WMS Regulatory Framework & Compliance 3

Question 1

A wealth manager registered as an RIA with $150 million in AUM is subject to registration with:

Accepted Answer

The SEC only

Answer

Investment advisers with $100 million or more in AUM generally must register with the SEC rather than state regulators under the Investment Advisers Act of 1940.

Question 2

Which provision of ERISA requires plan fiduciaries to act prudently and solely in the interest of plan participants and beneficiaries?

Accepted Answer

Section 404 — Fiduciary Duties

Answer

ERISA Section 404 codifies the prudent man standard and the exclusive benefit rule that govern how plan fiduciaries must manage retirement plan assets.

Question 3

Under the Investment Company Act of 1940, a mutual fund that invests primarily in stocks of other companies must generally register as which type of investment company?

Accepted Answer

Management investment company (open-end fund)

Answer

Most mutual funds are open-end management investment companies under the Investment Company Act of 1940, issuing and redeeming shares on demand at NAV.

Question 4

A client receives a large inheritance and deposits $25,000 in cash at a bank branch. Under the Bank Secrecy Act, the bank must file a:

Accepted Answer

Currency Transaction Report (CTR)

Answer

Banks must file a CTR for any cash transaction exceeding $10,000 in a single business day, regardless of whether suspicious activity is suspected.

Question 5

When a wealth manager identifies a conflict of interest that cannot be eliminated, the most appropriate compliance action is to:

Accepted Answer

Disclose it fully to the affected client and obtain informed consent

Answer

The fiduciary standard under the Investment Advisers Act requires full and fair disclosure of conflicts so clients can make informed decisions.

(WMS) Wealth Management Specialist Certification Practice Test

(WMS) Wealth Management Specialist Certification Practice Test

WMS Regulatory Framework & Compliance 3