Chapter 5: Ethical Practices and Obligations - I. Loans to and From Customers Flashcards
1
Q
Loans to and from Clients
A
Under NASAA rules, an investment adviser cannot borrow money from a client unless the client is a broker/dealer, an affiliate of the investment adviser, or a financial institution engaged in the business of lending money. If a client is a close relative, borrowing would be permitted if one of the above criteria applies.
An investment adviser cannot lend money to a client, even if the client is a relative, unless the investment adviser is a financial institution in the business of lending money, or the client is an affiliate of the investment adviser.
An affiliate or affiliated person is a person who directly or indirectly controls or is controlled by an investment adviser.
