CIC CIC - Certified Investment Counselor Securities Law and Regulatory Compliance Questions and Answers

Question 1

Under the Investment Advisers Act of 1940, an adviser with assets under management of $110 million or more must register with:

Accepted Answer

The SEC

Answer

State securities regulators

Answer

FINRA

Answer

The Federal Reserve

Question 2

SEC Form ADV Part 2 is required to be delivered to clients primarily to:

Accepted Answer

Provide clients with a 'brochure' disclosing the adviser's business practices, fees, and conflicts

Answer

Register the adviser with the SEC

Answer

Report quarterly portfolio holdings

Answer

File annual financial statements with regulators

Question 3

The Securities Exchange Act of 1934 primarily regulates:

Accepted Answer

The trading of previously issued securities in secondary markets

Answer

The initial issuance of securities to the public

Answer

The registration of investment advisers

Answer

The creation and sale of mutual funds

Question 4

Rule 10b-5 under the Securities Exchange Act of 1934 prohibits:

Accepted Answer

Fraud, misrepresentation, and insider trading in connection with securities transactions

Answer

Charging excessive fees to clients

Answer

Short selling of securities during market declines

Answer

Margin lending above regulatory limits

Question 5

Under the Investment Company Act of 1940, a mutual fund is legally classified as a:

Accepted Answer

Registered investment company

Answer

Registered investment adviser

Answer

Broker-dealer

Answer

Limited partnership

Question 6

A 'no-action letter' from the SEC staff provides:

Accepted Answer

Staff assurance that it will not recommend enforcement action if the described activities are conducted as stated

Answer

A binding legal ruling on securities law questions

Answer

Formal regulatory approval of a new investment product

Answer

An exemption from registration requirements