IACCP LATEST 2026 TEST PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 - ✔✔B. Form ADV-W
✔✔During an examination of XYZ Investment Advisers, the SEC discovers that two of
Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to claim
that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. - ✔✔D. supervise.
✔✔SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures on
Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. - ✔✔A. Adopt
procedures to ensure proxies are voted in the best interest of clients.
D. Provide information to clients on how their proxies were voted.
✔✔In which THREE circumstances is an adviser deemed to have custody under the
SEC Custody Rule? (Choose three.)
A. The investment adviser is mistakenly sent a check payable to the client and returns it
to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
C. The investment adviser takes possession of a check drawn by the client that is
payable to a third party.
, D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account. - ✔✔A. The investment adviser is mistakenly sent a check
payable to the client and returns it to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account.
✔✔An investment advisory firm is closing its business.
What should the firm do with its corporate and organizational documents after
termination of the firm entity?
A. Retain the documents in an easily accessible place of which the SEC has been
notified for five years.
B. Retain the documents in an easily accessible place of which the SEC has been
notified for three years.
C. Dispose of the documents in a prudent manner, ensuring the personal identifying
information is destroyed.
D. Retain the documents for five years, two of which must be in an easily accessible
place. - ✔✔B. Retain the documents in an easily accessible place of which the SEC has
been notified for three years.
✔✔Under the SEC Custody Rule, an adviser is NOT subject to a surprise annual
examination by a qualified accounting firm if the:
A. adviser directly debits advisory fees from clients' custodial accounts.
B. adviser is granted general power of attorney by advisory clients.
C. adviser or certain of adviser's employees serve as trustees to advisory clients.
D. adviser provides bill-pay services to advisory clients. - ✔✔A. adviser directly debits
advisory fees from clients' custodial accounts.
✔✔Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An individual who has become a covered associate within the last three months
makes a $1,000 contribution to an elected official, whom the individual is also soliciting
as an advisory client.
B. An investment adviser makes a contribution of $50.00 to a government elected
official responsible for selecting investment advisers.
C. An investment adviser directs its counsel to make a contribution of $50.00 to a
government elected official responsible for selecting investment advisers.
D. An investment advisory firm pays another registered investment adviser to solicit
government clients on its behalf. - ✔✔A. An individual who has become a covered
associate within the last three months makes a $1,000 contribution to an elected official,
whom the individual is also soliciting as an advisory client.
SOLUTIONS RATED A+
✔✔If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 - ✔✔B. Form ADV-W
✔✔During an examination of XYZ Investment Advisers, the SEC discovers that two of
Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to claim
that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. - ✔✔D. supervise.
✔✔SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures on
Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. - ✔✔A. Adopt
procedures to ensure proxies are voted in the best interest of clients.
D. Provide information to clients on how their proxies were voted.
✔✔In which THREE circumstances is an adviser deemed to have custody under the
SEC Custody Rule? (Choose three.)
A. The investment adviser is mistakenly sent a check payable to the client and returns it
to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
C. The investment adviser takes possession of a check drawn by the client that is
payable to a third party.
, D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account. - ✔✔A. The investment adviser is mistakenly sent a check
payable to the client and returns it to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account.
✔✔An investment advisory firm is closing its business.
What should the firm do with its corporate and organizational documents after
termination of the firm entity?
A. Retain the documents in an easily accessible place of which the SEC has been
notified for five years.
B. Retain the documents in an easily accessible place of which the SEC has been
notified for three years.
C. Dispose of the documents in a prudent manner, ensuring the personal identifying
information is destroyed.
D. Retain the documents for five years, two of which must be in an easily accessible
place. - ✔✔B. Retain the documents in an easily accessible place of which the SEC has
been notified for three years.
✔✔Under the SEC Custody Rule, an adviser is NOT subject to a surprise annual
examination by a qualified accounting firm if the:
A. adviser directly debits advisory fees from clients' custodial accounts.
B. adviser is granted general power of attorney by advisory clients.
C. adviser or certain of adviser's employees serve as trustees to advisory clients.
D. adviser provides bill-pay services to advisory clients. - ✔✔A. adviser directly debits
advisory fees from clients' custodial accounts.
✔✔Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An individual who has become a covered associate within the last three months
makes a $1,000 contribution to an elected official, whom the individual is also soliciting
as an advisory client.
B. An investment adviser makes a contribution of $50.00 to a government elected
official responsible for selecting investment advisers.
C. An investment adviser directs its counsel to make a contribution of $50.00 to a
government elected official responsible for selecting investment advisers.
D. An investment advisory firm pays another registered investment adviser to solicit
government clients on its behalf. - ✔✔A. An individual who has become a covered
associate within the last three months makes a $1,000 contribution to an elected official,
whom the individual is also soliciting as an advisory client.
