Unit#6

When an agent recommends a proprietary mutual fund to a client it is considered

A potential conflict of interests

Proprietary mutual fund

A proprietary mutual fund is a fund that is managed by your brokerage house

Which of the following activities would violate the uniform securities act

An investment adviser partnership admits a renowned securities analyst to the partnership without informing its clients of its highly desirable addition, an investment advisory firm incorporated in Illinois charges clients a share of the capital gains on the basis of a guaranteed performance level above a designated benchmark

The investment adviser registration depository IARD is an electronic filing system that facilitates investment advisors registration the IARD is used for falling form ADV parts 1 and 2 if the brochure is not deliver it at least 48 hours before the signing of the agreement the client has a 5 day penalty free withdrawal of right

Annually the part 2 of the brochure or a summary of material changes must be delivered within 120 days of the end of their advisers fiscal year the brochure does not have to be delivered to all clients. Those purchasing and personal advice for less than $500 per year are exempt it

A federal covered investment adviser has decided that it is necessary to increase its fee schedule and charge commissions on securities trades however they are going to leave the fee structure in place for existing customers This information must be

Disclosed promptly only to those customers who will be affected by the change through an amended brochure

Which of the following statements regarding the investment advisers act of 1940 and the advises brochure are correct

Each client must receive the brochure no later than the entering and to the advisory contract

One way to make money is to buy low and sell high if an investment adviser has developed a propriety charging system that has had a very high degree of success in picking stocks near their market bottoms any advertisement about the system must

Indicate that there are limitations and difficulties to using the system. Anytime you see a question dealing with advertising a charging system or investment formula always look for limitations and difficulties in the answer

When promoting new program to existing brokerage clients it would be appropriate to point out that wrap fee charges cover which of the following services

Investment advice and execution of brokerage transactions

Research reports in seminar fees are

Provided by broker dealers to investment advisors as soft dollar compensation

A registered investment advisor recommends a stock that will be sold to his client in a principal transaction. The broker dealer that will sell the stock is also a registered as an investment adviser in a poison investment advisor as an agent this transaction

Requires both written disclosure to and the consent of the client prior to the completion of the transaction

The sec has determined that advertising regarding past recommendations made by investment advisors is misleading if

Results do not reflect the deduction of fees, actual market conditions during the reference period are not disclosed, The advertisement did not disclose that it applied to only a specific group of clients

Sec rules requires

That a brochure or summary of material changes if any must be delivered to all clients within a 120 days of the end of the advisor's fiscal year

According to both the investment advisers act of 1940 and the uniform securities act under which of the following circumstances is an investment adviser required to make disclosure to the client

The adviser intends to recommend the use of broker dealer with whom he is affiliated, the transactions recommend to the client are inconsistent with those for that advisers on account, the investment adviser intends to sell the client insurance policy recommended for his financial plan, the adviser is employed by a broker dealer but provides investment advisory services outside the scope of his employment with the broker dealer

Under NASAA's Model rule on an ethical business practices of investment advisors investment adviser representatives and federal cover advisors which of the following must be included in an investment advisory contract

The formula used to determine the investment advisors compensation and a statement of the discretionary authority if any given to the investment adviser