Communications with Clients and Ethical Practices Flashcards
6 cards from real Series 63 – Uniform Securities Agent State Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Communications with Clients and Ethical Practices flashcards as text
Under the USA, what is required for an investment adviser to exercise discretionary authority over a client's account?
Answer: Prior written authorization from the client before exercising discretion
Investment advisers must obtain prior written authorization from the client before exercising discretionary authority over the client's account.
What is a 'written supervisory procedure' (WSP) for broker-dealers?
Answer: A documented set of internal policies and procedures describing how the firm supervises agents and ensures compliance with securities laws
WSPs are required internal compliance documents that describe how a broker-dealer supervises its registered persons and ensures regulatory compliance.
Under the USA, what is 'fair dealing' in the context of securities regulation?
Answer: The obligation to treat clients honestly and equitably, avoiding practices that disadvantage clients for the benefit of the agent or firm
Fair dealing requires honesty, transparency, and equitable treatment of clients, prohibiting practices that prioritize agent or firm interests over client welfare.
Under the USA, which of the following describes the agent's obligation regarding 'outside business activities'?
Answer: Agents must obtain prior written approval from their broker-dealer before engaging in outside business activities, and some must be disclosed to clients
Agents are required to disclose and obtain approval from their broker-dealer for outside business activities, particularly those that may create conflicts of interest.
Under the USA, agents must report which types of changes to their broker-dealer and the Administrator within a specified time period?
Answer: Material changes such as new criminal charges, regulatory actions, customer complaints, or changes in employment status
Agents must promptly report material changes including criminal charges, regulatory actions, customer complaints, and employment changes to ensure registration information remains current and accurate.
Under the USA, what is required in annual compliance reviews for registered investment advisers?
Answer: A review of the adequacy and effectiveness of compliance policies and procedures and testing for compliance
Annual compliance reviews require investment advisers to assess whether their compliance policies and procedures are adequate and effective, and to test actual compliance with those procedures.
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