Chapter 6 Part 3 Flashcards Preview

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Flashcards in Chapter 6 Part 3 Deck (20):
1

registered representatives are entitled to the exclusion if they provide advice

under the knowledge and control of the broker-dealer.

2

A conflict of interest arises when registered representatives of a broker-dealer provide investment advismy seivices that are outside the scope of their duties as registered representatives. These representatives acting as advisers must

disclose to all investment advisory clients that the advisory services they provide are separate from their employment with the broker-dealer

3

firms offering wrap accounts must register as

investment advisers and must treat them as advisory accounts. In practice, most of the firms that offer wrap accounts do so through affiliates or subsidiaries that are registered investment advisers

4

An exclusion is available for publishers of

any bona fide newspaper, news magazine, or other financial publication of general and regular circulation. To be considered general, the publication may not contain promotional material, be tailored to the specific needs of a client, or be timed to specific events affecting the securities industry. Even though some newsletters offer impersonal investment advice, if the publications are not in general circulation, the newsletter writers may need to register as investment advisers

5

U.S. Government Securities Advisers

"To be excluded from the IA definition, a person must
provide advice or issue analyses and reports related solely to U.S. government securities. However, this exclusion does not apply to advice concerning municipal securities or securities issued by foreign governments"

6

Local Exemption

"An investment adviser whose clients are all residents of the state in which the adviser maintains its principal office and the adviser does not provide advice on exchange-traded securities
is exempt from federal registration"

7

Insurance Exemption

An investment adviser whose only clients are insurance companies

8

What docs it mean for an investment adviser to be holding itself out? An

An adviser holds itself out to the public if it seeks additional clients through word of mouth, print or Internet-based advertising, or any other means. A firm identifying itself as an investment adviser in any communication that it knows will reach potential advisory clients (such as through business cards, letterhead, a Web site, a mass mailing, a trade show display, etc.) is sufficient to eliminate the private adviser exemption

9

An investment adviser's registration remains in effect unless the registration has been

been withdrawn, cancelled, or revoked by the SEC. The SEC also has the authority to suspend an investment adviser's registration for up to 12 months

10

These actions may be taken if the investment adviser or any person associated with the adviser Willfully made or caused any required report or application filed with the Commission to be

false or misleading with regard to any material fact, or omitted any material fact Has been convicted within the previous

11

These actions may be taken if the investment adviser or any person associated with the adviser Has been convicted within the previous

10 years of a misdemeanor involving securities, misappropriation of funds, or any felony

12

These actions may be taken if the investment adviser or any person associated with the adviser Is permanently or temporarily prohibited by

court order from acting as an investment adviser, underwriter, broker, dealer, or as an affiliated person of an investment company, bank, or insurance company

13

These actions may be taken if the investment adviser or any person associated with the adviser Has willfully violated or is unable to

comply with any provision of federal securities law

14

These actions may be taken if the investment adviser or any person associated with the adviser Has willfully aided another person's

violation of federal securities law or has failed to reasonably supervise a person who commits a violation

15

These actions may be taken if the investment adviser or any person associated with the adviser ls subject to an order of the

Commission barring or suspending the person from being associated with an investment adviser

16

also must maintain other records, including A record of all discretionary accounts and

all powers of attorney from clients granting such authorization

17

also must maintain other records, including All written agreements between

the investment adviser and clients

18

also must maintain other records, including A record of every securities transaction in a

client's account (excluding direct obligations of the U.S. government). This must be donewithin 10 days of the end of the quarter in which the transaction took place

19

also must maintain other records, including A memorandum (order ticket) of

each order to purchase or sell a security

20

also must maintain other records, including A copy of each notice, circular, advertisement, or other communication that is circulated to

10 or more persons. If the communication recommends the purchase or sale of a specific security but does not state the reason for the recommendation, a memorandum must be prepared indicating the reason.

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