IACCP EXAM TEST PAPER 2025/2026 QUESTIONS WITH
ANSWERS RATED A+
✔✔If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 - ✔✔B. Form ADV-W
✔✔During an examination of XYZ Investment Advisers, the SEC discovers that two of
Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to claim
that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. - ✔✔D. supervise.
✔✔SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures on
Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. - ✔✔A. Adopt
procedures to ensure proxies are voted in the best interest of clients.
D. Provide information to clients on how their proxies were voted.
✔✔In which THREE circumstances is an adviser deemed to have custody under the
SEC Custody Rule? (Choose three.)
A. The investment adviser is mistakenly sent a check payable to the client and returns it
to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
C. The investment adviser takes possession of a check drawn by the client that is
payable to a third party.
,D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account. - ✔✔A. The investment adviser is mistakenly sent a check
payable to the client and returns it to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account.
✔✔An investment advisory firm is closing its business.
What should the firm do with its corporate and organizational documents after
termination of the firm entity?
A. Retain the documents in an easily accessible place of which the SEC has been
notified for five years.
B. Retain the documents in an easily accessible place of which the SEC has been
notified for three years.
C. Dispose of the documents in a prudent manner, ensuring the personal identifying
information is destroyed.
D. Retain the documents for five years, two of which must be in an easily accessible
place. - ✔✔B. Retain the documents in an easily accessible place of which the SEC has
been notified for three years.
✔✔Under the SEC Custody Rule, an adviser is NOT subject to a surprise annual
examination by a qualified accounting firm if the:
A. adviser directly debits advisory fees from clients' custodial accounts.
B. adviser is granted general power of attorney by advisory clients.
C. adviser or certain of adviser's employees serve as trustees to advisory clients.
D. adviser provides bill-pay services to advisory clients. - ✔✔A. adviser directly debits
advisory fees from clients' custodial accounts.
✔✔Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An individual who has become a covered associate within the last three months
makes a $1,000 contribution to an elected official, whom the individual is also soliciting
as an advisory client.
B. An investment adviser makes a contribution of $50.00 to a government elected
official responsible for selecting investment advisers.
C. An investment adviser directs its counsel to make a contribution of $50.00 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. - ✔✔A. An individual who has become a covered
associate within the last three months makes a $1,000 contribution to an elected official,
whom the individual is also soliciting as an advisory client.
,✔✔Each person is defined as an "access person" under the SEC Investment Adviser
Codes of Ethics Rule EXCEPT:
A. any supervised person who has access to nonpublic information regarding any
client's purchase or sale of securities.
B. any supervised person who makes securities recommendations to clients.
C. officers, directors, and partners of a firm whose primary business is providing
investment advice.
D. any supervised person who trades in securities for their own account. - ✔✔D. any
supervised person who trades in securities for their own account.
✔✔An investment adviser is required to maintain which THREE records in connection
with its code of ethics? (Choose three.)
A. An electronic database of access persons' personal trading records.
B. A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code. - ✔✔B.
A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code.
✔✔Investment Adviser's President serves on the board of directors of XYZ, a publicly
traded company. Adviser has approved the separate employment, established and
tested a Chinese Wall to prevent information flowing between Adviser and XYZ, and
has adopted a policy that it will not hold XYZ stock in client portfolios.
In drafting its client disclosures, must Adviser disclose the President's relationship with
XYZ?
A. Yes, by disclosing the conflict and Adviser's procedures.
B. Yes, but only in the Adviser's code of ethics.
C. No, the conflict has been resolved.
D. No, Adviser will not recommend XYZ to clients. - ✔✔A. Yes, by disclosing the conflict
and Adviser's procedures.
✔✔According to the Investment Advisers Act of 1940, every investment adviser is
required to prevent illegal insider trading by establishing, maintaining and enforcing
written policies and procedures reasonably designed to:
A. prevent the misuse of material client information.
B. create Chinese Walls.
C. prevent the misuse of material nonpublic information.
, D. create restricted lists and enforce black-out periods. - ✔✔C. prevent the misuse of
material nonpublic information.
✔✔What does the SEC Investment Adviser Codes of Ethics Rule require access
persons to submit?
A. An annual holdings report that must be current within 45 days of submission.
B. Quarterly transaction reports within 10 days of quarter end.
C. A certification that the employee does not hold any private placements.
D. A request for pre-approval of all brokers used. - ✔✔A. An annual holdings report that
must be current within 45 days of submission.
✔✔Adviser A and its president, Jones, conduct investment manager searches for
institutional clients. Jones often refers his clients to Adviser B. Adviser B has provided
financing for business ventures owned by Jones. Adviser B has also steered brokerage
business to a brokerage firm owned by Jones' son.
Which action should be taken by Adviser B?
A. Adviser B may rely on disclosure in Adviser A's Form ADV about these business
dealings.
B. None since Jones had made his clients aware of Adviser B's business dealings with
Jones and his son.
C. None since Adviser A's referrals are not influenced by any of these business
dealings.
D. Adviser B should disclose these business dealings in its Form ADV Part 2 because
they are material conflicts of interest. - ✔✔D. Adviser B should disclose these business
dealings in its Form ADV Part 2 because they are material conflicts of interest.
✔✔Investment Adviser manages a portfolio for Mr. Jackson, the President of Jackson
Industries, a publicly traded company. Mr. Jackson informs Portfolio Manager that the
stock price for Jackson Industries will likely decline in value when the quarterly earnings
announcement is made. Portfolio Manager shorts Jackson Industries in his personal
account and makes a large profit. Adviser did not require pre-clearance of these trades
because Adviser does not hold Jackson Industries in client portfolios.
Has Adviser failed to meet its duties under the Advisers Act?
A. Yes, because Adviser must pre-clear all trades by portfolio managers.
B. No, because it was Mr. Jackson who shared nonpublic information.
C. Yes, because Adviser reasonably failed to detect insider trading.
D. No, because Mr. Jackson suffered no losses. - ✔✔C. Yes, because Adviser
reasonably failed to detect insider trading.
ANSWERS RATED A+
✔✔If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 - ✔✔B. Form ADV-W
✔✔During an examination of XYZ Investment Advisers, the SEC discovers that two of
Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to claim
that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. - ✔✔D. supervise.
✔✔SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures on
Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. - ✔✔A. Adopt
procedures to ensure proxies are voted in the best interest of clients.
D. Provide information to clients on how their proxies were voted.
✔✔In which THREE circumstances is an adviser deemed to have custody under the
SEC Custody Rule? (Choose three.)
A. The investment adviser is mistakenly sent a check payable to the client and returns it
to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
C. The investment adviser takes possession of a check drawn by the client that is
payable to a third party.
,D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account. - ✔✔A. The investment adviser is mistakenly sent a check
payable to the client and returns it to the sender within five business days of receipt.
B. The investment adviser deducts advisory fees from the client's account with the
client's prior written consent.
D. The investment adviser acts as one of three or more trustees in regards to an
advisory client's account.
✔✔An investment advisory firm is closing its business.
What should the firm do with its corporate and organizational documents after
termination of the firm entity?
A. Retain the documents in an easily accessible place of which the SEC has been
notified for five years.
B. Retain the documents in an easily accessible place of which the SEC has been
notified for three years.
C. Dispose of the documents in a prudent manner, ensuring the personal identifying
information is destroyed.
D. Retain the documents for five years, two of which must be in an easily accessible
place. - ✔✔B. Retain the documents in an easily accessible place of which the SEC has
been notified for three years.
✔✔Under the SEC Custody Rule, an adviser is NOT subject to a surprise annual
examination by a qualified accounting firm if the:
A. adviser directly debits advisory fees from clients' custodial accounts.
B. adviser is granted general power of attorney by advisory clients.
C. adviser or certain of adviser's employees serve as trustees to advisory clients.
D. adviser provides bill-pay services to advisory clients. - ✔✔A. adviser directly debits
advisory fees from clients' custodial accounts.
✔✔Which situation would trigger a violation of the SEC Pay-to-Play Rule?
A. An individual who has become a covered associate within the last three months
makes a $1,000 contribution to an elected official, whom the individual is also soliciting
as an advisory client.
B. An investment adviser makes a contribution of $50.00 to a government elected
official responsible for selecting investment advisers.
C. An investment adviser directs its counsel to make a contribution of $50.00 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. - ✔✔A. An individual who has become a covered
associate within the last three months makes a $1,000 contribution to an elected official,
whom the individual is also soliciting as an advisory client.
,✔✔Each person is defined as an "access person" under the SEC Investment Adviser
Codes of Ethics Rule EXCEPT:
A. any supervised person who has access to nonpublic information regarding any
client's purchase or sale of securities.
B. any supervised person who makes securities recommendations to clients.
C. officers, directors, and partners of a firm whose primary business is providing
investment advice.
D. any supervised person who trades in securities for their own account. - ✔✔D. any
supervised person who trades in securities for their own account.
✔✔An investment adviser is required to maintain which THREE records in connection
with its code of ethics? (Choose three.)
A. An electronic database of access persons' personal trading records.
B. A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code. - ✔✔B.
A record of violations of the code.
C. A list of access persons.
D. A copy of each supervised person's acknowledgement of receipt of the code.
✔✔Investment Adviser's President serves on the board of directors of XYZ, a publicly
traded company. Adviser has approved the separate employment, established and
tested a Chinese Wall to prevent information flowing between Adviser and XYZ, and
has adopted a policy that it will not hold XYZ stock in client portfolios.
In drafting its client disclosures, must Adviser disclose the President's relationship with
XYZ?
A. Yes, by disclosing the conflict and Adviser's procedures.
B. Yes, but only in the Adviser's code of ethics.
C. No, the conflict has been resolved.
D. No, Adviser will not recommend XYZ to clients. - ✔✔A. Yes, by disclosing the conflict
and Adviser's procedures.
✔✔According to the Investment Advisers Act of 1940, every investment adviser is
required to prevent illegal insider trading by establishing, maintaining and enforcing
written policies and procedures reasonably designed to:
A. prevent the misuse of material client information.
B. create Chinese Walls.
C. prevent the misuse of material nonpublic information.
, D. create restricted lists and enforce black-out periods. - ✔✔C. prevent the misuse of
material nonpublic information.
✔✔What does the SEC Investment Adviser Codes of Ethics Rule require access
persons to submit?
A. An annual holdings report that must be current within 45 days of submission.
B. Quarterly transaction reports within 10 days of quarter end.
C. A certification that the employee does not hold any private placements.
D. A request for pre-approval of all brokers used. - ✔✔A. An annual holdings report that
must be current within 45 days of submission.
✔✔Adviser A and its president, Jones, conduct investment manager searches for
institutional clients. Jones often refers his clients to Adviser B. Adviser B has provided
financing for business ventures owned by Jones. Adviser B has also steered brokerage
business to a brokerage firm owned by Jones' son.
Which action should be taken by Adviser B?
A. Adviser B may rely on disclosure in Adviser A's Form ADV about these business
dealings.
B. None since Jones had made his clients aware of Adviser B's business dealings with
Jones and his son.
C. None since Adviser A's referrals are not influenced by any of these business
dealings.
D. Adviser B should disclose these business dealings in its Form ADV Part 2 because
they are material conflicts of interest. - ✔✔D. Adviser B should disclose these business
dealings in its Form ADV Part 2 because they are material conflicts of interest.
✔✔Investment Adviser manages a portfolio for Mr. Jackson, the President of Jackson
Industries, a publicly traded company. Mr. Jackson informs Portfolio Manager that the
stock price for Jackson Industries will likely decline in value when the quarterly earnings
announcement is made. Portfolio Manager shorts Jackson Industries in his personal
account and makes a large profit. Adviser did not require pre-clearance of these trades
because Adviser does not hold Jackson Industries in client portfolios.
Has Adviser failed to meet its duties under the Advisers Act?
A. Yes, because Adviser must pre-clear all trades by portfolio managers.
B. No, because it was Mr. Jackson who shared nonpublic information.
C. Yes, because Adviser reasonably failed to detect insider trading.
D. No, because Mr. Jackson suffered no losses. - ✔✔C. Yes, because Adviser
reasonably failed to detect insider trading.
