Investment Advisor SEC Registration and Regulatory Compliance 1 — Questions and Answers
Question 1: Under the Investment Advisers Act of 1940, which threshold generally requires an investment adviser to register with the SEC?
- $25 million in assets under management
- $100 million in assets under management (Correct answer)
- $500 million in assets under management
- $1 billion in assets under management
Correct answer: $100 million in assets under management
Investment advisers with $100 million or more in assets under management generally must register with the SEC rather than state regulators.
Question 2: An investment adviser with less than $100 million AUM typically registers with:
- The SEC only
- State securities regulators (Correct answer)
- FINRA directly
- The Federal Reserve
Correct answer: State securities regulators
Investment advisers below the $100 million AUM threshold generally register with their state's securities regulator rather than the SEC.
Question 3: Which part of Form ADV contains the adviser's brochure that must be delivered to clients?
- Part 1
- Part 2 (Correct answer)
- Part 3
- Part 4
Correct answer: Part 2
Form ADV Part 2 is the narrative brochure that must be provided to clients, disclosing the adviser's services, fees, conflicts, and disciplinary history.
Question 4: How often must a registered investment adviser update their Form ADV?
- Every 5 years
- Annually within 90 days of fiscal year-end (Correct answer)
- Only when material changes occur
- Quarterly
Correct answer: Annually within 90 days of fiscal year-end
Registered investment advisers must file an annual updating amendment to Form ADV within 90 days after their fiscal year-end.
Question 5: Which exemption allows venture capital fund advisers to avoid full SEC registration?
- The de minimis exemption
- The venture capital fund adviser exemption (Correct answer)
- The family office exemption
- The intrastate exemption
Correct answer: The venture capital fund adviser exemption
The Dodd-Frank Act created a specific exemption for advisers solely to venture capital funds, allowing them to be exempt reporters rather than fully registered advisers.
Question 6: An investment adviser representative (IAR) who wants to work with retail clients must generally be registered in:
- Only the state where the IAR's firm is headquartered
- Each state where the IAR has clients or conducts business (Correct answer)
- Only federally through the SEC
- No registration is required for IARs
Correct answer: Each state where the IAR has clients or conducts business
IARs must be registered in each state where they have clients or conduct advisory business, regardless of where their firm is based.
Investment Advisor SEC Registration and Regulatory Compliance 1
Under the Investment Advisers Act of 1940, which threshold generally requires an investment adviser to register with the SEC?