RIA Ethics & Regulatory Guidelines 2

Question 1

Under the Investment Advisers Act of 1940, an adviser must disclose material conflicts of interest:

Accepted Answer

To clients, as part of the fiduciary duty

Answer

Fiduciary duty requires advisers to disclose all material conflicts of interest to clients so they can make informed decisions.

Question 2

Churning refers to:

Accepted Answer

Excessive trading to generate commissions at client's expense

Answer

Churning is excessive trading in a client account primarily to generate commissions, violating fiduciary duty and suitability requirements.

Question 3

The 'brochure rule' under the Investment Advisers Act requires advisers to:

Accepted Answer

Deliver Form ADV Part 2 to clients and prospects

Answer

The brochure rule requires investment advisers to deliver Form ADV Part 2 (their disclosure document) to clients and prospects.

Question 4

Which action would violate the prohibition on fraudulent conduct under the Investment Advisers Act?

Accepted Answer

Making material misrepresentations about investment strategy

Answer

Making material misrepresentations about investment strategies, performance, or qualifications is fraud under Section 206 of the Investment Advisers Act.

Question 5

Under ERISA, a fiduciary of a pension plan is required to:

Accepted Answer

Act solely in the interest of plan participants and beneficiaries

Answer

ERISA fiduciaries must act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits.

(RIA) Registered Investment Advisor Practice Test

(RIA) Registered Investment Advisor Practice Test

RIA Ethics & Regulatory Guidelines 2