Who are Investment Advisers?
State laws provide for expulsions from the definition of IA. Which of the following persons it's specifically excluded under the USA? A) IAR B) Economists whose advice is strictly incidental to their professional activity C) BDs receiving special compensation D) Bank subsidiary offering investment advice
A) IAR
Under SEC Release IA-1092, the term IA does NOT include which of the following? I. A BD who charges for investment advice II. A publisher of a financial newspaper III. A person who sells security analysis IV. A CPA who, as an incidental part of his practice, suggests tax-sheltered investments to wealthier clients A) II and IV B) I and IV C) I and III D) II and III
A) II and IV
The purpose of SEC Release 1A-1092 is to: I. Unify the requirements of the USA and the IA Act of 1940 II. clarify the Securities Exchange Act of 1934 III. clarify the activities that would subject a person to regulation under the IA Act of 1940. A) III only B) I only C) II only D) I and II
A) III only
Under SEC Release 1A-1092, which of the following has (have) met the test of providing advice or analysis concerning securities? I. A stockbroker calls a client and recommends the purchase of a certain stock II. A lawyer recommends against purchasing shares of a mutual fund in favor of another investment III. A publisher of an investment newsletter provides general information and recommendations concerning securities. A) I, II and III B) I only C) I and II D) I and III
A) I, II, and III
An IA 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? A) 5 B) 20 C) 10 D) 35
A) 5
Which of the following is most likely to be excluded from the definition of an adviser under the IA Act of 1940? A) A commercial bank that regularly handles the financial affairs of its customers B) A teacher who makes reference to specific securities Ina course on corporate finance and accepts compensation from those who seek his advice as a result of his course C) An accountant who,as part of his practice, offers semifinal securities advice D) An adviser who recommends government securities but also issues research reports on corporate securities
A) A commercial bank that regularly handles the financial affairs of its customers
Under the terms of the USA, which of the following is an investment adviser for purposes of state regulatory jurisdiction? A) An investment subsidiary of a bank holding company located in the state that manages $20 million 8in assets B) A federal covered adviser with clients in the state C) A commercial bank with a place of business in the state that advises clients on banking matters D) An accountant located in the state who offers general securities advice as an incidental part of his business.
A) An investment subsidiary of a bank holding company located in the state that manages $20 million 8in assets
Which of the following persons is NOT excluded from the definition of an IA if their advice given is incidental to the individual's profession? A) Economist B) Teacher C) Lawyer D) Engineer
A) Economist
Under the IA Act of 1940, which of the following is (are) excluded from the definition of an IA? I. The publisher of a financial newsletter on a paid subscription basis, which contains only general securities recommendations II. Persons whose investment advice relates solely to issues distributed or guaranteed by the US government. III. A lawyer who charges a separate fee for investment advice that is provided as a separate part of the business. A) I and II B) I, II, and III C) III only D) I only
A) I and II
Which of the following meet(s) the compensation test for defining IAs under SEC Release 1A-1092? I. An insurance agent sells a life insurance policy and receives a commission on that policy. During the sale of the insurance policy, the agent provides some securities investment advice. II. Subscription payments received by a publisher of a newsletter providing impersonal securities-related advice. III. Your next door neighbor recommends the purchase of a certain security from his broker, which you eventually do. A) I and II B) II only C) I, II, and III D) I only
A) I and II Compensation may take the form of payments for subscriptions, salaries, or commissions. Nothing in the neighbor's advice involves compensation
Which of the following situations would require registration as an investment adviser? I. A BD provided investment research services to a customer and charged a fee for the service. II. An agent of a BD recommend the purchase of ABC securities to a customer, who then purchases 100 shares, and the agent earns a commission. III. An agent of a BD prepares a complete financial plan for a customer for a nominal charge. The plan recommends specific securities transactions, which the customer orders. The agent earns commissions on the securities transactions IV. A BD charges its customers for collecting dividends and maintaining their accounts in addition to commission charges for transactions executed A) I and III B) I only C) I, I, III, and IV D) I, III and IV
A) I and III
Under the USA, which of the following is (are) excluded from the definition of an IA when providing investment advice solely incidental to the business? I. Lawyer II. Accountant III. Engineer IV. Teacher A) I, II, III and IV B) I, II and IV C) II and IV D) I and III
A) I, II, III and IV
Which of the following are NOT IAs under the USA? I. Joe advises customers regarding the value of gold and silver coins II. The trust department of ABC Bank provides investment advice to its clients III. Tammy writes a newspaper column in which she analyzes and recommends securities IV. Jack is an IAR A) I, II, III, and IV B) I and II C) I and IV D) II, III, and IV
A) I, II, III, and IV
In defining an IA under SEC Release 1A-1092, which of the following would meet the business standard? I. A person who advertises himself as an IA II. A person who provides securities-related advice ona frequent or regular basis III. A person who receives separate or additional compensation for securities-related advice A) I, II, and III B) II and III C) III only D) I and II
A) I, II, and III
In which of the following third-party transactions would an investment adviser be required to make disclosure to the client of compensation received> I. An IA recommends an affiliated realtor to a client and receives compensation from the realtor. II. An IA, who is also an agent for an insurance company, sells policies from the company to his clients. III. An adviser who is affiliated with a BD receives commissions on sales recommended to clients through the BD A) I, II, and III B) II only C) I only D) I and III
A) I, II, and III
Martin holds both the CPA and the CFP designations. Within the previous year, if he has provided portfolio advice to approximately 40 clients, is Martin required to register as an IA? A) Yes, because he provides investment advice on a more than incidental basis B) YEs, because he could receive commission income from investment clients C) No, because he is a CPA D) No, because he falls under the de minis exemption having relatively few clients
A) Yes, because he p
As defined in the IA Act of 1940, all of the following would be considered IAs EXCEPT: A) a professional plumber with excellent stock market skills who as a hobby and without pay, manages portfolios for 8 of his neighbors. B) a civil engineer making investment decisions for $5 million held in escrow while a bridge for which she is the project manager is being constructed, C) a portfolio manager who limits advice to municipal securities exclusively D) a tax attorney who manages investment portfolios for 50 clients.
A) a professional plumber with excellent stock market skills who as a hobby and without pay, manages portfolios for 8 of his neighbors.
Registration as an IA is required for any firm in the business of giving advice on the purchase of: A) convertible bonds B) gold coins C) rare convertible automobiles D) apartments undergoing a conversion to condominiums
A) convertible bonds
An IA need not register in a state if it has: A) no place of business in the state and only advises three insurance companies located in the state B) no place of business in the state, does not direct business communications in the state, and advises more than five high-net-worth individuals located in the state C) a place of business ion the state and advises fewer than five banks D) a place of business in the state and only advises employee benefit plans with more than $1 million
A) no place of business in the state and only advises three insurance companies located in the state
Under the USA, a person who is in the business of providing advice on trading futures contracts in addition to advising clients on securities issued or guaranteed by the US government is: A) not required to be a registered Investment adviser in the state B) required to be a registered agent in the state C) required to be a registered investment adviser in the state D) required to be a registered investment adviser representative in the state
A) not required to be a registered investment adviser in the state.
Kappa Investment Advisers currently has $138 million in AUM and has offices in Colorado and Utah. Kapco's only clients in Utah are 2 insurance companies domicile do in that state. Kapco has no office in New Mexico but does service the accounts of 3 middle-class individuals. Kapok recently has opened an advisory account for a pension plan for a corporation located in Montana. Under the USA, Kapco would have to register with: A) the SEC B) the Administrator in the states of Montana and New Mexico C) the Administrator in each state in which it does business. D) the Administrator in the states of Colorado and Utah
A) the SEC
The sole proprietor of an insurance business that exclusively provides advice on fixed income annuity contracts: A) must register as a BD with the SEC B) must register as an IAR under the USA C) need not register under any securities laws D) must register as an IA under the IA Act of 1940
C) need not register under any securities laws
The USA provides either an exclusion from the definition or an exemption from registration as an IA for certain persons. Which of the following would be required to register? A) A teacher who teaches a course in the local high school on consumer economics. B) A CFP who provides a full range of financial planning to clients on a fee-only basis C) An engineer employed by an oil company selling limited partnership interests to public investors who provides estimates of recoverable reserves. D) A bank trust officer with less than $250 million in assets under management
B) A CFP who provides a full range of financial planning to clients on a fee-only basis
Which of the following statements describes a person who provides investment advice on a regular basis but does not charge fees, yet would be considered an adviser under Release 1A-1092? A) The Secretary of the US Treasury who, as part of his official duties, comments on conditions in the financial markets and their future investment implications B) A financial planner who sold his business and spends his time consulting with pension plans on whether to retain or hire new investment managers based on their performance. He does not charge fees; however, those managers retained as a result of his recommendations routinely provide him with no cash benefits such as vacations, computers, and office space. C) A retired chief investment officer of a well-known investment management company who, without compensation, writes a column in a general circulation newspaper commenting on the value of investing in equity securities; many readers find his advice useful and become clients of his former investment management company D) A wealthy college professor who gives free lectures on sound investment practices and makes specific securities recommendations based on a. Qualitative model he has developed.
B) A financial planner who sold his business and spends his time consulting with pension plans on whether to retain or hire new investment managers based on their performance. He does not charge fees; however, those managers retained as a result of his recommendations routinely provide him with no cash benefits such as vacations, computers, and office space.
Under both state and federal law, there are a number of exclusions from the definition of IA. Which of the following would not qualify for an exclusion? A) A personal injury attorney who recommends that clients consult with a CFP for advice on how to deal with the large settlements they receive B) A publisher of a newsletter that is paid to make reports to be used in the sale of specific securities C) A CPA who gives high-tax bracket clients a chart showing the tax equivalent yield of municipal bonds. D) An economist who teaches a course in fundamental analysis at a local community college
B) A publisher of a newsletter that is paid to make reports to be used in the sale of specific securities
Which of the following would NOT be considered to be in the business of an IA? A) A person compensated for the investment advice, but who provides the advice only to institutions B) An accountant who provides occasional investment advice bu receives no separate fee for the service C) A person compensated for investment advice, although this service is not a primary part of the business D) A person who provides investment advice but is compensated only through commissions on the sale of stock.
B) An accountant who provides occasional investment advice bu receives no separate fee for the service
Under the IA Act of 1940, which of the following is excluded from the definition of IA? A) Pension consultants B) Attorneys for whom providing investment advice is incidental to the practice of their profession C) Publishers of investment newsletters D) Sports of entertainment representatives
B) Attorneys for whom providing investment advice is incidental to the practice of their profession
An investment adviser is required to disclose to a client the amount of compensation received from which of the following third parties? I. Compensation on the client's transactions executed through a BD II. Compensation received from an issuer of a security recommended to the client III.Compensation received from any nonsecurities products recommended to the client A) II only B) I, II, and III C) I and II D) I only
B) I, II, and III
Under the IA Act of 1940, persons who provide a variety of services, including investment advisory services, are considered to have received compensation for their advice when they receive: I. Any economic benefit II. A fee paid directly for the investment advice portion of their services III. A commission on the sale of real estate when it is part of a total financial plan for a client that includes securities advice A) I and II B) I, II, and III C) II and III D) I and III
B) I, II, and III
Which of the following factors determine(s) whether a person is considered an IA under the IA Act of 1940? I, The specificity of the advice II. The business engaged in III. Whether compensation is received. A) I and III B) I, II, and III C) I and II D) II only
B) I, II, and III
Which of the following would meet the definition of IA under the USA? I. A BD charging a separate fee for investment advice II. The publisher of a weekly newsmagazine, sold in newsstands, that contains at least 5 stock recommendations per issue III. A civil damages attorney who advertises that he is available to assist clients in suggesting appropriate investments for their successful claims IV. A finance teacher at a local community college who offers weekend seminars on comprehensive financial planning at a very reasonable price A) I, II and III B) I, III, and IV C) I only D) I, II, III, and IV
B) I, III, and IV
In response to an evolving marketplaces the SEC, through Release 1A-1092, expanded the coverage of the definition of IA to include: I. BD offering wrap fee programs II. Financial Planners III. Life insurance agents IV. Pension consultants A) III and IV B) II and IV C) I and II D) I and III
B) II and IV
Under IA-1092, an IA: I. Makes advice his principal activity II. Makes advice his regular activity III. is compensated directly for advice IV. Is compensated directly or indirectly for advice A) II and III B) II and IV C) I and III D) I and IV
B) II and IV
Based on the IA Act of 1940, which of the following would be excluded from the definition of an investment adviser? I. A lawyer who advertises financial planning services II. Persons whose advice relates solely to government securities III. An accountant who receives separate fees for providing investment advice A) I and III B) II only C) II and III D) I only
B) II only
Which of the following is (are) required to register with a state Administrator? I. An adviser who only provides impersonal investment advice through newspaper columns, magazine articles, or financial publication of general and regular circulation II. Investment adviser representatives of federal registered advisers who have natural person clients and have a place of business in the state III. An investment adviser who has no place of business in the state and has five advisory clients in the state IV. A person who is an officer of a federal registered investment adviser who has no natural person clients A) I, II, III, and IV B) II only C) II and III D) I only
B) II only
Both the IA Act of 1940 and SEC Release !a-1092 specifically exclude from the definition of IA certain persons who provide investment advice solely incidental to the practice of their profession. Which of the following would NOT by definition qualify for this exclusion? I. An accountant who provides high tax bracket clients with a useful chart showing them how to compute the tax equivalent yield for municipal bonds II. A divorce attorney who, after obtaining settlements for clients, provides them with a list of suggested investment alternatives encouraging them to be prudent with their newfound wealth. III. A university professor who provides investment advice for a substantial fee to fewer than `5 clients during any consecutive 12-month period, none of whom is an investment company IV. An economist who consultes with very large corporate employee benefit plans on how to best invest their funds A) II and III B) III and IV C) I and IV D) I and II
B) III and IV
Which of the following are not specifically excluded from the definition of an IA under the USA? I. An IAR of an advisory firm who makes securities recommendations on a regular basis for compensation II. A temporary employee hired to assist in administrative responsibilities of an advisory firm III. Any person who is a federal covered investment adviser IV. A person whom on a regular basis for compensation, offers specific investment advice to clients as to the value of securities A) II and III B) IV only C) I and IV D) II and IV
B) IV only
When, if ever, would a BD be required to register as an IA? A) never B) If it changes distinct fees for investment advice or management C) If it is not registered with the SEC D) Always
B) If it changes distinct fees for investment advice or management
Which of the following is specifically excluded from the definition of an IA providing the investment advice is solely incidental to the business in which the person is engaged? A) Sports representative who advises on securities for a fee B) Industrial Engineer C) Pension MAnager D) Movie star's business manager who handles the star's investment portfolio.
B) Industrial engineer
As defined in SEC Release 1A-1092, which of the following is a pension consultant? A) A person who provides securities-related advice for compensation B) Persons suggesting portfolio managers to administrators of employee benefit plans C) A person who charges a fee for advising retirees on how to maximize their pension payouts D) A person who prepares a plan for a client's future based on analyzing needs, objectives, tax situations, and resources
B) Persons suggestions portfolio managers to administrators of employee benefit plans
In 1987, the SEC promulgated release 1A-1092. One of the significant effects of the release was to expand the definition of investment adviser to include some financial planners. However, a financial planner would not be considered an IA when: A) he does financial planning as part of offering a wrap fee program as a licensed agent of a BD B) the extent of his planning is limited to wills, estates and trust creation. C) he is a licensed insurance agent and credits the commission earned on the sale of insurance policies included in a comprehensive financial plan against the fee charged for the plan D) there is an upfront fee charged for creating a comprehensive financial plan, even when the plan is not put into place
B) the extent of his planning is limited to wills, estates, and trust creation.
Under theUSA, which of the following is included in the definition of an IA? A) publisher that receives a yearly subscription fee for a newsletter that provides nonspecific investment advice B) bank that offers investing counseling to its high net worth customers C) A BD who receives a flat fee for analyzing a customer's investment objectives and recommending a portfolio of securities D) Antiques dealer who receives a fee for ad vision customer as to the value of antiques and rare coins
C) A BD who receives a flat fee for analyzing a customer's investment objectives and recommending a portfolio of securities
Which of the following parties is most likely to be considered an IA under the IA Act of 1940? A) Dow Jones, Inc., publisher of "The Wall Street Journal" B) An expert in fixed income securities whose only clients are individuals and whose only recommendations deal with securities issued or guaranteed by the US Treasury C) A CPA who manages investment accounts for 50 clients and charges hourly fees for the service. D) The trust department of Citibank, which handles billions of dollars in trust assets
C) A CPA who manages investment accounts for 50 clients and charges hourly fees for the service.
Under the IA Act of 1940, who of the following would be considered to be in the business of rendering investment advice? A) An agent who receives no separate compensation for investment advice but who takes commissions on recommended trades B) An individual who provides investment advice to family members, but receives no compensation C) A financial planner who charges no fee for developing a financial plan, but takes commissions on recommended trades D) An accountant who provides investment advice to clients as an incidental part of the business.
C) A financial planner who charges no fee for developing a financial plan, but takes commissions on recommended trades
Which of the following persons does NOT meet the definition of providing investment advice as a business outlined in SEC Release IA-1092? A) Attorney who advertises the availability of investment advice B) A financial planner who provides specific investment advice as part of his fee-based services and also makes specific securities recommendations to his clients in his capacity as an agent for a BD C) A management consultant whose only investment advice is suggestion to a couple of small business clients who had invested their surpluses in speculative securities that they should find something less risky D) Accountant who charges clients an additional fee for providing investment advice
C) A management consultant whose only investment advice is suggestion to a couple of small business clients who had invested their surpluses in speculative securities that they should find something less risky
Which of the following must register as an investment adviser under the IA Act of 1940? A) A person who provides advice to people who are investing in antique furniture B) A person who provides advice to insurance companies on their portfolios C) A person who provides advice to people who are investing in companies registered under the Investment Company Act of 1940 D) A person who provides advice to people who are investing in coin collections
C) A person who provides advice to people who are investing in companies registered under the Investment Company Act of 1940
Which of the following is an IA? A) A bank that purchases securities on behalf of its custodial accounts B) A lawyer with sophisticated investment experience who gratuitously offers his clients advice on the value of securities. C) A retired mechanical engineer who offers investment advice in his areas of expertise to a small number of clients for a fee D) A columnist for a major news magazine who writes on the business and economic functions of banking institutions.
C) A retired mechanical engineer who offers investment advice in his areas of expertise to a small number of clients for a fee
Which of the following activities is most likely to be considered by the SEC as meeting the business standard element in the definition of an IA? A) Advertising investment services but receiving no separate compensation for the services B) Giving specific investment advice only on rare isolated occasions C) Advertising investment services to the public and providing them routinely D) Issuing reports on macroeconomic conditions
C) Advertising investment services to the public and providing them routinely
Under the USA, an accountant who charges hourly fees for securities recommendations in the regular course of his account practice is: A) included in the definition of an IA because accountants are not among the professionals excluded from the definition B) not included in the definition of an IA because he receives an hourly rate instead of a commission C) included in the definition of an IA because he is compensated for giving investment advice in the regular course of business D) not included in the definition of an investment adviser because he is an accountant
C) no place of business in the state and only advises three insurance companies located in the state
Under the IA Act of 1940, for which of the following is an IA required to disclose to clients the amount of compensation he will receive? I. Commissions on recommended securities transactions II. Commissions on insurance sales III. Incentives from the issuer of a recommended security A) I and II B) II and III C) I, II, and III D) I and II
C) I, II and III
Under the USA, which of the following persons do NOT have to register as an IA? I. BD who gives advice for which he charges a specific fee. II. Agent of a BD who gives fee-based investment advice independent of his duties for the BD III. BD who gives investment advice that is incidental to the course of its business and for which no special compensation is received. IV. Attorney who writes a legal opinion for a municipal bond indenture. A) I and II B) II and IV C) III and IV D) I and III
C) III and IV
Under the IA Act of 1940, who is not excluded from the definition of IA when their investment advice is solely incidental to the individual's profession? A) engineers B) teachers C) insurance agents D) attorneys
C) Insurance agents
Which of the following is NOT considered to be in the business of investment advising? A) A person who prepares reports about securities in general. B) A financial planner who provides advice on many types of financial instruments, including securities, and receives commissions on the sale of life insurance C) Insurance agents who discuss the merits of life insurance verses nonsecurities financial instruments and who receive commissions on the sale of life insurance only D) An insurance agent who provides advice regularly, but such advice represents a small portion of her business.
C) Insurance agents who discuss the merits of life insurance verses nonsecurities financial instruments and who receive commissions on the sale of life insurance only
Which of the following statements is NOT true of investment advisers under the USA? A) Investment advice includes advice regarding the value of securities as well as recommendations to buy or sell B) Compensation is a key factor in determining whether a person is required to register as an IA C) Only written advice concerning investments is covered by the act D) Investment advisory contracts must be in writing.
C) Only written advice concerning investments is covered by the act
An agent and a BD maintain wrap fee accounts for several of their customers. Which of the following registrations is required? A) neither the BD nor the agent is required to have any license other than their regular securities license B) Only the registered principal would need to be registered in the state(s) in which they do business. C) the firm must register as an investment adviser D) the agent must be registered as an investment adviser
C) The firm must register as an investment adviser
Under the USA, all of the following are excluded from the definition of an IA EXCEPT: A) banks B) a federal covered adviser C) an individual providing advice on municipal bonds D) BDs and their agents
C) an individual providing advice on municipal bonds
Under the USA, all of the following persons may provide investment advice incidental to their normal business without requiring registration as an IA EXCEPT a(n): A) lawyer B) engineer C) economist D) teacher
C) economist
Under the USA, IAs are exempt from registration Ina. State where they have no office if they direct business communications with no more than 5 retail clients within: A) 6 moths B) 30 days C) 2 years D) 12 months
D) 12 months
Under SEC Release 1A-1092, which of the following is included in the definition of an IA? A) A research service that offers advice on the value of gold B) A professions research analyst who holds himself out to the public as an expert in trading the Euro and other foreign currencies C) A bank that advertises to the public that it offers a complete line of trust services D) A lawyer who advertises to the public that he offers comprehensive legal and investment advice to high net worth individuals
D) A lawyer who advertises to the public that he offers comprehensive legal and investment advice to high net worth individuals
Under the IA Act of 1940, which of the following is considered an IA? A) A syndicated columnist who gives weekly reports and recommendations on investments B) A person who publishes a regular newsletter of advice on US Treasury bonds and other US government securities C) The trust officer of a commercial bank who manages investment accounts for clients D) A lawyer who specializes in consulting on investing securities
D) A lawyer who specializes in consulting on investing in securities
Which of the following would have to register as an IA under the USA? A) An accountant who advises clients about investments as an incidental part of services B) A trust company C) An economics professor who occasionally gives a lecture to business groups about the stock market D) A retired aeronautical engineer who charges a nominal fee for holding seminars on opportunities in aerospace stocks
D) A retired aeronautical engineer who charges a nominal fee for holding seminars on opportunities in aerospace stocks
Which of the following is specifically excluded from the definition of an IA under the IA Act of 1940, when that person's investment advice is solely incidental to the practice of their profession? A) Pension consultant B) Athlete's financial manager C) Financial planner D) Aeronautical engineer
D) Aeronautical angineer
A registered BD offers investment advice as an incidental part of its commission business. One of its agents charges for investment advice as a freelance investment adviser outside the scope of his employment at the firm. Which of the following statements are TRUE? I. The BD must register as an IA II. The agent must register as an IA III. The agent need not register as an IA IV. The BD need not register as an IA A) III and IV B) I and III C) I and II D) II and IV
D) II and IV
Harrison is a CFP with an office in the state and a telephone directory listing under the category "FInancial Planners." Harrison has, for fees, written more than 100 comprehensive financial plans for various individual clients. However, only 20% of the plans' content entails advice regarding securities and investments. Which of the following statements best describes Harrison's status as an investment adviser under the USA? A) Harrison is required to register as an IA because he holds a recognized financial planning credential. B) Harrison is not required to register as an IA because he holds a recognized financial planning credential. C) Harrison is not required to register as an IA because his securities advice is purely incidental to his overall planning activities D) Harrison is required to register as an IA because he regularly offers advice and receives compensation for advice concerning securities and investments, and holds himself out as a financial planner.
D) Harrison is required to register as an IA because he regularly offers advice and receives compensation for advice concerning securities and investments, and holds himself out as a financial planner.
Under the IA Act of 1940, which of the following criteria are considered in determining whether a person is in the business of rendering investment advice? I. The person regularly gives advice on securities II. The person derives his earnings from executing transactions on recommended securities III. The person receives compensation from rendering advice on securities A) I, II, and III B) I and II C) II and III D) I and III
D) I and III
T be defined as an IA under the USA, which of the following must apply? I. Compensation must be received II. Advice is provided regarding securities III. Advice may be provided through direct oral communication or in writing A) I and II B) I and III C) II and III D) I, II, and III
D) I, II and III
Under SEC Release 1A-1092 which three standards are used to define an IA? I. Provides advice, reports, or analyses concerning securities II. Is in the business of providing securities-related advice or analysis III. Receives compensation IV. Is the principal business activity A) I, III, and IV B) I, II, and IV C) II, III, and IV D) I, II and III
D) I, II and III
In October 1987, the SEC promulgated Release IA-1092, which had the effect of broadening the definition of IA. As a result of the Release, which of the following would be included in the definition? I. Commercial banks offering comprehensive financial planning for their high-net-worth clients. II. Entertainment agents earning a fee for negotiating contracts for their clients and then placing a portion of their client's royalties into investment grade bonds or large cap stocks as market conditions dictate. III.Persons who receive a nominal fee for assisting employee benefit plan administrators select investment managers for the plan's assets IV. Lawyers who prepare trust agreements for clients with large securities holding with a goal of minimizing estate taxes A) I and IV B) I and II C) II and IV D) II and III
D) II and III
The IA Act of 1940 excludes from the definition of "Investment Adviser" person whose advice: I. Relates solely to municipal issues II. Relates solely to issues issued by or guaranteed by the US Treasury III. Is solely incidental to their professional practice as an aeronautical engineer IV. Is limited to fewer than 15 clients in any 12-month period, none of whom is a registered investment company A) I, II and IV B) III and IV C) I, II, III, and IV D) II and III
D) II and III
Under the USA, which of the following are excluded from the definition of IA, provided the advice is incidental to their profession? I. Banks II. Lawyers III. BDs IV. Teachers A) II and III B) I and III C) I and IV D) II and IV
D) II and IV
The IA Act of 1940 contains the basic definition of persons who are required to register with the SEC as IAs. Which of the following persons would be included in the listing of those who must register? I. A person who gives advice to investors on collectibles that are most likely to appreciate in value in the next 10 years. II. A chemical engineer who gave advice on new product ideas that was solely incidental to the practice of the profession and for which no compensation was received. III. A person, while receiving compensation, described the advantages of certain types of managed investments such as mutual funds and REITs, but did not recommend a specific investment IV. A fee-based financial planner who, on the basis of current economic forecasts, had many of his clients liquidate their investment-grade bonds and purchase gold coins with the proceeds. A) I and II B) III only C) I, II, and IV D) III and IV
D) III and IV
Under which of the following circumstances may attorneys and accountants claim an exclusion from the definition of IA under the IA Act of 1940? I. They charge a separate fee for the provision of investment advice from that received for their professional services. II. They advertise that they are available to provide investment advice III. The advice is incidental to the practice of their profession. IV. The investment advisory activities have grown to represent 30% of their business A) I and III B) I, II and IV C) II only D) III only
D) III only
Which of the following would NOT be considered an investment adviser under Release IA-1092? A) A retired banker who solicits business and advises former clients on a monthly basis as to the specific investment merits of banking securities and receives compensation for his services B) An agent for an athlete who negotiates contracts for a baseball player, as well as advises the client on securities, but does not have discretionary authority over the athlete's securities account C) A pension consultant who advises a defined contribution plan alternative methods of funding the plan and the relative merits of a selected list of investment managers D) The president of an investment club who provides research and advice to the members of his club on a regular basis as an integral part of his duties
D) The president of an investment club who provides research and advice to the members of his club on a regular basis as an integral part of his duties
A person is excluded from the definition of an IA under the IA Act of 1940 if the investment advice and reports are restricted to: A) bank and insurance company securities B) securities listed on a national stock exchange C) foreign securities D) US government securities
D) US government securities
Under the IA Act of 1940, which of the following are excluded from the definition of an IA? A) Insurance companies B) Attorneys who advise on securities (only) for a fee C) Accountants who advise on securities (only) for a fee D) All banks that are not investment companies
D) all banks that are not investment companies
Registration as an IA or IAR under the USA is required of a(n): A) officer of a trust company handling investments for trust accounts B) tax attorney who, as an incidental part of his tax advise, recommends that his high tax bracket clients investigate the use of municipal bonds in their portfolios C) agent of a BD who recommends model portfolios to clients in exchange for them executing their trades through him D) economics professor at a local community college who gives lectures in the evenings to public groups about portfolio analysis for which he charges a nominal fee.
D) economics professor at a local community college who gives lectures in the evenings to public groups about portfolio analysis for which he charges a nominal fee.
A BD is NOT considered an IA if the: A) firm's investment advice is limited to 10 or fewer people. B) firm has less than 15 advisory accounts totaling less than $1 million C) firm is registered under the IA Act of 1940 D) investment advisory services are incidental to the BD's business and no special compensation is received.
D) investment advisory services are incidental to the BD's business and no special compensation is received.
Under the USA, a person who exclusively provides advice on commodities is: A) a registered insurance agent B) an options representative C) a registered IAR D) not a RIA
D) not a RIA
Under the IA Act of 1940, the exclusion for providing investment advice that is solely incidental to the practice of a profession is NOT available to: A) teachers B) engineers C) attorneys D) real estate agents
D) real estate agents
