Series 65: Unit 9 Exam
States may require investment advisers who are registered with the SEC to do each of the following
except
A. file a consent to service of process.
B. file any documents with the state that are filed with the SEC.
C. maintain net capital requirements.
D. pay state notice filing fees. - correct answer ✔✔Maintain net capital requirements
Unless renewed, the registration of which of the following securities professionals expires on December
31?
1. Agents
2. Broker-dealers
3. Investment advisers
4. Investment adviser representatives - correct answer ✔✔Agents, broker-dealers, investment advisers,
and investment adviser representatives
Under both state and federal law, the executive office of the investment adviser from which the officers,
partners, or managers of the investment adviser direct, control, and coordinate the activities of the
investment adviser is properly referred to as
A. the office of supervisory jurisdiction (OSJ).
B. the home office.
C. the principal office and place of business.
D. the registered office. - correct answer ✔✔The principal office and place of business
Which of the following would not be considered an investment adviser under Release IA-1092?
,A. The president of an investment club who provides research and advice to the members of his club on
a regular basis as an integral part of his duties
B. A pension consultant who advises a defined contribution plan on alternative methods of funding the
plan and the relative merits of a selected list of investment managers
C. An agent for a professional athlete whose fee includes negotiating the player's contract as well as
advising her on security selection for her retirement plan even though the agent does not have
discretion over the account
D. A retired banker who solicits business and advises former clients on a monthly basis as to the specific
investment merits of bank stocks and who receives compensation for his services - correct answer
✔✔The president of an investment club who provides research and advice to the members of his club
on a regular basis as an integral part of his duties
The term exempt reporting adviser refers to
A. advisers who are registered on the state level but who file their Form ADVs through the IARD.
B. advisers whose only clients are insurance companies.
C. advisers who rely on either the venture capital fund adviser exemption or the private fund adviser
exemption.
D. broker-dealers who are considered investment advisers solely because they offer wrap fee accounts. -
correct answer ✔✔Advisers who rely on either the venture capital fund adviser exemption or the private
fund adviser exemption
Which of the following describe requirements of the Investment Advisers Act of 1940 concerning the
firm and customer records of an investment adviser?
1. They must be maintained in the principal office of the adviser for two years.
2. They must be maintained in the principal office of the adviser for three years.
3. They must be readily accessible for two years.
4. They must be readily accessible for five years. - correct answer ✔✔They must be maintained in the
principal office of the adviser for 2 yrs and they must be readily accessible for 5 yrs
,Under the Investment Advisers Act of 1940, which of the following would be excluded from the
definition of an investment adviser?
A. The publisher of an investment advisory newsletter who plans issues based on market events
B. A broker-dealer that manages clients' portfolios for a fee
C. A bank that charges a fee for providing investment advice
D. An individual who makes recommendations regarding which types of securities would meet a client's
investment objectives but who does not recommend specific securities - correct answer ✔✔A bank that
charges a fee for providing investment advice
Although many advisers to private funds are exempt from registration, larger ones generally register with
the SEC. SEC-registered investment advisers with at least $150 million in private fund assets under
management use which form to report information about the private funds that they manage?
A. Form D
B. Form PF
C. Form ADV Part 1A
D. Form 13F - correct answer ✔✔Form PF
Which of the following activities is most likely to be considered by the SEC as meeting the business
standard element in the definition of an investment adviser?
A. Issuing reports on macroeconomic conditions
B. Providing investment advisory services but limiting the clientele to immediate family members
C. Giving specific investment advice on only rare and isolated occasions
D. Advertising investment advisory services to the public and providing them routinely - correct answer
✔✔Advertising investment advisory services to the public and providing them routinely
Gibraltar Investment Advisers opened for business last week. Because of the clients brought over from
previous affiliations of their investment adviser representatives, they have started with $94 million under
management for various individual and corporate clients. They also signed a contract to manage an
additional $10 million for a wealthy individual. Gibraltar will begin managing that individual's portfolio at
, the beginning of the next calendar quarter. Which of the following best describes Gibraltar's investment
adviser registration requirements?
A. Gibraltar must register with the state(s) and then, within 90 days of the receipt of the additional $10
million, must register with the SEC.
B. Gibraltar's only option is to register at the state level because it currently manages less than $100
million in client funds.
C. Gibraltar need not register as an investment adviser because it will manage funds for an insti - correct
answer ✔✔Gibraltar would be eligible to register at the federal level
Which of the following does not meet the compensation test for defining investment advisers under SEC
Release IA-1092?
A. Subscription payments are received by a publisher of a newsletter providing impersonal securities-
related advice.
B. A real estate agent advertises that she will give free advice regarding investing the proceeds from the
sale of any home she lists.
C. Your next-door neighbor recommends the purchase of a certain security from his broker, which you
eventually do.
D. An insurance agent sells a life insurance policy and receives a commission on that policy. During the
sale of the insurance policy, the agent provides some securities investment advice. - correct answer
✔✔Your next-door neighbor recommends the purchase of a certain security from his broker, which you
eventually do
Under the Investment Advisers Act of 1940, which of the following investment advisers is not exempt
from federal registration?
A. All of Paula's clients are private funds, and she has total assets under management of $200 million
with less than $25 million of that belonging to foreign investors.
B. All of John's clients reside in his home state, and John offers no advice on any exchange-listed
securities. He manages $50 million in assets, and none of his clients are private funds.
C. Marie maintains her only office in Paris, France, deals with fewer than 15 clients (none of whom is a
registered investment company) in private funds advised by Marie, has AUM in the United States of less
than $25 million, and does not hold herself out as an investment adviser in the United States.
States may require investment advisers who are registered with the SEC to do each of the following
except
A. file a consent to service of process.
B. file any documents with the state that are filed with the SEC.
C. maintain net capital requirements.
D. pay state notice filing fees. - correct answer ✔✔Maintain net capital requirements
Unless renewed, the registration of which of the following securities professionals expires on December
31?
1. Agents
2. Broker-dealers
3. Investment advisers
4. Investment adviser representatives - correct answer ✔✔Agents, broker-dealers, investment advisers,
and investment adviser representatives
Under both state and federal law, the executive office of the investment adviser from which the officers,
partners, or managers of the investment adviser direct, control, and coordinate the activities of the
investment adviser is properly referred to as
A. the office of supervisory jurisdiction (OSJ).
B. the home office.
C. the principal office and place of business.
D. the registered office. - correct answer ✔✔The principal office and place of business
Which of the following would not be considered an investment adviser under Release IA-1092?
,A. The president of an investment club who provides research and advice to the members of his club on
a regular basis as an integral part of his duties
B. A pension consultant who advises a defined contribution plan on alternative methods of funding the
plan and the relative merits of a selected list of investment managers
C. An agent for a professional athlete whose fee includes negotiating the player's contract as well as
advising her on security selection for her retirement plan even though the agent does not have
discretion over the account
D. A retired banker who solicits business and advises former clients on a monthly basis as to the specific
investment merits of bank stocks and who receives compensation for his services - correct answer
✔✔The president of an investment club who provides research and advice to the members of his club
on a regular basis as an integral part of his duties
The term exempt reporting adviser refers to
A. advisers who are registered on the state level but who file their Form ADVs through the IARD.
B. advisers whose only clients are insurance companies.
C. advisers who rely on either the venture capital fund adviser exemption or the private fund adviser
exemption.
D. broker-dealers who are considered investment advisers solely because they offer wrap fee accounts. -
correct answer ✔✔Advisers who rely on either the venture capital fund adviser exemption or the private
fund adviser exemption
Which of the following describe requirements of the Investment Advisers Act of 1940 concerning the
firm and customer records of an investment adviser?
1. They must be maintained in the principal office of the adviser for two years.
2. They must be maintained in the principal office of the adviser for three years.
3. They must be readily accessible for two years.
4. They must be readily accessible for five years. - correct answer ✔✔They must be maintained in the
principal office of the adviser for 2 yrs and they must be readily accessible for 5 yrs
,Under the Investment Advisers Act of 1940, which of the following would be excluded from the
definition of an investment adviser?
A. The publisher of an investment advisory newsletter who plans issues based on market events
B. A broker-dealer that manages clients' portfolios for a fee
C. A bank that charges a fee for providing investment advice
D. An individual who makes recommendations regarding which types of securities would meet a client's
investment objectives but who does not recommend specific securities - correct answer ✔✔A bank that
charges a fee for providing investment advice
Although many advisers to private funds are exempt from registration, larger ones generally register with
the SEC. SEC-registered investment advisers with at least $150 million in private fund assets under
management use which form to report information about the private funds that they manage?
A. Form D
B. Form PF
C. Form ADV Part 1A
D. Form 13F - correct answer ✔✔Form PF
Which of the following activities is most likely to be considered by the SEC as meeting the business
standard element in the definition of an investment adviser?
A. Issuing reports on macroeconomic conditions
B. Providing investment advisory services but limiting the clientele to immediate family members
C. Giving specific investment advice on only rare and isolated occasions
D. Advertising investment advisory services to the public and providing them routinely - correct answer
✔✔Advertising investment advisory services to the public and providing them routinely
Gibraltar Investment Advisers opened for business last week. Because of the clients brought over from
previous affiliations of their investment adviser representatives, they have started with $94 million under
management for various individual and corporate clients. They also signed a contract to manage an
additional $10 million for a wealthy individual. Gibraltar will begin managing that individual's portfolio at
, the beginning of the next calendar quarter. Which of the following best describes Gibraltar's investment
adviser registration requirements?
A. Gibraltar must register with the state(s) and then, within 90 days of the receipt of the additional $10
million, must register with the SEC.
B. Gibraltar's only option is to register at the state level because it currently manages less than $100
million in client funds.
C. Gibraltar need not register as an investment adviser because it will manage funds for an insti - correct
answer ✔✔Gibraltar would be eligible to register at the federal level
Which of the following does not meet the compensation test for defining investment advisers under SEC
Release IA-1092?
A. Subscription payments are received by a publisher of a newsletter providing impersonal securities-
related advice.
B. A real estate agent advertises that she will give free advice regarding investing the proceeds from the
sale of any home she lists.
C. Your next-door neighbor recommends the purchase of a certain security from his broker, which you
eventually do.
D. An insurance agent sells a life insurance policy and receives a commission on that policy. During the
sale of the insurance policy, the agent provides some securities investment advice. - correct answer
✔✔Your next-door neighbor recommends the purchase of a certain security from his broker, which you
eventually do
Under the Investment Advisers Act of 1940, which of the following investment advisers is not exempt
from federal registration?
A. All of Paula's clients are private funds, and she has total assets under management of $200 million
with less than $25 million of that belonging to foreign investors.
B. All of John's clients reside in his home state, and John offers no advice on any exchange-listed
securities. He manages $50 million in assets, and none of his clients are private funds.
C. Marie maintains her only office in Paris, France, deals with fewer than 15 clients (none of whom is a
registered investment company) in private funds advised by Marie, has AUM in the United States of less
than $25 million, and does not hold herself out as an investment adviser in the United States.
