FIA Regulatory Compliance & Ethics 3

Question 1

Under the Investment Advisers Act of 1940, an investment adviser owes a fiduciary duty that includes:

Accepted Answer

Disclosing all material conflicts of interest to clients

Answer

Investment advisers owe a fiduciary duty requiring full disclosure of all material conflicts of interest that could affect the advice given to clients.

Question 2

A 'material non-public information' (MNPI) policy at a financial firm primarily aims to prevent:

Accepted Answer

Trading on information not available to the general public that could affect securities prices

Answer

MNPI policies are designed to prevent insider trading by prohibiting trades based on information not yet available to the investing public that is likely to affect a security's price.

Question 3

The Dodd-Frank Act's whistleblower program, administered by the SEC, incentivizes individuals to report securities violations by offering:

Accepted Answer

Monetary awards between 10% and 30% of sanctions exceeding $1 million

Answer

The SEC's whistleblower program offers awards of 10% to 30% of monetary sanctions collected when sanctions exceed $1 million.

Question 4

Under FINRA Rule 3110, member firms are required to establish and maintain a supervisory system that includes:

Accepted Answer

Written supervisory procedures (WSPs) reasonably designed to achieve compliance

Answer

FINRA Rule 3110 requires firms to establish WSPs tailored to their business that are reasonably designed to ensure compliance with applicable laws and regulations.

Question 5

The term 'suitability' in the context of FINRA Rule 2111 requires a broker-dealer to have a reasonable basis to believe that a recommendation is suitable based on all EXCEPT:

Accepted Answer

The current market performance of the recommended security

Answer

Suitability under Rule 2111 is based on customer-specific factors like financial situation, risk tolerance, and objectives, not on the current market performance of the security.

(FIA) Financial Information Associate Certification Practice Test

(FIA) Financial Information Associate Certification Practice Test

FIA Regulatory Compliance & Ethics 3