Regulatory Frameworks & Compliance Flashcards
7 cards from real Series 66 – Uniform Combined 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 7 Regulatory Frameworks & Compliance flashcards as text
A registered investment adviser must deliver an updated Form ADV Part 2A brochure or summary of material changes to clients annually within how long after fiscal year-end?
Answer: 120 days
Advisers must deliver the annual update within 120 days of the fiscal year end.
An adviser with custody of client funds through fee deduction must have a reasonable belief that the qualified custodian sends account statements to clients at least:
Answer: Quarterly
The custody rule requires quarterly statements from the qualified custodian.
A performance-based fee charged by an investment adviser must be based on:
Answer: A share of capital gains or capital appreciation
Performance fees are tied to a share of gains or appreciation and generally limited to qualified clients.
An adviser wants to sell a security from its own inventory to a client. What is required?
Answer: Written disclosure and client consent before completion of each transaction
Principal transactions require disclosure of capacity and client consent before each trade is completed.
Which of the following is an unethical business practice for an agent?
Answer: Guaranteeing a customer against loss in an account
Guaranteeing a client against loss is a prohibited, dishonest practice.
An agent enters a trade in a customer's account without the customer's authorization and without discretionary authority. This is:
Answer: An unethical practice
Effecting transactions without customer authorization is an unethical practice, regardless of outcome.
The Section 28(e) safe harbor allows an adviser to pay higher commissions for research when:
Answer: The adviser determines in good faith the commission is reasonable for the services provided
The safe harbor covers commissions reasonable in relation to the value of brokerage and research services.
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