IACCP Actual Questions and Correct Answers
Q1
Which THREE are consistent with Form ADV amendment requirements under the Investment
Advisers Act of 1940? (Choose three.) File amendments to Form ADV Part 1 electronically via
the IARD system. Update Form ADV Part 1 annually and file within 90 days of adviser's fiscal
year end. Upload Form ADV Part 2 amendments to the SEC via the IARD system. Amend Form
ADV Part 1 within three months of a change in control or in executive officers.
Answer: File amendments to Form ADV Part 1 electronically via the IARD system.
Update Form ADV Part 1 annually and file within 90 days of adviser's fiscal year end.
Upload Form ADV Part 2 amendments to the SEC via the IARD system.
Q2
Which THREE statements are TRUE regarding an SEC-registered investment adviser's annual
review of its policies and procedures? (Choose three.) The annual review should include a
determination of the adequacy of the adviser's policies and procedures. The annual review
should assess the effectiveness of the adviser's policies and procedures. The annual review
must be conducted by the adviser's Chief Compliance Officer. The adviser should keep any
records documenting the annual review.
Answer: A. * The annual review should include a determination of the adequacy of the
adviser's policies and procedures. B. * The annual review should assess the
effectiveness of the adviser's policies and procedures. D. * The adviser should keep
any records documenting the annual review.
Q3
Which activity is NOT a retention requirement of the Books and Records Rule under the
Investment Advisers Act of 1940? Corporate records must be maintained with the attorney of
record. Duplicate copies of any electronic records must be maintained. All records must be
maintained for the first two years in an appropriate office of the adviser. D. All books and
records must be maintained and preserved in an easily accessible place for five years from the
end of the fiscal year in which the record was created.
Answer: A. * Corporate records must be maintained with the attorney of record.
, Q4
Which situation would trigger a violation of the SEC Pay-to-Play Rule? A. A covered associate
makes a campaign contribution of $50 to the Comptroller for the State of New York. B. A
covered associate makes a $500 campaign contribution to an elected official, who has influence
in selecting advisers for a government plan which the covered associate is also soliciting as an
advisory client. C. An investment adviser directs its counsel to make a campaign contribution of
$200 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.
Answer: B. * A covered associate makes a $500 campaign contribution to an elected
official, who has influence in selecting advisers for a government plan which the
covered associate is also soliciting as an advisory client.
Q5
Which TWO examples fall within the SEC's definition of custody under the Investment Advisers
Act of 1940? (Choose two.) An investment adviser inadvertently receives a check drawn by a
client made payable to a third party. An investment adviser forwards securities certificates on
behalf of its client via overnight delivery. An investment adviser acts as sole trustee of a trust in
which the advisory client is beneficiary. An investment adviser inadvertently receives client
funds and returns them to the sender within 48 hours of receiving them.
Answer: B. * An investment adviser forwards securities certificates on behalf of its
client via overnight delivery. C. * An investment adviser acts as sole trustee of a trust
in which the advisory client is beneficiary.
Q6
Which is NOT required when an investment adviser wants to engage in a riskless principal
transaction with a client using an affiliated broker-dealer? Sufficient disclosure to enable the
client to give informed consent Approval from the client prior to settlement of the trade.
Sufficient Form ADV Part 2 disclosure on principal transactions. All of the above are required.
Answer: D. * All of the above are required.
Q7
Under the Investment Advisers Act of 1940, an investment adviser is restricted from paying
referral fees exceeding $1,000 to an unaffiliated promoter UNLESS the adviser complies with
which THREE requirements? (Choose three.) The promoter is not subject to statutory
disqualification. Any cash fee is paid pursuant to a written agreement. The client must be
provided by the adviser or promoter with certain disclosure statements regarding compensation
and conflicts of interest. The promoter discloses in writing to each client all disciplinary history
with respect to activities regulated under the securities laws.
Answer: The promoter is not subject to statutory disqualification. Any cash fee is paid
pursuant to a written agreement. The client must be provided by the adviser or
promoter with certain disclosure statements regarding compensation and conflicts of
interest.
Q1
Which THREE are consistent with Form ADV amendment requirements under the Investment
Advisers Act of 1940? (Choose three.) File amendments to Form ADV Part 1 electronically via
the IARD system. Update Form ADV Part 1 annually and file within 90 days of adviser's fiscal
year end. Upload Form ADV Part 2 amendments to the SEC via the IARD system. Amend Form
ADV Part 1 within three months of a change in control or in executive officers.
Answer: File amendments to Form ADV Part 1 electronically via the IARD system.
Update Form ADV Part 1 annually and file within 90 days of adviser's fiscal year end.
Upload Form ADV Part 2 amendments to the SEC via the IARD system.
Q2
Which THREE statements are TRUE regarding an SEC-registered investment adviser's annual
review of its policies and procedures? (Choose three.) The annual review should include a
determination of the adequacy of the adviser's policies and procedures. The annual review
should assess the effectiveness of the adviser's policies and procedures. The annual review
must be conducted by the adviser's Chief Compliance Officer. The adviser should keep any
records documenting the annual review.
Answer: A. * The annual review should include a determination of the adequacy of the
adviser's policies and procedures. B. * The annual review should assess the
effectiveness of the adviser's policies and procedures. D. * The adviser should keep
any records documenting the annual review.
Q3
Which activity is NOT a retention requirement of the Books and Records Rule under the
Investment Advisers Act of 1940? Corporate records must be maintained with the attorney of
record. Duplicate copies of any electronic records must be maintained. All records must be
maintained for the first two years in an appropriate office of the adviser. D. All books and
records must be maintained and preserved in an easily accessible place for five years from the
end of the fiscal year in which the record was created.
Answer: A. * Corporate records must be maintained with the attorney of record.
, Q4
Which situation would trigger a violation of the SEC Pay-to-Play Rule? A. A covered associate
makes a campaign contribution of $50 to the Comptroller for the State of New York. B. A
covered associate makes a $500 campaign contribution to an elected official, who has influence
in selecting advisers for a government plan which the covered associate is also soliciting as an
advisory client. C. An investment adviser directs its counsel to make a campaign contribution of
$200 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.
Answer: B. * A covered associate makes a $500 campaign contribution to an elected
official, who has influence in selecting advisers for a government plan which the
covered associate is also soliciting as an advisory client.
Q5
Which TWO examples fall within the SEC's definition of custody under the Investment Advisers
Act of 1940? (Choose two.) An investment adviser inadvertently receives a check drawn by a
client made payable to a third party. An investment adviser forwards securities certificates on
behalf of its client via overnight delivery. An investment adviser acts as sole trustee of a trust in
which the advisory client is beneficiary. An investment adviser inadvertently receives client
funds and returns them to the sender within 48 hours of receiving them.
Answer: B. * An investment adviser forwards securities certificates on behalf of its
client via overnight delivery. C. * An investment adviser acts as sole trustee of a trust
in which the advisory client is beneficiary.
Q6
Which is NOT required when an investment adviser wants to engage in a riskless principal
transaction with a client using an affiliated broker-dealer? Sufficient disclosure to enable the
client to give informed consent Approval from the client prior to settlement of the trade.
Sufficient Form ADV Part 2 disclosure on principal transactions. All of the above are required.
Answer: D. * All of the above are required.
Q7
Under the Investment Advisers Act of 1940, an investment adviser is restricted from paying
referral fees exceeding $1,000 to an unaffiliated promoter UNLESS the adviser complies with
which THREE requirements? (Choose three.) The promoter is not subject to statutory
disqualification. Any cash fee is paid pursuant to a written agreement. The client must be
provided by the adviser or promoter with certain disclosure statements regarding compensation
and conflicts of interest. The promoter discloses in writing to each client all disciplinary history
with respect to activities regulated under the securities laws.
Answer: The promoter is not subject to statutory disqualification. Any cash fee is paid
pursuant to a written agreement. The client must be provided by the adviser or
promoter with certain disclosure statements regarding compensation and conflicts of
interest.
