FINRA Uniform Investment Adviser Law 2

Question 1

Under the Uniform Securities Act, which of the following is NOT considered an 'investment adviser'?

Accepted Answer

An attorney who renders investment advice incidental to their legal practice

Answer

Attorneys, accountants, engineers, and teachers who provide investment advice solely incidental to their professional practice are excluded from the definition of investment adviser under the Uniform Securities Act.

Question 2

An investment adviser representative (IAR) who moves from one state-registered advisory firm to another must:

Accepted Answer

Notify the state administrator and update Form U4 through IARD

Answer

When an IAR changes firms, they must notify the state administrator and update their Form U4 through the IARD system to reflect the new employer.

Question 3

A state-registered investment adviser with 25 clients in a state is acquired by a firm that manages $120 million in assets. After the acquisition, registration must be:

Accepted Answer

Switched to SEC registration because AUM exceeds the federal threshold

Answer

When an investment adviser's assets under management reach or exceed $110 million (the federal threshold), it must register with the SEC rather than state authorities.

Question 4

Which disclosure document must a state-registered investment adviser deliver to clients under the 'brochure rule'?

Accepted Answer

Form ADV Part 2A

Answer

Form ADV Part 2A is the 'brochure' that investment advisers must deliver to clients, containing information about services, fees, conflicts of interest, and disciplinary history.

Question 5

Under state law, an investment adviser's contract with a client is VOID if it includes which of the following provisions?

Accepted Answer

A clause waiving the adviser's fiduciary duty to the client

Answer

Investment adviser contracts cannot include provisions waiving any rights or remedies of the client, and any such waiver is void under the Uniform Securities Act.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Uniform Investment Adviser Law 2