Series 63 ch. 6

what 2 time frames does a customer have to receive the options disclosure document?

-either before the first options trade or at (or before) the time the options account is approved

3 examples of interactive social media content

Emails, tweets, commenting on a FB post

A prospective client would like information on the post-secondary schools attended by those employees of an investment adviser who will be making advisory decisions. That information can be found by requesting which form Part 1a/b or 2a/b

Form 2B

Can an IA make its fees based on a percentage of the change in value of funds from quarter to quar

NO - fees based on a share of appreciation in an account are prohibited

does the client HAVE to get the borchure 48 hours in advance of entering into an Advisory contract?

No it can be after 48 hours, but if it's later than the penalty-free termination is in effect

One major difference between the customer identification program (CIP) and the new account opening rules of the regulatory bodies is that the CIP

Requires date of birth while the regulators only require proof of legal age.

What is entanglement

Where the firm is involved in the preparation of the content

when collecting information for customer identification programs (CIPs), what is not accepted

a PO address instead of a physical address. but be physical

When a broker-dealer is acting as a principal in a securities transaction, it is

a contra party to the trade.

An agent is making a presentation of a mutual fund to a client. So that the client better understands the risks and expenses involved, the agent takes a yellow highlighter and uses it to mark the most important information in the prospectus. Under state and federal regulations, this is

a prohibited practice because no markings may ever be made on a prospectus

Under the National Securities Markets Improvement Act of 1996 (NSMIA) which of the following statements describe federal covered securities?

a security registered under the investment company Act of 1940, a security of a company regulated by the US Federal reserve board, and a security issued by the US gov't, any security traded on exchanges and Nasdaq

n general, a broker-dealer will disclose its fee schedule

at the time of the account opening.

In general, the Administrator would require that a broker-dealer's social media policies be

committed to writing and communicated firmwide.

What is adoption of social media

material posted to a securities professional's social media site by a third party, where the securities professional explicitly or implicitly endorses or approves of the content but plays no role in its development

NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure that must be made...

no later than the date of entry into the advisory contract

what is a hypothecation agreement

permits the BD to pledge the client's margin securities as collateral for a loan that the BD takes out. In simple terms, there are two loans taking place: 1- The loan from the BD to the client, with the client's securities used as collateral. That is covered in the credit agreement. 2- The loan from a bank to the BD, with the client's securities used as collateral for the BD's loan. The authorization for the BD to use those securities is found in the hypothecation agreement.

One of the portions of the USA PATRIOT Act of 2001 that affects the opening of an account for a new customer is

the customer identification program.

to the brochure, the Administrator is empowered to check communications with

the public, such as seminars and advertising, the website

For larger accounts, a broker-dealer is least likely to waive its normal fee for

transferring the account to another broker-dealer

A state-registered investment adviser would be permitted to

use Part 2 of the Form ADV to satisfy the brochure requirement

A new investor is confused over the expression that a broker-dealer must disclose its capacity on a trade confirmation. You could explain that capacity refers to

whether the firm acted as an agent or a principal in the transaction.

Margin account agreements must be received before the first margin trade in the account. true or false?

. margin account agreements must be received promptly after the initial margin trade in the account.

The brochure rule creates exemptions from the delivery requirement in two cases.

1- e first is when the service rendered meets the definition of impersonal advisory services and the annual fee is less than $500. In this question, the fee is $600 ($150 per quarter times four quarters). 2- The other is when the advisory contract is with a registered investment company such as a mutual fund.

Annual delivery of the brochure to existing clients must be made within ---?

120 days of the end of the adviser's fiscal year

requirement for the annual updating amendment to the Administrator is __ days?

90

Which of the following methods of compensation to an investment adviser would probably be in violation of the Uniform Securities Act?

A client agrees to compensate an investment adviser on a percentage of capital gains in excess of the S&P 500 in return for a guarantee against loss. Can charge a flat fee, % of AUM, hourly basis

what is the model rule/48 hour rule

The Model Rule permits that as long as there is a provision for the client to have a penalty-free withdrawal right within five business days of entering the contract. That right can be abrogated if the brochure is delivered at least 48 hours in advance. However, the rule does not mandate the early delivery. By doing so, the adviser is relieved of providing the penalty-free withdrawal.

A margin account is a type of brokerage account in which the broker-dealer lends the investor cash to purchase securities using marginable securities in the account as collateral. Which of the account documents authorizes the use of those securities as collateral for that loan?

The credit agreement

three primary expenses involved with brokerage accounts that are not included in the fee disclosure template.

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