IACCP MAIN EXAMINATION 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔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.
✔✔Each person is defined as an "access person" under the SEC Investment Adviser
Codes of Ethics Rule EXCEPT:
,A. any supervised person who has access to nonpublic information regarding any
client's purchase or sale of securities.
B. any supervised person who makes securities recommendations to clients.
C. officers, directors, and partners of a firm whose primary business is providing
investment advice.
D. any supervised person who trades in securities for their own account. - ✔✔D. any
supervised person who trades in securities for their own account.
✔✔An investment adviser is required to maintain which THREE records in connection
with its code of ethics? (Choose three.)
A. An electronic database of access persons' personal trading records.
B. A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code. - ✔✔B.
A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code.
✔✔Investment Adviser's President serves on the board of directors of XYZ, a publicly
traded company. Adviser has approved the separate employment, established and
tested a Chinese Wall to prevent information flowing between Adviser and XYZ, and
has adopted a policy that it will not hold XYZ stock in client portfolios.
In drafting its client disclosures, must Adviser disclose the President's relationship with
XYZ?
A. Yes, by disclosing the conflict and Adviser's procedures.
B. Yes, but only in the Adviser's code of ethics.
C. No, the conflict has been resolved.
D. No, Adviser will not recommend XYZ to clients. - ✔✔A. Yes, by disclosing the conflict
and Adviser's procedures.
✔✔According to the Investment Advisers Act of 1940, every investment adviser is
required to prevent illegal insider trading by establishing, maintaining and enforcing
written policies and procedures reasonably designed to:
A. prevent the misuse of material client information.
B. create Chinese Walls.
C. prevent the misuse of material nonpublic information.
D. create restricted lists and enforce black-out periods. - ✔✔C. prevent the misuse of
material nonpublic information.
✔✔What does the SEC Investment Adviser Codes of Ethics Rule require access
persons to submit?
,A. An annual holdings report that must be current within 45 days of submission.
B. Quarterly transaction reports within 10 days of quarter end.
C. A certification that the employee does not hold any private placements.
D. A request for pre-approval of all brokers used. - ✔✔A. An annual holdings report that
must be current within 45 days of submission.
✔✔Adviser A and its president, Jones, conduct investment manager searches for
institutional clients. Jones often refers his clients to Adviser B. Adviser B has provided
financing for business ventures owned by Jones. Adviser B has also steered brokerage
business to a brokerage firm owned by Jones' son.
Which action should be taken by Adviser B?
A. Adviser B may rely on disclosure in Adviser A's Form ADV about these business
dealings.
B. None since Jones had made his clients aware of Adviser B's business dealings with
Jones and his son.
C. None since Adviser A's referrals are not influenced by any of these business
dealings.
D. Adviser B should disclose these business dealings in its Form ADV Part 2 because
they are material conflicts of interest. - ✔✔D. Adviser B should disclose these business
dealings in its Form ADV Part 2 because they are material conflicts of interest.
✔✔Investment Adviser manages a portfolio for Mr. Jackson, the President of Jackson
Industries, a publicly traded company. Mr. Jackson informs Portfolio Manager that the
stock price for Jackson Industries will likely decline in value when the quarterly earnings
announcement is made. Portfolio Manager shorts Jackson Industries in his personal
account and makes a large profit. Adviser did not require pre-clearance of these trades
because Adviser does not hold Jackson Industries in client portfolios.
Has Adviser failed to meet its duties under the Advisers Act?
A. Yes, because Adviser must pre-clear all trades by portfolio managers.
B. No, because it was Mr. Jackson who shared nonpublic information.
C. Yes, because Adviser reasonably failed to detect insider trading.
D. No, because Mr. Jackson suffered no losses. - ✔✔C. Yes, because Adviser
reasonably failed to detect insider trading.
✔✔According to Investment Company Act of 1940 Rule 3a-4 (Status of Investment
Advisory Programs), which TWO activities is an adviser required to do? (Choose two.)
A. Notify clients monthly of any investment changes to the model portfolio.
B. Notify the client in writing at least quarterly to contact the adviser if suitability
information has changed.
, C. Develop an Investment Policy Statement (IPS) for a client within two weeks of initial
investment.
D. Make a best effort attempt to contact the client to update suitability information at
least annually. - ✔✔B. Notify the client in writing at least quarterly to contact the adviser
if suitability information has changed.
D. Make a best effort attempt to contact the client to update suitability information at
least annually.
✔✔Which was NOT identified as a requirement for an investment adviser that intends to
allocate an investment opportunity to a proprietary account in a block trade with other
client accounts?
A. The adviser's compliance officer must approve the order in writing.
B. The adviser will prepare, prior to entering the order, a written allocation statement.
C. Transaction costs for the order will be shared pro-rata based on each client's
participation in the transaction.
D. The adviser will identify that the block trade is consistent with its duty to achieve best
execution. - ✔✔A. The adviser's compliance officer must approve the order in writing.
✔✔To fall within the Section 28(e) safe harbor of the Securities Exchange Act of 1934,
which TWO activities are an investment adviser required to do if it pays higher
commissions in order to receive soft dollar products? (Choose two.)
A. Make a good faith determination that commissions paid are reasonable for products
received.
B. Make disclosure in Form ADV Part 2 regarding its soft dollar practices.
C. Document mixed use allocations in writing.
D. Ensure that research is used to benefit all client accounts. - ✔✔A. Make a good faith
determination that commissions paid are reasonable for products received.
B. Make disclosure in Form ADV Part 2 regarding its soft dollar practices.
✔✔Investment Adviser has managed Bob's account for many years. Bob notifies
Investment Adviser that he has recently married Kate, and now Kate's three minor
children are living with them.
What is Investment Adviser required to do?
A. Send Kate a copy of the current Form ADV Part 2.
B. Meet with Kate to discuss her investment strategy.
C. Reassess the suitability of Bob's current investment strategy.
D. Count Kate and her children as separate clients - ✔✔C. Reassess the suitability of
Bob's current investment strategy.
✔✔Investment Adviser is introduced to Client by Broker. Client instructs Adviser in
writing to place 50% trades in Client's account through Broker "subject to best
SOLUTIONS RATED A+
✔✔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.
✔✔Each person is defined as an "access person" under the SEC Investment Adviser
Codes of Ethics Rule EXCEPT:
,A. any supervised person who has access to nonpublic information regarding any
client's purchase or sale of securities.
B. any supervised person who makes securities recommendations to clients.
C. officers, directors, and partners of a firm whose primary business is providing
investment advice.
D. any supervised person who trades in securities for their own account. - ✔✔D. any
supervised person who trades in securities for their own account.
✔✔An investment adviser is required to maintain which THREE records in connection
with its code of ethics? (Choose three.)
A. An electronic database of access persons' personal trading records.
B. A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code. - ✔✔B.
A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code.
✔✔Investment Adviser's President serves on the board of directors of XYZ, a publicly
traded company. Adviser has approved the separate employment, established and
tested a Chinese Wall to prevent information flowing between Adviser and XYZ, and
has adopted a policy that it will not hold XYZ stock in client portfolios.
In drafting its client disclosures, must Adviser disclose the President's relationship with
XYZ?
A. Yes, by disclosing the conflict and Adviser's procedures.
B. Yes, but only in the Adviser's code of ethics.
C. No, the conflict has been resolved.
D. No, Adviser will not recommend XYZ to clients. - ✔✔A. Yes, by disclosing the conflict
and Adviser's procedures.
✔✔According to the Investment Advisers Act of 1940, every investment adviser is
required to prevent illegal insider trading by establishing, maintaining and enforcing
written policies and procedures reasonably designed to:
A. prevent the misuse of material client information.
B. create Chinese Walls.
C. prevent the misuse of material nonpublic information.
D. create restricted lists and enforce black-out periods. - ✔✔C. prevent the misuse of
material nonpublic information.
✔✔What does the SEC Investment Adviser Codes of Ethics Rule require access
persons to submit?
,A. An annual holdings report that must be current within 45 days of submission.
B. Quarterly transaction reports within 10 days of quarter end.
C. A certification that the employee does not hold any private placements.
D. A request for pre-approval of all brokers used. - ✔✔A. An annual holdings report that
must be current within 45 days of submission.
✔✔Adviser A and its president, Jones, conduct investment manager searches for
institutional clients. Jones often refers his clients to Adviser B. Adviser B has provided
financing for business ventures owned by Jones. Adviser B has also steered brokerage
business to a brokerage firm owned by Jones' son.
Which action should be taken by Adviser B?
A. Adviser B may rely on disclosure in Adviser A's Form ADV about these business
dealings.
B. None since Jones had made his clients aware of Adviser B's business dealings with
Jones and his son.
C. None since Adviser A's referrals are not influenced by any of these business
dealings.
D. Adviser B should disclose these business dealings in its Form ADV Part 2 because
they are material conflicts of interest. - ✔✔D. Adviser B should disclose these business
dealings in its Form ADV Part 2 because they are material conflicts of interest.
✔✔Investment Adviser manages a portfolio for Mr. Jackson, the President of Jackson
Industries, a publicly traded company. Mr. Jackson informs Portfolio Manager that the
stock price for Jackson Industries will likely decline in value when the quarterly earnings
announcement is made. Portfolio Manager shorts Jackson Industries in his personal
account and makes a large profit. Adviser did not require pre-clearance of these trades
because Adviser does not hold Jackson Industries in client portfolios.
Has Adviser failed to meet its duties under the Advisers Act?
A. Yes, because Adviser must pre-clear all trades by portfolio managers.
B. No, because it was Mr. Jackson who shared nonpublic information.
C. Yes, because Adviser reasonably failed to detect insider trading.
D. No, because Mr. Jackson suffered no losses. - ✔✔C. Yes, because Adviser
reasonably failed to detect insider trading.
✔✔According to Investment Company Act of 1940 Rule 3a-4 (Status of Investment
Advisory Programs), which TWO activities is an adviser required to do? (Choose two.)
A. Notify clients monthly of any investment changes to the model portfolio.
B. Notify the client in writing at least quarterly to contact the adviser if suitability
information has changed.
, C. Develop an Investment Policy Statement (IPS) for a client within two weeks of initial
investment.
D. Make a best effort attempt to contact the client to update suitability information at
least annually. - ✔✔B. Notify the client in writing at least quarterly to contact the adviser
if suitability information has changed.
D. Make a best effort attempt to contact the client to update suitability information at
least annually.
✔✔Which was NOT identified as a requirement for an investment adviser that intends to
allocate an investment opportunity to a proprietary account in a block trade with other
client accounts?
A. The adviser's compliance officer must approve the order in writing.
B. The adviser will prepare, prior to entering the order, a written allocation statement.
C. Transaction costs for the order will be shared pro-rata based on each client's
participation in the transaction.
D. The adviser will identify that the block trade is consistent with its duty to achieve best
execution. - ✔✔A. The adviser's compliance officer must approve the order in writing.
✔✔To fall within the Section 28(e) safe harbor of the Securities Exchange Act of 1934,
which TWO activities are an investment adviser required to do if it pays higher
commissions in order to receive soft dollar products? (Choose two.)
A. Make a good faith determination that commissions paid are reasonable for products
received.
B. Make disclosure in Form ADV Part 2 regarding its soft dollar practices.
C. Document mixed use allocations in writing.
D. Ensure that research is used to benefit all client accounts. - ✔✔A. Make a good faith
determination that commissions paid are reasonable for products received.
B. Make disclosure in Form ADV Part 2 regarding its soft dollar practices.
✔✔Investment Adviser has managed Bob's account for many years. Bob notifies
Investment Adviser that he has recently married Kate, and now Kate's three minor
children are living with them.
What is Investment Adviser required to do?
A. Send Kate a copy of the current Form ADV Part 2.
B. Meet with Kate to discuss her investment strategy.
C. Reassess the suitability of Bob's current investment strategy.
D. Count Kate and her children as separate clients - ✔✔C. Reassess the suitability of
Bob's current investment strategy.
✔✔Investment Adviser is introduced to Client by Broker. Client instructs Adviser in
writing to place 50% trades in Client's account through Broker "subject to best
