RIA Securities Law & Regulations 3

Question 1

The Securities Investor Protection Corporation (SIPC) protects investors against:

Accepted Answer

Broker-dealer failure and missing customer assets

Answer

SIPC protects customers when a SIPC-member broker-dealer fails, covering up to $500,000 in securities ($250,000 in cash) per account.

Question 2

The anti-money laundering (AML) requirements under the Bank Secrecy Act apply to investment advisers by requiring:

Accepted Answer

Advisers to implement written AML programs and suspicious activity reporting

Answer

AML requirements impose obligations on financial institutions to maintain written AML programs, identify customers, and report suspicious activities.

Question 3

Regulation Best Interest (Reg BI) applies to:

Accepted Answer

Broker-dealers making recommendations to retail customers

Answer

Reg BI requires broker-dealers to act in the best interest of retail customers when making investment recommendations.

Question 4

Which of the following is considered a 'covered security' under NSMIA, preempting state registration requirements?

Accepted Answer

Securities listed on national securities exchanges and investment company securities

Answer

NSMIA preempts state Blue Sky registration for 'covered securities' including exchange-listed securities and investment company (mutual fund) securities.

Question 5

The Investment Advisers Act's definition of 'investment adviser' specifically excludes:

Accepted Answer

Broker-dealers whose advice is solely incidental to brokerage services and who receive no special compensation for advice

Answer

Broker-dealers are excluded from the investment adviser definition if advisory services are solely incidental to their brokerage business and they receive no special compensation for advice.

(RIA) Registered Investment Advisor Practice Test

(RIA) Registered Investment Advisor Practice Test

RIA Securities Law & Regulations 3