Ethics & Regulatory Guidelines Flashcards
6 cards from real RIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Ethics & Regulatory Guidelines flashcards as text
Under the Investment Advisers Act of 1940, an adviser must disclose material conflicts of interest:
Answer: To clients, as part of the fiduciary duty
Fiduciary duty requires advisers to disclose all material conflicts of interest to clients so they can make informed decisions.
Churning refers to:
Answer: Excessive trading to generate commissions at client's expense
Churning is excessive trading in a client account primarily to generate commissions, violating fiduciary duty and suitability requirements.
The 'brochure rule' under the Investment Advisers Act requires advisers to:
Answer: Deliver Form ADV Part 2 to clients and prospects
The brochure rule requires investment advisers to deliver Form ADV Part 2 (their disclosure document) to clients and prospects.
Which action would violate the prohibition on fraudulent conduct under the Investment Advisers Act?
Answer: Making material misrepresentations about investment strategy
Making material misrepresentations about investment strategies, performance, or qualifications is fraud under Section 206 of the Investment Advisers Act.
Under ERISA, a fiduciary of a pension plan is required to:
Answer: Act solely in the interest of plan participants and beneficiaries
ERISA fiduciaries must act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits.
The Investment Advisers Act defines 'investment adviser' to include persons who:
Answer: Provide advice about securities for compensation
An investment adviser is any person who provides advice about securities, is in the business of doing so, and receives compensation.
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