August 9th

When it comes to advertising by investment advisers and their representatives, which of the following would be most likely to be acceptable to the Administrator?

A "like" from a client on an investment adviser representative's Facebook page post that announced the birth of her most recent child.

An elderly widow with no independent income wishes to invest the proceeds from her recently deceased husband's life insurance. Which of the following would be the most suitable recommendation?

Large-cap income stocks

An investment adviser is preparing an advertisement. Which of the following would be acceptable?

Offering to provide its investment recommendations for the past 12 months Promoting its system of charts and formulas while mentioning its limitations and difficulties

Differences between static and interactive content on social media include

Only static content needs pre-approval Only interactive content can be commented on by others

Which of the following would be a permissible activity for an agent?

Placing an order in an existing discretionary account without specific authorization for that trade

Which of the following is NOT a prohibited practice under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents?

Selling stock rights received in a client's account at the direction of the client

Under which of the following circumstances can an agent conduct customer transactions without the activity being recorded on the books and records of his broker-dealer employer?

The transactions are authorized in writing by the broker-dealer before execution of the transactions.

Which of the following statements regarding Form ADV Part 2 is TRUE?

Unless there are no material changes, it must be delivered to clients annually.

Typical broker-dealer fees that must be disclosed as part of a fee disclosure document would include

a charge when a client requests that a stock certificate be issued in his name the interest charged by the firm on money owed by customers in their margin accounts

A working group convened by NASAA has developed a model fee disclosure schedule to help investors better understand the costs involved in doing business with their broker-dealer. The template has broker-dealers disclose all of the following fees EXCEPT

advisory fees

Consent of the client before completion of a trade made between the firm and a client must be made when

an investment adviser will be acting in the capacity of a principal

An investment adviser representative is prohibited from

charging a fee for investment advice and then earning commissions on recommended trades without disclosing the nature of the dual relationship

In designing a client's portfolio, a registered investment adviser representative of Greater Wealth Advisory Services recommends the purchase of several stocks from the inventory of Greater Wealth's wholly owned broker-dealer. Under current regulations, this activity requires written

disclosure to the client and consent prior to completion of the transaction

An agent has been recommending that customers buy common stock in XYZ Company. If on a visit to XYZ he overhears unreleased news that XYZ has just lost its biggest account, the agent should

discuss the situation with his supervisory principal stop recommending the security to customers and prospects

If an agent has secured a signed statement from a customer that waives the customer's right to sue for a transaction in violation of the USA, the agreement is

null and void

Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, it is permissible for an agent to do all of the following EXCEPT

open a joint account with a customer with written consent of the employing broker-dealer

A customer in a low tax bracket is retired and living on a fixed income. An agent constructs a portfolio consisting of high-yield bonds and small-cap stocks for this customer. If this came to the attention of the Administrator, under the Uniform Securities Act, the Administrator would probably

take action against the agent for selling unsuitable investments

The most common way in which to distinguish whether social media content is static or interactive is

the ability for others to change it

Trade confirmations sent by broker-dealers to their customers must always include

the amount of commission charged

A broker-dealer publishes a list of securities it approves for inclusion in IRAs. This means

the broker-dealer has evaluated these securities and believes they would be suitable for inclusion for retirement planning

A registered broker-dealer is under common control with a registered investment adviser. An individual who is an agent of the broker-dealer and an investment adviser representative of the adviser has a client with $250,000 under an asset management program. This individual calls the client and suggests the purchase of 500 shares of RMBM common stock as an appropriate addition to the portfolio. The broker-dealer is a market maker in RMBM, and the sale will be made as a principal, a fact that is disclosed to the client on the trade confirmation. In this situation, the registered person has acted:

unlawfully in that investment advisers are required to make written disclosure as well as receive the advisory client's consent prior to completion of a trade where the firm or an affiliate will be acting in a principal capacity.

A customer buys $20,000 worth of stock with a required 50% initial margin deposit of $10,000 cash. When he places the order, the customer tells the agent he cannot risk more than $4,000 in the stock market. Following a highly unfavorable news release causing a significant price drop, regulators halt trading in the stock. When the stock is permitted to reopen, the stock's price is half the client's purchase price and the client receives a maintenance margin call for $3,000. The customer is outraged that he has a (unrealized) loss of $10,000 and must deposit $3,000 more to maintain the position. In the above situation, the agent has acted

unlawfully, because the agent failed to warn the customer of the true risk of margin trading