IACCP Actual Questions and Correct Answers
Q1
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.
Answer: C. No, because personal trading procedures were inadequate.
Q2
No, because personal trading procedures were inadequate. Yes, because Portfolio Manager was
not a principal of the firm.
Answer: Yes, because Portfolio
Q3
XYZ Investment Adviser has been found to have engaged in numerous prohibited activities.
Which THREE measures may the SEC impose? (Choose three.) Criminal indictment Revocation
of registration Suspension Censure
Answer: B. Revocation of registration C. Suspension D. Censure
Q4
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
prospective client solicited by an outside promoter. A wrap fee program client. A client who
receives only impersonal advisory services. An investment company client.
Answer: A. A prospective client solicited by an outside promoter.
Q5
Who determines the designation and compensation of an investment company's Chief
Compliance Officer (CCO)? The investment company's board. The investment company's CEO.
The investment company's CFO. Senior management of the investment company.
Answer: A. The investment company's board.
, Q6
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? Within 30 days of the adviser hiring a new CFO. Within 60 days of when the adviser
amends its fee schedule. Within 120 days of the end of the adviser's fiscal year. Promptly, after
the adviser updates the amount of client assets it manages.
Answer: C. Within 120 days of the end of the adviser's fiscal year.
Q7
Which TWO records must be maintained under the recordkeeping requirements of the Advisers
Act Compliance Programs Rule? (Choose two.) A copy of the Chief Compliance Officer's
credentials. A copy of the investment adviser's policies and procedures. Any records created
that document the investment adviser's annual review. Records documenting the Chief
Compliance Officer's compensation agreement.
Answer: B. A copy of the investment adviser's policies and procedures. C. Any records
created that document the investment adviser's annual review.
Q8
States have the authority to enforce which TWO of the following for SEC registered advisers?
(Choose two.) Advisory notice filing. Additional books and records requirements. Errors and
omissions insurance. Investment Adviser Representative registrations
Answer: A. Advisory notice filing. D. Investment Adviser Representative registrations
Q9
Which TWO are considered to be best practices when valuing a client's securities holdings?
(Choose two.) Disclosure in Form ADV Part 2 regarding procedures for correction of mispriced
securities. A summary of valuation procedures in the firm's investment management
agreement. Frequent reviews of valuation information to promptly identify any "stale"
valuations. Reliance on one of the firm's Portfolio Managers to determine pricing for illiquid
securities.
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.
Q1
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.
Answer: C. No, because personal trading procedures were inadequate.
Q2
No, because personal trading procedures were inadequate. Yes, because Portfolio Manager was
not a principal of the firm.
Answer: Yes, because Portfolio
Q3
XYZ Investment Adviser has been found to have engaged in numerous prohibited activities.
Which THREE measures may the SEC impose? (Choose three.) Criminal indictment Revocation
of registration Suspension Censure
Answer: B. Revocation of registration C. Suspension D. Censure
Q4
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
prospective client solicited by an outside promoter. A wrap fee program client. A client who
receives only impersonal advisory services. An investment company client.
Answer: A. A prospective client solicited by an outside promoter.
Q5
Who determines the designation and compensation of an investment company's Chief
Compliance Officer (CCO)? The investment company's board. The investment company's CEO.
The investment company's CFO. Senior management of the investment company.
Answer: A. The investment company's board.
, Q6
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? Within 30 days of the adviser hiring a new CFO. Within 60 days of when the adviser
amends its fee schedule. Within 120 days of the end of the adviser's fiscal year. Promptly, after
the adviser updates the amount of client assets it manages.
Answer: C. Within 120 days of the end of the adviser's fiscal year.
Q7
Which TWO records must be maintained under the recordkeeping requirements of the Advisers
Act Compliance Programs Rule? (Choose two.) A copy of the Chief Compliance Officer's
credentials. A copy of the investment adviser's policies and procedures. Any records created
that document the investment adviser's annual review. Records documenting the Chief
Compliance Officer's compensation agreement.
Answer: B. A copy of the investment adviser's policies and procedures. C. Any records
created that document the investment adviser's annual review.
Q8
States have the authority to enforce which TWO of the following for SEC registered advisers?
(Choose two.) Advisory notice filing. Additional books and records requirements. Errors and
omissions insurance. Investment Adviser Representative registrations
Answer: A. Advisory notice filing. D. Investment Adviser Representative registrations
Q9
Which TWO are considered to be best practices when valuing a client's securities holdings?
(Choose two.) Disclosure in Form ADV Part 2 regarding procedures for correction of mispriced
securities. A summary of valuation procedures in the firm's investment management
agreement. Frequent reviews of valuation information to promptly identify any "stale"
valuations. Reliance on one of the firm's Portfolio Managers to determine pricing for illiquid
securities.
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.
