CIC Investment Adviser Regulations 3

Question 1

The SEC's Regulation Best Interest (Reg BI) primarily applies to:

Accepted Answer

Broker-dealers making recommendations to retail customers

Answer

Reg BI applies to broker-dealers and their associated persons when making securities recommendations to retail customers, establishing a 'best interest' standard.

Question 2

Under the Investment Advisers Act, which document must an investment adviser file to update material changes and deliver to existing clients annually?

Accepted Answer

Form ADV Part 2A

Answer

Form ADV Part 2A (the brochure) must be updated annually within 90 days of the adviser's fiscal year end, and material changes must be delivered to existing clients.

Question 3

A state-registered investment adviser with clients in multiple states must register in each state where it:

Accepted Answer

Has a place of business OR more than the de minimis number of clients

Answer

Most states require registration if the adviser has a place of business in the state or exceeds the de minimis client threshold (typically 5 clients) for that state.

Question 4

Which of the following activities requires an investment adviser to obtain client consent before proceeding?

Accepted Answer

Assigning the advisory contract to another adviser

Answer

Under Section 205(a)(2) of the Advisers Act, advisory contracts cannot be assigned without client consent because assignment changes the identity of the manager.

Question 5

The Investment Advisers Act of 1940 was primarily enacted to address concerns about:

Accepted Answer

Conflicts of interest and fraudulent practices by investment counselors and advisers

Answer

The Act was enacted following SEC studies revealing widespread conflicts of interest and abusive practices by investment counsel and advisory firms in the 1930s.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Investment Adviser Regulations 3