Part 1

An investment adviser must register in a state if it manages less than

$100 million in assets.

Investment advisers within assets under management must register with the SEC, not the state Administrator.

$110 million or more

IAR

(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.

The USA specifies that all records, including electronic communications (emails), must be maintained for a minimum of _____. For investment advisers, the requirement is ______

3 Years IAs 5 years

​Both ​​the Investment Company Act of 1940 ​(applicable here because this is a covered adviser) and the NASAA Model Rule on Recordkeeping ​require that investment advisers maintain certain records, such as partnership agreements and corporate articles of incorporation, for a period of no less than

3 years after dissolution.

An investment adviser who has no office in a state is exempt from registration in a state if, during any 12-month period, he has no more than how many retail clients in the state?

5

One of the exemptions from registration under state and federal law applies to investment advisers to private funds. One characteristic of all private funds is that A) they are not registered as investment companies B) they have no more than 100 investors C) they have assets of less than $150 million D) their advisers are exempt from filing reports on Form ADV

A) they are not registered as investment companies

For state-registered investment advisers, requirements set by the Administrator are subject to the limitations of the requirements set by the

Administrator of the adviser's home state.

Under the NASAA Model Custody Rule, an investment adviser would be considered to have custody of client assets if that adviser inadvertently receives 1) a check from a client made out to the IA and does not return the check within 24 hours 2) a check from a client made out to a third party and does not forward the check within 3 business days 3) stock certificates from a client and does not forward them within 3 business days 4) stock certificates from a client and does not return them within 3 business days

B) II and IV

Included in the Investment Advisers Act of 1940 are a number of different recordkeeping requirements. Wealth Preservation Specialists is a covered adviser that is organized as a partnership. If the firm were to dissolve, partnership agreements must be kept for A) 5 years after the dissolution B) 5 years from the date of organization C) 3 years after the dissolution D) the lifetime of the firm

C) 3 years after the dissolution

With regard to the keeping of records, the Uniform Securities Act states that investment advisers must keep records for A) 5 years B) 3 years C) 5 years, the first 2 in the principal office of the adviser D) 3 years, the first 2 in the principal office of the adviser

C) 5 years, the first 2 in the principal office of the adviser

Under the Investment Advisers Act of 1940, which of the following is considered an investment adviser? A) A syndicated columnist who gives weekly reports and recommendations on investments B) A person who publishes a regular newsletter of advice on U.S. Treasury bonds and other U.S. government securities C) A lawyer who specializes in consulting on investing in securities D) The trust officer of a commercial bank who manages investment accounts for clients

C) A lawyer who specializes in consulting on investing in securities *not excluded because the advice provided is not incidental to the profession; it is the lawyer's specialty.

Jefferson, Adams, and Washington (JAW) is a pension consulting firm whose only office is on Constitution Avenue in Washington, D.C. JAW has only one advisory client—a U.S. government employees pension fund with assets of $4 billion. What are this firm's registration requirements? A) It does not have to register because its only client is the U.S. government. B) It can only register with the SEC because the District of Columbia is not a state. C) It may choose to register with either the D.C. Administrator or the SEC. D) It must register with the SEC because the AUM is so high.

C) It may choose to register with either the D.C. Administrator or the SEC.

In which of the following cases is the exemption from registration with the SEC not based on the value of assets under management? A) An investment adviser that acts as an adviser solely to one or more national banks B) An investment adviser that acts as an adviser solely to private funds and has assets under management in the United States of less than $150 million C) An investment adviser with assets under management of less than $25 million D) An investment adviser that acts as an adviser solely to one or more venture capital funds

D) An investment adviser that acts as an adviser solely to one or more venture capital funds

As defined in the Uniform Securities Act, the term "offer to sell" would include A) the sale of U.S. Treasury bills. B) a gift of nonassessable stock. C) the attempt to sell gold coins. D) a gift of warrants.

D) a gift of warrants.

If an agent thought that a technology stock was undervalued and actively solicited purchase order from all of her customers, the agent A) committed an unethical sales practice because the firm has not recommended this technology stock B) did not violate the Uniform Securities Act if all material facts were disclosed C) did not commit a violation if all clients were accurately informed of the price of the stock D) committed an unethical business practice

D) committed an unethical business practice

Form PF must be filed by

Form PF is the form used by those private fund managers who are registered with the SEC and whose private fund AUM reaches or exceeds the $150 million threshold. Exempt reporting advisers are, as the term implies, exempt from reporting. State-registered advisers don't report on the form because, among other things, if they reached the $150 million mark, they'd have to register with the SEC.

"small" investment advisers, those with less than $25 million in AUM, are generally prohibited from

SEC registration.

Under the Uniform Securities Act, when must a consent to service of process be filed with the Administrator?

With the original application only

There are 3 primary expenses involved with brokerage accounts that are not included in the fee disclosure template. Those are:

commissions; markups and markdowns; and advisory fees for those firms that are also registered as investment advisers.

It is only in the case of the adviser to venture capital funds where there is no

dollar limitation on AUM.

Private funds lose that distinction if they become registered as

investment companies under the Investment Company Act of 1940.

Under IA-1092, an investment adviser makes advice his ___ and is compensated ___

makes advice his regular activity is compensated directly or indirectly for advice

The SEC requires _____ amendment of any material information changes on Form ADV (e.g., names, location, control, custody, organization) and also requires nonmaterial amendments within ____days of the end of the adviser's fiscal year.

prompt 90

Private fund advisers with AUM of $150 million or more must

register, and "small" investment advisers, those with less than $25 million in AUM, are generally prohibited from SEC registration.

Agents must always determine _______ before soliciting purchases or sales.

suitability The key here is that the agent solicited buy orders for this stock from all of her clients. One investment cannot be suitable for all of your clients.

sale of the unregistered stock is ANexempt transaction (private placement) ONLY IF

the USA only permits offers to a maximum of 10 noninstitutional investors over a 12-month period.

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 provisions of the Dodd-Frank Act of 2010, once a pension consultant's AUM reaches $200 million, it has

the choice of state or SEC registration.

Under the Uniform Securities Act, the recordkeeping requirements established by the Administrator for out-of-state investment advisers wishing to register in his state are subject to the limitations of

the requirements set by the Administrator of the adviser's home state