Series65 MOD 4 BUSINESS PRACTICES OF INVESTMENT ADVISERS

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Series65ForFab
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292390
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Series65 MOD 4 BUSINESS PRACTICES OF INVESTMENT ADVISERS
Updated:
2015-01-25 20:00:57
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BUSINESS PRACTICES OF INVESTMENT ADVISERS
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  1. Define FRAUD:
    • Using any device, scheme, or artifice to defraud any person is defined as FRAUD.
    • If an agent, investment adviser, or investment adviser representative omits any material facts while selling a security, it is considered a fraudulent act.
  2. Examples of FRAUD:
    • some examples of fraudulent practices defined under the act:
    • Making misleading or untrue statements
    • Failing to state important facts
    • Making recommendations based on inside information and then acting on the information
    • It's not fraudulent to make a recommendation based on inside information if it is not acted on, although this is prohibited
  3. Who may share in the profits or losses in a customer’s account?
    A broker/dealer or an agent(not an investment adviser),may share in the profits or losses in a customer’s account
  4. Who can share in Commissions with Agents:
    Agents can share commissions, but only with other agents employed by the same broker/dealer firm, or for a broker/dealer under direct or indirect common control, who are registered in the client’s state
  5. What difference is there between an Investment Adviser's and an Broker Dealer Agent's Discretionary Authority:
    • Investment advisers may exercise discretion on an account based on a client’s verbal permission, but they must obtain written discretionary authority within 10 business days after placing the order
    • Agents of broker/dealers must obtain written authorization from the customer before accepting any discretionary orders.
  6. How is 3rd party trading authority granted?
    Clients must grant third-party trading authority in writing. This permission must be granted prior to the placing of any trades through this arrangement.
  7. An Accountants must file Form ADV-E with the administrator within 30 days stating that they have completed the examination and must describe the nature and extent of the examination of Investor Adviser Client's funds. If there are any discrepancies:
    they must notify the state within one business day of the examinations by either fax or email, followed by first class mail
  8. Not disclosing material conflicts of interest in writing prior to entering into an advisory agreement is_________________?
    unethical and fraudulent.
  9. References only to specific past recommendations; any advertisement referring to past recommendations must include all recommendations made by the investment  adviser going back ______
    one year
  10. Fees that are excessive compared to fees charged by other advisers for the same serviceswould be considered:
    unreasonable, even if the client agrees to the fees.
  11. Information required to be disclosed shall be   disclosed to clients promptly and to prospective clients not less than______prior to entering into any investment advisory contract.
    48 hours
  12. Investment advisers who are not_________ cannot be paid a commission for the sale of securities if they are being paid an investment advisory fee.
    Broker/Dealers
  13. Under state law, INVESTMENT ADVISORY CONTRACTS must be______________.
    in writing.
  14. An investment adviser that is a partnership shall notify clients of any ____________ in partners within a reasonable time
    material change
  15. Define Trading ahead of a client, also known as front running:
    registrants place an order for their own account at the same time a client is making a purchase of the same security, the client’s order must be entered first. To do otherwise is unethical

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