because of this, it is probable that he will make at least a 15% return for any new accounts. The statement by the adviser is: A. permissible because the adviser's past performance backs up this claim B. not permitted because it is misrepresenting that there is no risk in trading options C. not permitted because advisers are prohibited from showing past performance of recommendations in advertising D. not permitted because the adviser is making a performance guarantee to the client

B. The Investment Advisers Act of 1940 permits past performance to be shown in advertising, as long as the entire universe of recommendations is shown and the disclaimer that "past performance does not predict future results" is made. This is not a prohibited "performance guarantee" (Choice D) because the adviser only said that "it is probable" that a 15% return will be achieved for new clients - he or she did not guarantee it.

The maximum permitted dollar amount that can be raised in a Private Placement under Rule 504 of Regulation D is: A. $1,000,000 B. $5,000,000 C. $50,000,000 D. Unlimited

B. The Regulation D Private Placement exemption consists of Rules 501-506. Rules 501-503 are definitional rules, basically explaining who is an accredited investor and who is a "sophisticated" investor. The actual permitted offerings are detailed under Rules 504-506. Rule 504 is for small offerings, and is pretty much obsolete (but still tested!). Rule 505 has been rescinded. Rule 506 is the one everyone uses and can be used to raise any dollar amount. - Rule 504: Covers offerings of up to $5,000,000. For such very small offerings, the rule does not specify required investor disclosures, and does not place any limit on the number of investors. Also, there is no audit requirement for the issuer's financial statements. While there is no Federal registration required, the State(s) where the issue is offered can still require State registration. - Rule 505: Rescinded. - Rule 506: Covers offerings of more than $5,000,000: This is the private placement rule used by pretty much everyone. The rule requires detailed disclosure to investors, similar to that required in a prospectus. The offer can only be made to a maximum of 35 non-accredited investors; and to an unlimited number of accredited investors. However, the States cannot require registration at the State level - a big financial benefit.

An Investment Adviser Representative (IAR) is also a registered broker-dealer. The IAR has a brokerage client who has a $1,200,000 account; and a net worth of $2,500,000. The client wants the IAR to take over the management of the account, with the IAR to be compensated on a performance basis. The IAR should tell this client that the account: A. cannot be traded on a performance basis B. can be traded on a performance basis C. can be traded based only on a per trade commission charge D. must be closed

B. Under the Investment Advisers Act of 1940, performance fees are only allowed for wealthy clients with at least $1,000,000 invested; or have a minimum $2,100,000 net worth - so this client qualifies.

A registered representative with a broker-dealer makes recommendations of securities to a customer, and charges a commission on each trade. Which statement is TRUE? A. This person must register with the State as an investment adviser representative B. This person must register with the State as an investment adviser C. This person is excluded from the definition of an investment adviser D. This person is defined as an investment adviser, but is exempt from registration

C. Broker-dealers and their registered representatives are excluded from the definition of an investment adviser as long as they do not charge separately for advisory services. Thus, a broker-dealer can charge a commission on each recommended trade and not be defined as an investment adviser that must register in the State (note however, that it must still register as a broker-dealer in that State).

All of the following statements are true regarding an investment adviser that wishes to take custody of clients funds under the Investment Advisers Act of 1940 EXCEPT the investment adviser: A. must send an itemized statement of account to each customer at least quarterly B. must be audited, on a surprise basis, at least annually C. must segregate each customer's funds from those of other customers D. need not comply with the custody rules if the firm is already a registered broker-dealer

C. If an investment adviser wishes to take custody of client funds or securities, under the Investment Advisers Act of 1940, the investment adviser must deposit customer funds and securities in an account that is separate from the adviser's account. It is permitted to "commingle" all customer positions together in one account, as long that there is a record of each customer's individual positions. However, customer securities positions cannot be commingled with the investment adviser's positions. Each customer must get a quarterly account statement; and the adviser must be audited, on a surprise basis, at least annually. If the investment adviser is already a broker-dealer, it is complying with these requirements under a similar SEC rule for broker-dealers (SEC Rule 8c-1); so this is not required for investment advisers that are also registered as broker-dealers.

All of the following are defined as "giving advice about securities" under IA-1092 EXCEPT a person who: A. advises on the selection of an investment adviser B. prepares a list of securities that may be purchased without making specific recommendations C. prepares an asset allocation plan that specifies percentage investments in stocks, bonds, real estate and insurance D. charts the price movements of stocks and distributes them to subscribers

D. Charting of the price movements of stock is not "investment advice." An investment adviser, under the Investment Advisers Act of 1940, is "a person who receives compensation for advising others about securities, or about the advisability of investing in securities." Under the SEC's interpretations, a person who prepares a "list" of securities is making an implicit recommendation of these securities and is giving advice; a person who prepares asset allocation plans is also giving advice (if one of the assets included is securities). Furthermore, a person who recommends investment advisers is also one who gives advice! A person who prepares and distributes charts of stock price movements is not giving advice. Note, however, that if this information is used by the preparer to determine which securities to buy or sell, it would be considered to be "investment advice."

An investment adviser makes an offer to send, by mail, a "free" analysis covering his top 50 stock picks in an advertisement. In order for an individual to get the report, the adviser could require that individual to: A. fill out a questionnaire detailing that individual's financial resources B. pay a shipping and handling fee of $38 to get the report sent out C. provide the names and addresses of 3 other persons who would be interested in the adviser's reports D. telephone the adviser and listen to a brief sales pitch before taking the mailing information

D. Free means just that - free. Charging a high shipping fee for the "free" report means that it is not free, so this is prohibited. The offer of a free service cannot be made conditional, so requiring the customer to complete a detailed financial questionnaire crosses the line; as does asking for 3 customer references in order to get the "free" report. Making the individual call the adviser to get the "free" report is OK; and making the customer listen to a brief sales pitch to get the report is OK as well.

Private Fund Advisers: A. are not required to register with the SEC as long as they have no more than 5 clients B. are not required to register with the SEC because their clients are all "accredited investors" C. must register with the SEC once assets under management reach $100 million D. must register with the SEC once assets under management reach $150 million

D. Regular investment advisers must register with the SEC as "Federal Covered Advisers" once assets under management reach $100 million. Private Fund Advisers, who only advise pooled investment vehicles like hedge funds, were exempt from SEC registration until 2012. At that point, they were required to register with the SEC once their assets under management reached $150 million. The intent was to make sure that there was public disclosure about the world of hedge funds.

A partner in an investment advisory firm that has been accredited as a Chartered Financial Analyst may use all of the following descriptive terms on his or her business card EXCEPT: A. Managing Partner B. Investment Counsel C. Chartered Financial Analyst D. Registered Investment Adviser

D. Since this individual is a partner in an advisory firm, he or she can use the title "Managing Partner" on a business card. Since this individual has passed the CFA exam, the business card can say "Chartered Financial Analyst." The term "Investment Counsel" is permitted as long as this is the firm's primary business - and this is an investment advisory firm. However, the term Registered Investment Adviser can't be used because it is the "firm" that is the RIA; not the individual associated with the firm.

The filing of an updated Form ADV with the SEC by a Federal Covered Adviser at fiscal year end is: A. only required if there are material changes in the content compared to the information included in the previous year's filing B. only required the adviser will, for the first time, take custody of client funds C. only required if the adviser was registered with a state in the preceding year D. required for each Federal Covered Adviser without exception

D. The updated Form ADV must be filed each year with the SEC by Federal Covered Advisers - there are no exceptions. The filing is due within 90 days of fiscal year end. Note that the updating ADV amendment must be filed with NASAA under the same time frame for State-registered advisers.

A customer inherits 3,000,000 shares of ABC stock, a company listed on the NYSE which has 10,000,000 shares outstanding. The customer is not a director or officer of the company. Which of the following statement(s) is/are TRUE? I The customer is defined as an "insider" under the Securities Exchange Act of 1934 II The customer is prohibited from selling ABC stock short except for tax deferral purposes (short against the box) III If the customer trades ABC stock at a profit after having held the stock for less than 6 months, the gain is forfeited IV The customer must report trading activity to the SEC A. I only B. II and IV C. I, II, IV D. I, II, III, IV

D. This person falls into the definition of an "insider" because he holds 10% or more (in this case he holds 30%) of the company's stock. Insiders cannot sell their stock short (except to short against the box at year-end for tax deferral reasons); they must forfeit any short swing profits derived from trading their own company's shares; and trading activity must be reported to the SEC.

An investment adviser representative has recently passed her Series 7 and Series 66 exams. Which of the following statements can she make to potential clients regarding these registrations? A. "The State Administrator approves of my doing business in each of the States in which I am registered." B. "Because I only recommend investment grade securities, the SEC endorses my activities in each of the States in which I am registered." C. "The SEC or State Administrator views all of the recommendations that I make to be suitable, as long as an investment profile has been completed for each new customer." D. "I am now registered with FINRA and the State"

D.It cannot be stated that "registration" means that the SEC, FINRA or the State Administrator approves of the adviser, or endorses, recommends, or certifies the adviser. It can be stated that the adviser is "registered" - in this case, the IAR is registered in the State, and as a Series 7 representative, this individual is federally licensed as a representative. The federal Series 7 license is given by FINRA, which is an SRO (self-regulatory organization) operating under SEC oversight.

Which statements are TRUE regarding closed-end management companies? I The initial offering of shares is made under a prospectus II Shares are redeemable with the issuer at the NAV III Shares trade in the secondary market at prevailing market prices IV The portfolio of investments is not managed

I & III ONLY. The initial offering of closed-end management company shares is made under a prospectus; then the books of the fund are closed to new investment and the shares are listed on an exchange and trade like any other stock. The shares are not redeemable; they are negotiable. The portfolio of investments is managed - remember, this is one of the 2 types of "management" companies.

Under the Investment Advisers Act of 1940, which of the following statements are TRUE about the acceptance of prepaid advisory fees by an investment adviser? I The fees must be detailed in writing in the advisory contract II The fees cannot amount to more than 6 months' payment in advance III Prepaid fees in excess of $1,200 require that the adviser's balance sheet be included in the "Brochure" IV Acceptance of a prepaid fee constitutes taking "custody" of customer funds

I & III. Prepaid advisory fees are permitted, as long as they are detailed in the advisory contract; and there is a refund of such fees if the contract is canceled prematurely. There is no restriction on the amount of prepaid fees that can be accepted - but remember that under the Statement of Policy on unethical practices, adviser fees must be similar to those charged by other advisers for comparable services. 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 "Brochure" given to customers (the "Brochure" is Part 2A of Form ADV). Acceptance of prepaid fees is not the same as taking custody of customer funds or securities.

Which of the following statements are TRUE about the Investment Company Act of 1940's requirements for management companies? I At least 40% of the Board of Directors must be "non-interested" persons II At least 60% of the Board of Directors must be non-interested III To establish a fund, a minimum of $10,000 of Total Net Assets is required IV To establish a fund, a minimum of $100,000 of Total Net Assets is required

I & IV. The Investment Company Act of 1940 requires that the minimum capital to start a fund is $100,000. It also requires that at least 40% of the Board of Directors be "non-interested parties" - that is, they are not affiliated with the sponsor, custodian, transfer agent, or firms in the selling group.

Under the Investment Advisers Act of 1940, which statements is (are) TRUE regarding the use of advertising? I Past performance may be shown in advertising II Prior recommendations may be shown in advertising III Testimonials may be shown in advertising

I ONLY. Under the Investment Advisers Act of 1940, testimonials are prohibited in advertising; and the showing of prior recommendations is prohibited in advertising. However, past performance can be shown in advertising as long as there is an accompanying statement about general market conditions during this period; and a disclaimer is included that "past performance does not predict future results."

Under the Investment Advisers Act of 1940, which of the following statements are TRUE regarding advisory contracts? I Advisory fees cannot be based upon capital gains in the account II Advisory fees for clients with at least $1,000,000 of assets under management; or $2,100,000 net worth; can have a fee that is partly based upon capital gains III Advisory contracts must be filed with the SEC if they allow for $1,200 or more of prepaid advisory fees, 6 or more months in advance of services rendered IV Advisory contracts cannot contain provisions that violate Federal law

I, II, & IV. Any contract cannot contain provisions that violate the law. Advisory contracts must be in writing under the Investment Advisers Act of 1940; and cannot provide for an advisory fee based on capital gains. However, for wealthy customers, a "performance" fee is permitted if the customer has at least $1,000,000 invested with the adviser; or the customer has a net worth of at least $2,100,000. Regarding Choice III, if an adviser accepts $1,200 or more of prepaid fees, 6 months or more in advance of services rendered, it must include a balance sheet in the "brochure" provided to customers.

When a 3rd party solicitor retained by an Investment Adviser (IA) visits a potential client to make a presentation, what must be given to the customer, and what must be signed by the customer? I The Investment Adviser's Brochure must be delivered to the client II The Solicitor's Brochure must be delivered to the client III The client must sign an acknowledgment that the Investment Adviser's Brochure was received IV The client must sign an acknowledgment that the Solicitor's Brochure was received

I, II, III, IV.

Which of the following statements are TRUE? I Investment advisers with assets of less than $100,000,000 are required to register in each State II Investment advisers with assets of $100,000,000 are required to be registered with the SEC III Investment adviser representatives associated with advisers with assets of less than $100,000,000 can be required to be registered in each State IV Investment adviser representatives associated with advisers with assets of more than $100,000,000 are required to be registered with the SEC

I, II, III. Advisers that manage $100,000,000 or more of assets; or that render advice to investment companies; or that are not regulated at the State level; must register with the SEC only. Note that the SEC registers the investment adviser only - it does not register investment adviser representatives. The smaller advisers are only required to be registered at the State level. However, the State can require registration of investment adviser representatives for any investment adviser firm.

Which of the following are "federal covered" advisers? I Investment adviser to an investment company with $2,500,000 of assets under management II Investment adviser to an investment company with $25,000,000 of assets under management III Investment adviser to an investment company with $100,000,000 of assets under management

I, II, III. Advisers that manage $100,000,000 or more of assets; or that render advice to investment companies; or that are not regulated at the State level; must register with the SEC only. These advisers are known as "federal covered" advisers. An investment adviser to an investment company (regardless of the dollar amount) need only register with the SEC and is exempt from registration in the State. One of main intents of the Investment Advisers Act of 1940 was to register advisers to investment companies and place limits on their compensation.

Which of the following are considered to be "compensation" to an investment adviser under the Investment Advisers Act of 1940? I Commissions paid to the investment adviser for executing recommended securities transactions II Commissions paid to the adviser on recommended insurance purchases III Payments made by the issuer to the adviser for recommending the issuer's securities IV Profits on securities positions held by the adviser where the adviser recommended those securities to its customers

I, II, III. Advisers' compensation is defined broadly and includes payments received from the sale of advisory services; payments received for referring customers to other advisers or broker-dealers; commission payments received for executing customer portfolio trades through an affiliated broker-dealer; commission payments received for selling that customer non-securities products like insurance or real estate; and payments made by issuers to the adviser to recommend that issuer's securities (though this is illegal, it is still compensation to the adviser). Profits on securities positions held by the adviser are specifically excluded from adviser compensation.

Under the Investment Advisers Act of 1940, if an investment adviser wishes to effect an agency cross transaction for a customer, which of the following statements are TRUE? I Agency cross transactions cannot have been recommended to both the buyer and seller by the investment adviser II Each client must be sent an annual statement identifying the total number of agency cross transactions effected; and the remuneration received by the adviser for these transactions III Each client must be sent a monthly account statement detailing activity in the account for that period IV To effect an agency cross transaction, written consent from the client must be obtained

I, II, IV. If an investment adviser wishes to effect an agency cross transaction for a customer, it cannot have recommended the transaction to both the buyer and the seller. To effect the transaction, the adviser must obtain written consent of the customer; must disclose the remuneration that will be received from the transaction; and must send the customer an annual statement identifying the total number of agency cross transactions effected by the adviser and the remuneration received. There is no requirement to send monthly statements to customers.

Investment advisory contracts, under the Investment Advisers Act of 1940 MUST: I be in writing II detail the advisory fee III detail the States in which the adviser is registered IV provide for customer approval if the contract is to be assigned to someone else

I, II, IV. Investment advisory contracts must be in writing under the Investment Advisers Act of 1940; must detail the advisory fee; and must provide for customer approval if the account is assigned to another investment adviser. There is no disclosure in the advisory contract of the States in which the adviser is registered (though this is disclosed in the Form ADV Part I filed with the SEC).

Which of the following are covered under the Securities Exchange Act of 1934? I Registration of broker-dealers II Registration of investment advisers III Registration of insiders IV Registration of securities information processors

I, III, IV. Federal registration of investment advisers comes under the Investment Advisers Act of 1940. The Securities Exchange Act of 1934 requires the registration of exchanges, member firms, salespersons, transfer agents, clearing organizations, securities depositories and securities information processors. It also requires that "insiders" (officers, directors and holders of 10% or more of a publicly held company) file notices with the SEC.

Delivery of the brochure under the "Brochure Rule" is required for which of the following? I Impersonal advisory services requiring payment of less than $500 annually II Prepaid advisory fees requiring payment in advance of $1,000 or more III Advisory contracts with investment companies IV Advisory contracts with pension plans

II & IV. Delivery of the "Brochure" to customers is not required for the sale of impersonal advisory services calling for no more than a $500 annual fee; or for the sale of advisory services to investment companies. Prepaid advisory fees requiring payment in excess of $500; or advisory contracts with anyone other than investment companies, requires the delivery of a brochure.

nstitutional investment managers MUST file a Form 13F with the SEC: I Monthly II Quarterly III Within 10 business days of the due date IV Within 45 calendar days of the due date

II & IV. The Form 13F (as in "Fund") is filed with the SEC by mutual funds that have at least $100,000,000 of assets under management. It discloses all of the fund's holdings and is filed within 45 calendar days of quarter-end.

Exemptions from IA registration

- Certain persons are included under the definition of an investment adviser but are EXEMPT from registration under Federal Law: - intrastate exemption - where the investment adviser with its principal office in 1 State only, renders advice to residents of that State; here only State law applies - adviser to insurance companies - the only clients of the investment adviser are insurance companies - Note that advisers to investment companies must register with the SEC. This was the main intent of the Investment Advisers Act of 1940 - to register advisers to investment companies and limit their compensation.

The States in which an investment adviser is registered would: A. be found in Form ADV Part 1 B. be found in Form ADV Part 2 C. be found in both Form ADV Part 1 and Form ADV Part 2 D. not be found in either Form ADV Part 1 or Form ADV Part 2

A. - The ADV Part 1 is the basic registration information filed with the SEC - such as name of firm, address, phone number, officers, shareholders, States where the adviser is registered, etc. - The ADV Part 2 is broken down into 2 parts. Part 2A is the "Brochure" that must be delivered to customers. It describes the investment adviser's policies, fees, education, types of investments, types of clients, method of analysis used, conflicts of interest, etc. Part 2B is the "Brochure Supplement" which details the educational and work background of the key personnel who make investment decisions or manage accounts.

Which of the following is NOT an accredited investor under Regulation D? A. An individual with a $3 million net worth B. An individual with $2 million in securities C. An employee benefit plan with $7 million to invest D. A couple that has $400,000 per year of annual income

B. This question is not immediately obvious! An individual with $2 million of securities does not mean that he or she has a net worth of $1,000,000 (the minimum requirement to be accredited). He or she may have a margin loan against the securities, with the loan amount in excess of $1,000,000! As long as a couple earns at least $300,000 per year, they are accredited. Employee benefit plans and trusts that have over $5,000,000 under management, also are accredited investors under Regulation D.

An updating amendment to Form ADV must be filed by an investment adviser with the SEC: I within 45 days II within 90 days III of the firm's fiscal year end IV of the calendar year end A. I and III B. I and IV C. II and III D. II and IV

C. An annual amendment of Form ADV must be filed electronically with the SEC no later than 90 days after the firm's fiscal year end. Note that the updating ADV amendment must be filed with NASAA under the same time frame for State-registered advisers.Do not confuse this with the NASAA requirement that all registrations expire December 31st of each year, unless renewed (and that all important annual renewal fee is paid!).

An investment adviser providing advice solely about municipal securities is subject to: I state registration II federal registration III state advertising filing requirements A. I only B. II only C. I or II D. I, II, III

C. An investment adviser who provides advice solely about municipal securities is subject to either Federal or State registration, depending on the amount of assets the adviser has under management (note that this is not the case for an adviser that gives advice only about U.S. Government securities, where there is an exemption from Federal registration but not from State registration). There are no advertising filing requirements in a State for securities or transactions that are exempt; or for federal covered securities. Since municipals are exempt securities, the Administrator cannot impose an advertising filing requirement on offerings of these securities.

The "Brochure Rule" applies to: A. oral advisory contracts only B. written advisory contracts only C. both of the above D. none of the above

C. The SEC states that the "Brochure Rule" it applies to both oral and written advisory contracts. Note that this does conflict with the Investment Adviser Act of 1940's requirement that advisory contracts be in writing; but this is a later rule, written by someone who wanted the broadest interpretation possible.