IACCP (MASTER TERMS) 2025
ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
What is Front-Running? - ANSWERS-When a broker or other entity enters into a
trade because they have foreknowledge of a big non-publicized transaction that
will influence the price of the asset, resulting in a likely financial gain for the
broker.
It also occurs when a broker or analyst buys or sells shares for their term-account
ahead of their firm's buy or sell recommendation to clients.
QUESTION 2
SEC factors of "in the business" (3) - ANSWERS-a) whether the person represents
or otherwise holds himself or herself out to the public as an investment adviser;
b) whether the person receives compensation for providing investment advice; and
c) whether the person provides specific investment advice other than on rare,
isolated, and non-periodic instances.
QUESTION 3
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, IACCP (MASTER TERMS) 2025
definition of "advice" - ANSWERS-A person or firm satisfies the "advice about
securities" element if the advice or reports relate to securities. The SEC has stated
that providing one or more of the following also could satisfy this element: advice
about market trends; advice in the form of statistical or historical data (unless the
data is no more than an objective report of facts on a nonselective basis); advice
about the selection of an investment adviser; and advice
concerning the advantages of investing in securities instead of other types of
investments.
QUESTION 4
definition of "In the business" - ANSWERS-With respect to the "business"
element, an investment advisory business need not be the person's or firm's sole or
principal business activity. A person may actively or even primarily engage in
another business, yet be considered in the business of being an investment adviser.
As with the compensation element, the SEC has taken a broad view of what
constitutes "in the business."
QUESTION 5
definition of "compensation" - ANSWERS-The receipt of any economic benefit
would qualify as "compensation," including an advisory fee, a commission, or any
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, IACCP (MASTER TERMS) 2025
combination thereof, for providing advisory services. For purposes of the
definition, a fee need not be separate from other fees charged, designated as an
advisory fee or be received directly from a client.
QUESTION 6
Definition of an Investment Adviser (3) - ANSWERS-A person who is
1. compensated
2. engaged in the business
3. provide advice to others OR issuing reports
QUESTION 7
Anti-Fraud (state vs. federal) - ANSWERS-The general objective of the Advisers
Act is to protect the public and investors against fraud and
deceit by persons engaged for compensation in the business of advising others with
respect to
securities. The Advisers Act is fundamentally a disclosure and anti-fraud statute.
The anti-fraud
provisions of the Advisers Act apply to all investment advisers, whether registered
as such or exempt from registration.
QUESTION 8
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, IACCP (MASTER TERMS) 2025
SEC Preemption - ANSWERS-IARs of SEC-Registered Advisers The Advisers
Act generally preempts most state regulation of "supervised persons" of SEC-
registered investment advisers. States, however, may require registration of an
"investment adviser representative" who has a place of business located within a
state.
QUESTION 9
NSMIA - ANSWERS-National Securities Markets Improvement Act of 1996.
The Coordination Act allocated responsibility for investment advisers between the
SEC and the
states, with the SEC regulating larger advisers and the states regulating smaller
advisers. This
allocation was implemented in Section 203A of the Advisers Act, and prohibits an
investment
adviser from registering with the SEC unless it has assets under management of not
less than
$25 million, "or such higher amount as the Commission may by rule, deem
appropriate."
QUESTION 10
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ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
What is Front-Running? - ANSWERS-When a broker or other entity enters into a
trade because they have foreknowledge of a big non-publicized transaction that
will influence the price of the asset, resulting in a likely financial gain for the
broker.
It also occurs when a broker or analyst buys or sells shares for their term-account
ahead of their firm's buy or sell recommendation to clients.
QUESTION 2
SEC factors of "in the business" (3) - ANSWERS-a) whether the person represents
or otherwise holds himself or herself out to the public as an investment adviser;
b) whether the person receives compensation for providing investment advice; and
c) whether the person provides specific investment advice other than on rare,
isolated, and non-periodic instances.
QUESTION 3
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, IACCP (MASTER TERMS) 2025
definition of "advice" - ANSWERS-A person or firm satisfies the "advice about
securities" element if the advice or reports relate to securities. The SEC has stated
that providing one or more of the following also could satisfy this element: advice
about market trends; advice in the form of statistical or historical data (unless the
data is no more than an objective report of facts on a nonselective basis); advice
about the selection of an investment adviser; and advice
concerning the advantages of investing in securities instead of other types of
investments.
QUESTION 4
definition of "In the business" - ANSWERS-With respect to the "business"
element, an investment advisory business need not be the person's or firm's sole or
principal business activity. A person may actively or even primarily engage in
another business, yet be considered in the business of being an investment adviser.
As with the compensation element, the SEC has taken a broad view of what
constitutes "in the business."
QUESTION 5
definition of "compensation" - ANSWERS-The receipt of any economic benefit
would qualify as "compensation," including an advisory fee, a commission, or any
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, IACCP (MASTER TERMS) 2025
combination thereof, for providing advisory services. For purposes of the
definition, a fee need not be separate from other fees charged, designated as an
advisory fee or be received directly from a client.
QUESTION 6
Definition of an Investment Adviser (3) - ANSWERS-A person who is
1. compensated
2. engaged in the business
3. provide advice to others OR issuing reports
QUESTION 7
Anti-Fraud (state vs. federal) - ANSWERS-The general objective of the Advisers
Act is to protect the public and investors against fraud and
deceit by persons engaged for compensation in the business of advising others with
respect to
securities. The Advisers Act is fundamentally a disclosure and anti-fraud statute.
The anti-fraud
provisions of the Advisers Act apply to all investment advisers, whether registered
as such or exempt from registration.
QUESTION 8
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, IACCP (MASTER TERMS) 2025
SEC Preemption - ANSWERS-IARs of SEC-Registered Advisers The Advisers
Act generally preempts most state regulation of "supervised persons" of SEC-
registered investment advisers. States, however, may require registration of an
"investment adviser representative" who has a place of business located within a
state.
QUESTION 9
NSMIA - ANSWERS-National Securities Markets Improvement Act of 1996.
The Coordination Act allocated responsibility for investment advisers between the
SEC and the
states, with the SEC regulating larger advisers and the states regulating smaller
advisers. This
allocation was implemented in Section 203A of the Advisers Act, and prohibits an
investment
adviser from registering with the SEC unless it has assets under management of not
less than
$25 million, "or such higher amount as the Commission may by rule, deem
appropriate."
QUESTION 10
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