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Who must register with the administrator of each state in which they do business:
Persons who are “in the business” of buying or selling securities for their own account or on behalf of others, and persons “in the business” of advising others regarding securities
When a broker/dealer opens a new office in a state who is also registered:
all officers, directors, and partners of the firm who are listed on the firm’s registration application are automatically registered in the new state as agents and principals (providing they act in such a role and hold an agent’s and/or principal’s license).
In the event an agent transfers from one broker/dealer to another broker/dealer, who must report the transfer to the state administrator?
- the former employer
- the new employer
- the agent
In the event of resignation/termination, who must notify the Administrator
the broker/dealer and agent must notify the administrator
Under what circumstances would an INVESTMENT ADVISERS or INVESTMENT ADVISER REPRESENTATIVES who are registered in one state not need to register in another state:
if they do not have a place of business in that state, do not transact in that state, or transact business only with institutional clients in that state.
What does the DE MINIMUS STANDARD allow?
The investment adviser can direct business communications to five or fewer clients in a state within a 12-month period without registering in that state.
When is an investment adviser required to notify the administrator?
When investment adviser representatives begin or terminates employment with an investment adviser.
When does Registration become effective?
Registration becomes effective at noon on the 30th calendar day after the date of filing
The registration application consists of:
- CONSENT TO SERVICE OF PROCESS (for initial applications)
- Renewal applications are not required to be accompanied by consent to service of process.
- Publication of notice of the application in one or more local or regional newspapers
- Registration fees
According to the Uniform Securities Act, agent, broker/dealer, and investment adviser
on December 31st of each year
What is the net capital requirements for broker/dealers:
in each state they follow the net capital requirements under federal rules, which require a minimum capitalization (liquid net worth) of $25,000.
An adviser with CUSTODY OF CLIENT FUNDS OR SECURITIES must maintain a
minimum net worth of:
- $35,000 at all times
- In lieu of these requirements, an adviser may post a surety bond of $35,000
An adviser with DISCRETIONARY AUTHORITY over client accounts, but not custody of the accounts, must have:
a minimum net worth of $10,000.
Who is required to file an audited balance sheet with the initial application?
- Every registered investment adviser who has custody of client funds and/or securities, or
- who requires payment six months or more in advance of advisory fees of more than $500
- per client.
Who must file Form ADV-E with their balance sheet.
Investment Advisers who have custody of funds and securities.
Who must file a balance sheet, though this balance sheet does not need to be audited?
- Every registered investment adviser who has discretionary authority over client funds or
- securities, but not custody of them.
If an Adviser's net worth is less than the minimum required, what must they do?
- Notify the administrator by close of business on the next business day
- The advisers must then file a report of financial condition with the administrator by the close of business on the following business day.
In order to take disciplinary action against a registrant, the administrator must always determine that the action is:
- “in the public interest” and must state a cause for the action.
- Causes may include a conviction of any securities-related misdemeanor or any felony conviction within the last 10 years, or being insolvent or bankrupt
In disciplinary actions, the administrator must also notify the persons of their right to a:
hearing and provide a hearing within 15 days of a written request
IARs and agents may withdraw their registrations by submitting a:
IAs may withdraw their registrations by submitting a:
submit Form ADV–W
B/Ds may withdraw their registrations by submitting a:
The administrator retains jurisdiction for __________ after a person's registration is withdrawn or terminated.
An agent or adviser must forward written customer complaints received by a representative to:
a supervisor for action and recording
If the investment adviser has custody of client securities and/or funds, the required records shall include:
copies of confirmations of all transactions for accounts. If investment advisers provide continuous advice to clients, they must maintain all required books and records for each client
An investment adviser must maintain and preserve all books and records in an easily accessible location for_________ from the date the record was created.
- 5 years
- During the first two years, the adviser must maintain the required books and records at the principal office of the adviser
In accordance with FINRA rules, B/Ds are required to retain copies of all advertisements
for at least______ years.
three; websites too
Who are exempt from registration with state administrators:
Investment advisers who must be registered with the SEC under the Investment Advisers Act of 1940
Which IAs are exempt from state registration?
IAs who provide continuous and regular supervisory or management services to securities portfolios that total $30 million or more, or who act as advisers to registered investment companies, must register with the SEC only
if investment advisers have between $25 and $30 million under management:
they have the option of either registering with the state or with the SEC
Advisers for nationally recognized statistical rating organizations (such as Morningstar) and Pension consultants for pension plans with $50 million or more in assets:
Are exempt from registering with individual states, because they are qualified to register with the SEC
Certain professionals whose advice is incidental to their profession and who receive no special compensation for that advice:
are exempt from the state and federal registration requirements of the Investment Advisers Act of 1940.
The Investment Advisors Act of 1940 permits federal covered investment advisers and their IARs to charge the following clients Performance Fees:
- Natural persons with $750,000 or more invested with the adviser,
- or a minimum net worth of $1,500,000
- and $2,000,000 net worth
- Knowledgeable employees of the adviser Registered investment companies
- Business development companies
- Private investment companies
PERFORMANCE FEES are:
fees based on the capital gains and capital appreciation of client funds
The Investment Advisers Act of 1940 defines a PLACE OF BUSINESS as:
- A place where the representative regularly provides investment advisory services
- Any place where an investment adviser solicits, meets with, or otherwise communicates with clients or any other location that is held out to the public (advertised) as a location where the representative performs any of these activities
- A hotel in which an investment adviser meets individually with clients on a regular basis monthly, quarterly) to review their accounts
What information is included in Form ADV Part 1 about the investment adviser?
- Business in general
- Business practices
- Disciplinary events involving the firm or it's employees