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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

  1. Under Investment Company Act Section 15(c), how must a mutual fund's investment advisory contract be renewed after its initial term?

    Answer: Approved at least annually by the board, including a majority of independent directors

    Section 15(c) requires annual approval of the advisory contract by the board, including a majority of non-interested directors voting in person.

  2. Under the SEC Liquidity Rule (Rule 22e-4), an open-end fund may not acquire an illiquid investment if, immediately after, more than what percentage of its net assets would be illiquid?

    Answer: 15%

    Rule 22e-4 caps illiquid investments at 15% of an open-end fund's net assets.

  3. A private fund relying on the Section 3(c)(7) exclusion from the Investment Company Act must generally limit its investors to which group?

    Answer: Qualified purchasers

    Section 3(c)(7) funds must be owned exclusively by qualified purchasers, generally individuals with at least $5 million in investments.

  4. An SEC-registered adviser to private funds must file Form PF if its private fund assets under management are at least what amount?

    Answer: $150 million

    Advisers with at least $150 million in private fund AUM must file Form PF to report systemic-risk data.

  5. Which document must SEC-registered advisers and broker-dealers deliver to retail investors summarizing services, fees, conflicts, and disciplinary history?

    Answer: Form CRS (Client Relationship Summary)

    Form CRS is a short, plain-English relationship summary required for retail investors under the SEC's 2019 rule package.

  6. Regulation Best Interest (Reg BI) primarily applies to which party when making recommendations to retail customers?

    Answer: Broker-dealers

    Reg BI establishes a best-interest standard of conduct for broker-dealers recommending securities transactions or strategies to retail customers.

  7. Under the Dodd-Frank SEC whistleblower program, an eligible whistleblower may receive what share of monetary sanctions collected in actions exceeding $1 million?

    Answer: 10% to 30%

    Eligible whistleblowers receive 10% to 30% of the monetary sanctions collected when they exceed $1 million.