Professional Development & Standards Flashcards

After a material change in an agent's disclosure information (such as a new customer complaint or disqualifying event), Form U4 must generally be amended within:

Answer: 30 days

Form U4 must be amended promptly and generally no later than 30 days after learning of the facts requiring the update.

Under the NASAA model rule on investment adviser representative continuing education, an IAR must complete how many credits each reporting period?

Answer: 12 total: 6 Products and Practice and 6 Ethics and Professional Responsibility

IARs must complete 12 credits annually, split evenly between Products & Practice and Ethics & Professional Responsibility.

An IAR fails to complete required continuing education by the deadline. The most likely result is that the IAR:

Answer: Becomes CE inactive and may not act as an IAR until requirements are completed

A non-compliant IAR's registration is treated as CE inactive, so the IAR cannot conduct advisory business until the credits are completed.

Under the NASAA model recordkeeping rule, an investment adviser must generally keep required books and records for:

Answer: Five years from the end of the fiscal year of the last entry, the first two in the principal office

Records must be maintained for five years after the fiscal year of the last entry, the first two years in an appropriate office of the adviser.

An investment adviser has custody of client assets. Which is generally required?

Answer: Assets held at a qualified custodian, with account statements sent to clients at least quarterly and, absent exceptions, an annual surprise examination

Advisers with custody must use qualified custodians, ensure clients get statements at least quarterly, and typically undergo an annual surprise exam by an independent accountant.

An investment adviser with approximately $150 million in regulatory assets under management and a principal office in a state would generally be:

Answer: Registered with the SEC as a federal covered adviser and subject to state notice filings and anti-fraud authority

Advisers at or above the SEC threshold register with the SEC, and states may require notice filings and enforce anti-fraud provisions.

Under the NASAA de minimis exemption, an investment adviser with no place of business in a state is exempt from registering there if it has had fewer than how many clients in the state in the preceding 12 months?

Answer: 6

The de minimis exemption applies when the adviser has no place of business in the state and has fewer than six clients there in the prior 12 months.