Series 65
the written discretionary power must be ________, before discretion may commence
"in hand" not in the mail
Under the USA, what are the maximum penalties for a securities-related felony?
$5,000 and 3 years imprisonment
If there should be any change on a Form U4, an amandment must be filed within _________
30 days
Under the Investment Advisers Act of 1940, an adviser's registration usually becomes effective how many days after it is filed?
45
When must a Form 13F be filed within
45 days of the end of the quarter
Under the Investment Advisers Act of 1940, for how many years must records be kept after the end of the fiscal year in which an entry was made?
5 years
Under the Uniform Securities Act, most books and records of investment advisers must be maintained for
5 years, the first 2 in the firm's principal office
What does the underwriting role of a broker-dealer allow them to earn?
A spread, the difference between the public offering price and what they pay the issuer, or recieve a commision on the sales, which they then pay their agents who actually made the sales to the clients
The antifraud provisions of the USA apply to
ANY person who acts fraudulently in connection with the offer, sale, or purchase of a security, even in the case of an isolated nonissuer transaction
According to the Investment Advisers Act of 1940, which of the following is always a natural person
An investment adviser representative
According to the Investment Advisers Act of 1940, which of the following is always a natural person?
An investment adviser representative
What is the balance sheet equation
Assets = liabilities + shareholders' equity
The agent has engaged in unehtical conduct if he/she induces a client to trade securities in transactions that are excessive in size or frequency in view of what three things?
FInancial resources (status), investment objectives, and character of the client's account
Exemptions for IARs
If the IAR does not maintain a place os business in the state and, during the preceding 12-month period has had no more than five retail clients Snowbird exemption If the individual is a covered investment advisor, IAR registration is only required in those states where the individual has a place of business
Under the Investment Advisers Act of 1940, who is not excluded from the definition of investment adviser when their investment advice is solely incidental to the individual's profession?
Insurance Agents
Which two of the following are services provided in a wrap fee program?
Investment advisory and brokerage execution
Do short-term or long-term bond prices react more to a change in interest rates?
Long-term because of the compounding effect over a much longer period
Individuals who do any of the following meet the definition of an IAR
Makes any recommendation or otherwise renders advice regarding securities Manages accounts or portfolios of clients determines which recommendation or advice regarding securities should be given solicites, offers, or negotiates for the saele of or sells investment advisory services supervises employees who perform any of the foregoing
Under the Uniform Securities Act, when does investment advisor registration become effective?
Noon, 30 days after the applicated has been filed, providing the registration is not in the process of denial
When an investment advisor registers in a new state, who of the following is automatically registered as IARS?
Officers, partners, and directors of the firm who are functioning as IARs
A federal covered investment adviser registered with the SEC that has offices in 5 states must do what?
Pay state filing fees if required by the administrator and notice file in any of those states where required by the administrator
Which of the following is NOT affected by the issuance of a bond
Shareholders' equity
specifically excluded from the definition of prospectus
Tombstone advertisements
What form needs to be filed to register as an IAR
U4
When does the LATE exclusion apply?
When incidental advice is given in the practice of a profession
Under the Uniform Securities Act, if no denial or proceedings are pending, when does an investment adviser registration become effective?
When the Administrator so orders, but not to exceed 30 days
When is it the case that an indiivdual acts as both the IAR and investment advisor?
When the business is organized as a sole proprietorship
prospectus
a communication made in writing or by radio or television that offers a security for sale
Who must a new discretionary account be approved by
a designated supervisory person
Under the NASAA Model Rule on recordkeeping for investment advisers, the firm must keep a copy of a research report along with
a memorandum describing the list and its source
The three non-persons
a minor, a deceased individual, and an individual declared mentally incompetent by the courts
broker dealer
a person engaged in the buisness of executing securities transactions
To come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over
a portfolio of at least $100 million of 13(f) securities
Even if the BD does not maintain a place of business in the state ______
a single retail client means registration is required
Under the NASAA Model Rule on Business Continuity and Succession Planning, which of the following investment advisers should be most concerned about succession planning?
a sole proprietorship
In the securities industry, the term "discretionary" refers to an
account in which the agent has the power to decide which securities to buy or sell without customer authorization for those specific trades
In the case of investment adviser representatives of federal covered advisers, the notification of employment or termination is the responsibility of who
adviser representative
Persons not included in the definition of broker-dealer are...
agents, issuers, banks, savings insitutions, and trust companies
Reticent Asset Management (RAM) is claiming an exemption from registration with the state because it is an adviser to private funds. One of the requirements to qualify for this exemption is
all investors must be qualified clients
Under Rule 206(4)-7, it is unlawful for an investment adviser registered with the Commission to provide investment advice unless the adviser has adopted and implemented written policies and procedures reasonably designed to prevent violation of the Advisers Act by the adviser or any of its supervised persons. Under this rule, investment advisers are required to perform a review of the adequacy of the policies and procedures established pursuant to this section and the effectiveness of their implementation no less frequently than
annually
Wrap Fee Program
any advisory program generally established by a broker-dealer, under which a specified fee or fees not based directly upon transactions in a client's account is charged for investment advisory services and the execution of client transactions
Definition of IAR
any partner, officer, director, or other individual employed by or associated with an investment adviser and is registered or required to be registered under the Unofrm Securities Act
Definition of broker dealer
any person engaged in the business of effecting transactions in secuirites for the accounts of others or for its own account.
statutory disqualification.
any person who would be unable to register as a securities professional because of prior conduct cannot act as a solicitor for a registered investment adviser.
A frequently-used metric by analysts is the yield, or credit spread. Common methods of computing this would be comparing
bonds of similar quality and different maturities; bonds of different quality and similar maturities
Any person iwth an established place of business in the state that is in the business of buying and selling seucirities for the accounts of others and/or for its own proprietary account is defined as a _______
broker-dealer
non-securities investments
commodities, collectibles (coins or stamps), precious metals, and real estate
Only a ______ can cite an individual to be in contempt of court
court
Market makers who buy and sell the same security simultaneously in their own accounts are manipulating the market by
creating false trading volume
On a balance sheet, dividends payable would fall under the category of
current liabilities
Under the Uniform Secuirites Act, persons providing investment advice do not have to register as investment advisors if they have no place of business in the state and they
deal only with institutional clients, have 5 or fewer noninstitutional client in the state during any 12-month period, deal only with other registered investment advisors
An adviser who has control of or discretionary power over client assets or who charges fees of more than $500 six or more months in advance is required to
disclose any condition that might affect its ability to carry out contractual obligations to its clients
There is no requirement that ________ be paid in order to register a security
dividends
The administrator does or does not approve custodial accounts?
does not
An IAR's registration is only valid while
employed by a registered investment adviser.
An individual who acts solely as an investmenr advisor representative is _____ from the definition of investment advisor
excluded
Equipment trust certificates issued by any regulated common carrier are always
exempt
If an investment adviser has no office in the state, and renders advice solely to broker-dealers, insurance companies, banks, investment companies, governmental agencies, or employee benefit plans with assets of $1 million or more the advisor is
exempt from registration with the state
Debts that will come due more than 1 year after the date on the balance sheet are known as
fixed (or long-term) liabilities
when employed by a covered adviser, the only time that state registration is required is when the inidividual functioning as an IAR
has a place of business in the state
If an IAR works for a covered IA, they only need to register
in states where the IAR maintains a place of business
Only a _____ can be an investment advisor representative
individual. the investment advisory firm is the legal person (entity) that the IAR represents in the performing functions
A state securities Administrator may not issue
injunctions
Do institutional or individual accredited investors qualify for the investment advisor exemption
institutional
Does an IAR or an investment advisor have financial requirements?
investment advisor
Does an IAR or an investment advisor have ongoing recordkeeping requirements?
investment advisor
When a broker-dealer offers wrap fee programs, the exclusion from the definition of _________ is lost
investment advisor
impersonal investment advice
investment advisory services provided by means of written material or oral statements that do not purport to meet the objectives or needs of specific individuals or accounts
Impersonal investment advice
investment advisory services provided by means of written material or oral statements that do not purport to meet the objectives orneeds of specific individuals or accounts
Under the Investment Advisers Act of 1940, an investment adviser who has custody of clients' funds and securities must
keep the clients' securities and funds segregated and identified
Is a bona fide gifts of securities considered a sale?
no
what is the limit on the number of institutional clients an investment advisor can have in a state without the need to register
no limit
The only type of transaction that may be executed for a customer of unknown financial status is
one that is customer initiated—an unsolicited trade
It would NOT be considered a prohibited or unethical business practice for an investment adviser to
pay a nominal fixed fee to certain professionals as a form of thanking them for client referrals
Three critical elements in the definition of investment advisor
person providing advice regarding securiites, receives compensation for doing so, and "being in the business"
What is the strongest action an Administrator can take without court action
revocation
Prohibited business practices under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents would NOT include
sharing in the profits and losses in a client's account without making a financial contribution to the account
Any issue from a ______ or ________ is always exempt
sstate or Canadian province
Under the USA, a state securities Administrator can
start an investigation against a registrant even if a violation has not yet occurred and subpoena witnesses living outside the state
It is only on the _____ level that iAR registers
state
Registration of IARs is done solely on the
state level
Only ______ are required to notify the appropriate state Administrator when employment is terminated or begun
state-registered investment advisory firms
The administrator may, by rule, forbid investment adviosrs registered in that state from what
taking custody of client funds
The primary components of a government's fiscal policy are
taxes and expenses
An investment adviser representative of a federal covered investment adviser registers with
the Administrator
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 USA, every investment adviser organized as a partnership, must include in its contracts an agreement to notify clients within a reasonable period of time of
the addition or removal of any of the partners
An offer to sell describes
the attempt to dispose of a security for value
Causes listed in the Uniform Securities Act that could lead to the revocation of the registration of a broker-dealer would include
the conviction of a principal officer for a securities-related crime or the firm was unable to meet its obligations as they came due
For termination purposes, if the investment adviser is a state-registered adviser _______
the firm must notify the administrator
For termination purposes, if the investment advisor is a federal covered advisor ________
the investment advisor representative must notify the administrator
Qualified client
the investor must have a net worth of at least $2.1 million dollars or at least $1 million in assets under management with the advisor
securities issued by a savings and loan or building and loan are only exempt if
the issuer is authorized to do business in this state.
Administrator
the office or agency that has the complete responsbility for adminstering the securities laws of states
discount rate
the rate charged when banks borrow directly from the Federal Reserve.
In the case of a firm registered in both broker-dealer and IA, disclosures when acting as a principle or agent would not be required when
there was a transaction with a client of both entities, but the trade was not based upon advisory services rendered
Issuer definition
those entities, such as corporation and governments who raise money by issuing securities
Which type of prviate fund has no ceiling on the size of the fund before the advisor loses the exmeption?
venture capital funds
An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients
when informed by the investment adviser that the representative's registration is effective
The term "investment counsel" can be used by investment advisors
with a primary business of rendering investment advice or who perform investment supervisory services
