Regulatory Compliance Flashcards
7 cards from real CIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance flashcards as text
Under Advisers Act Rule 206(4)-7, how often must a registered investment adviser review the adequacy and effectiveness of its compliance policies and procedures?
Answer: At least annually
The Compliance Rule requires an adviser to review its policies and procedures at least annually for adequacy and effectiveness.
An adviser's code of ethics under Rule 204A-1 requires access persons to submit quarterly securities transaction reports no later than how many days after the end of each calendar quarter?
Answer: 30 days
Quarterly transaction reports must be submitted within 30 days after the close of each calendar quarter.
Before completing a principal transaction with an advisory client, Section 206(3) of the Advisers Act requires the adviser to do what?
Answer: Disclose in writing its capacity and obtain the client's consent
Section 206(3) requires written disclosure that the adviser is acting as principal and the client's consent before the transaction is completed.
Which safe harbor allows investment managers to pay more than the lowest available commission in exchange for research and brokerage services?
Answer: Section 28(e) of the Securities Exchange Act of 1934
Section 28(e) provides a safe harbor for soft-dollar arrangements when the manager determines in good faith that commissions are reasonable relative to the research and brokerage received.
Under the pay-to-play rule (Rule 206(4)-5), what is the consequence when a covered associate makes a non-exempt political contribution to an official of a government entity client?
Answer: The adviser is barred from receiving compensation from that government entity for two years
The rule imposes a two-year time-out on receiving compensation for advisory services to the government entity after a triggering contribution.
Under Rule 204-2, books and records generally must be kept for what minimum period?
Answer: Five years, the first two years in an appropriate office of the adviser
Most required records must be kept for at least five years from the end of the fiscal year of the last entry, with the first two years in an appropriate office of the adviser.
An investment adviser that votes proxies on behalf of clients must, under Rule 206(4)-6, do which of the following?
Answer: Adopt written policies reasonably designed to vote in clients' best interests and address material conflicts
The proxy voting rule requires written policies to ensure votes are cast in clients' best interests, including procedures for material conflicts, plus disclosure to clients.