IACCP STUDY QUESTIONS WITH ACCURATE ANSWERS
XYZ Investment Adviser has been found to have engaged in numerous
prohibited activities. Which THREE measures may the SEC impose? (Choose
three.)
A. Criminal indictment
B. Revocation of registration
C. Suspension
D. Censure Accurate Answer - B. Revocation of registration
C. Suspension
D. Censure
Rule 206(4)-1 of the Investment Advisers Act of 1940 requires an adviser to
provide conflict of interest disclosures or make sure a promoter provides
disclosures for which type of client?
A. A prospective client solicited by an outside promoter.
B. A wrap fee program client.
C. A client who receives only impersonal advisory services.
D. An investment company client. Accurate Answer - A. A prospective
client solicited by an outside promoter.
Who determines the designation and compensation of an
investment company's Chief Compliance Officer (CCO)?
A. The investment company's board.
B. The investment company's CEO.
C. The investment company's CFO.
D. Senior management of the investment company. Accurate Answer -
A. The investment company's board.
An adviser signs an agreement with a client on January 1 and delivers the
disclosure brochure at that time. On March 1, the adviser hires a new Chief
Financial Officer (CFO) with no outside affiliations. On July 1, the adviser
amends its fee schedule. On October 1, the adviser updates the amount of
client assets it manages by $50 million. Form ADV Part 2 is updated
immediately after each event.
,When must the investment adviser make actual delivery of an amended
brochure?
A. Within 30 days of the adviser hiring a new CFO.
B. Within 60 days of when the adviser amends its fee schedule.
C. Within 120 days of the end of the adviser's fiscal year.
D. Promptly, after the adviser updates the amount of client assets it manages.
Accurate Answer - C. Within 120 days of the end of the adviser's fiscal year.
Which TWO records must be maintained under the recordkeeping
requirements of the Advisers Act Compliance Programs Rule? (Choose two.)
A. A copy of the Chief Compliance Officer's credentials.
B. A copy of the investment adviser's policies and procedures.
C. Any records created that document the investment adviser's annual review.
D. Records documenting the Chief Compliance Officer's compensation
agreement. Accurate Answer - B. A copy of the investment adviser's
policies and procedures.
C. Any records created that document the investment adviser's annual review.
*States have the authority to enforce which TWO of the following for SEC
registered advisers? (Choose two.)
A. Advisory notice filing.
B. Additional books and records requirements.
C. Errors and omissions insurance.
D. Investment Adviser Representative registrations Accurate Answer -
A. Advisory notice filing.
D. Investment Adviser Representative registrations
Which TWO are considered to be best practices when valuing a client's
securities holdings? (Choose two.)
A. Disclosure in Form ADV Part 2 regarding procedures for correction of
mispriced
securities.
B. A summary of valuation procedures in the firm's investment management
agreement.
C. Frequent reviews of valuation information to promptly identify any "stale"
valuations.
, D. Reliance on one of the firm's Portfolio Managers to determine pricing for
illiquid securities. Accurate Answer - B. A summary of valuation
procedures in the firm's investment management agreement.
C. Frequent reviews of valuation information to promptly identify any "stale"
valuations.
Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An investment adviser directs its counsel to make a campaign contribution
of $200 to a government elected official responsible for selecting investment
advisers.
B. An investment advisory firm pays another registered investment adviser to
solicit government clients on its behalf.
C. A covered associate makes a campaign contribution of $50 to the
Comptroller for the State of New York.
D. 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.
Accurate Answer - D. 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.
Investment Adviser manages portfolios of illiquid stocks. Adviser permits its
access persons to trade in securities also held in client accounts. Adviser
collects records of personal transactions at the end of each calendar quarter.
Compliance Officer discovers that Portfolio Manager has historically been
purchasing securities for her disclosed accounts that rightfully belonged in
client accounts. Portfolio Manager is disciplined and affected clients are made
whole.
Has Adviser met its duty to supervise?
A. No, because pre-clearance of all trades is required by the SEC Codes of
Ethics Rule.
B. Yes, because Adviser met all books and records requirements.
C. No, because personal trading procedures were inadequate.
D. Yes, because Portfolio Manager was not a principal of the firm.
Accurate Answer - C. No, because personal trading procedures were
inadequate.
XYZ Investment Adviser has been found to have engaged in numerous
prohibited activities. Which THREE measures may the SEC impose? (Choose
three.)
A. Criminal indictment
B. Revocation of registration
C. Suspension
D. Censure Accurate Answer - B. Revocation of registration
C. Suspension
D. Censure
Rule 206(4)-1 of the Investment Advisers Act of 1940 requires an adviser to
provide conflict of interest disclosures or make sure a promoter provides
disclosures for which type of client?
A. A prospective client solicited by an outside promoter.
B. A wrap fee program client.
C. A client who receives only impersonal advisory services.
D. An investment company client. Accurate Answer - A. A prospective
client solicited by an outside promoter.
Who determines the designation and compensation of an
investment company's Chief Compliance Officer (CCO)?
A. The investment company's board.
B. The investment company's CEO.
C. The investment company's CFO.
D. Senior management of the investment company. Accurate Answer -
A. The investment company's board.
An adviser signs an agreement with a client on January 1 and delivers the
disclosure brochure at that time. On March 1, the adviser hires a new Chief
Financial Officer (CFO) with no outside affiliations. On July 1, the adviser
amends its fee schedule. On October 1, the adviser updates the amount of
client assets it manages by $50 million. Form ADV Part 2 is updated
immediately after each event.
,When must the investment adviser make actual delivery of an amended
brochure?
A. Within 30 days of the adviser hiring a new CFO.
B. Within 60 days of when the adviser amends its fee schedule.
C. Within 120 days of the end of the adviser's fiscal year.
D. Promptly, after the adviser updates the amount of client assets it manages.
Accurate Answer - C. Within 120 days of the end of the adviser's fiscal year.
Which TWO records must be maintained under the recordkeeping
requirements of the Advisers Act Compliance Programs Rule? (Choose two.)
A. A copy of the Chief Compliance Officer's credentials.
B. A copy of the investment adviser's policies and procedures.
C. Any records created that document the investment adviser's annual review.
D. Records documenting the Chief Compliance Officer's compensation
agreement. Accurate Answer - B. A copy of the investment adviser's
policies and procedures.
C. Any records created that document the investment adviser's annual review.
*States have the authority to enforce which TWO of the following for SEC
registered advisers? (Choose two.)
A. Advisory notice filing.
B. Additional books and records requirements.
C. Errors and omissions insurance.
D. Investment Adviser Representative registrations Accurate Answer -
A. Advisory notice filing.
D. Investment Adviser Representative registrations
Which TWO are considered to be best practices when valuing a client's
securities holdings? (Choose two.)
A. Disclosure in Form ADV Part 2 regarding procedures for correction of
mispriced
securities.
B. A summary of valuation procedures in the firm's investment management
agreement.
C. Frequent reviews of valuation information to promptly identify any "stale"
valuations.
, D. Reliance on one of the firm's Portfolio Managers to determine pricing for
illiquid securities. Accurate Answer - B. A summary of valuation
procedures in the firm's investment management agreement.
C. Frequent reviews of valuation information to promptly identify any "stale"
valuations.
Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An investment adviser directs its counsel to make a campaign contribution
of $200 to a government elected official responsible for selecting investment
advisers.
B. An investment advisory firm pays another registered investment adviser to
solicit government clients on its behalf.
C. A covered associate makes a campaign contribution of $50 to the
Comptroller for the State of New York.
D. 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.
Accurate Answer - D. 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.
Investment Adviser manages portfolios of illiquid stocks. Adviser permits its
access persons to trade in securities also held in client accounts. Adviser
collects records of personal transactions at the end of each calendar quarter.
Compliance Officer discovers that Portfolio Manager has historically been
purchasing securities for her disclosed accounts that rightfully belonged in
client accounts. Portfolio Manager is disciplined and affected clients are made
whole.
Has Adviser met its duty to supervise?
A. No, because pre-clearance of all trades is required by the SEC Codes of
Ethics Rule.
B. Yes, because Adviser met all books and records requirements.
C. No, because personal trading procedures were inadequate.
D. Yes, because Portfolio Manager was not a principal of the firm.
Accurate Answer - C. No, because personal trading procedures were
inadequate.
