In order for an investment advisor to buy and sell for its own account, the advisor must obtain the buying or selling client''s written consent AND which of the following when executing a transaction?
Answer(s): C
Disclosure is the best way to avoid legal entanglements and potential conflicts of interest. When an investment advisory firm is trading for its own account, its fiduciary obligation is to fully disclose that it is acting as a buyer or seller for its own account
The Securities Exchange Act of 1934 is best described as:
The Securities Exchange Act of 1934 created the Securities and Exchange Commission (SEC), which enforces securities laws. The Exchange Act of 1934 was created to govern securities that have been issued to the primary market and those that are trading on the secondary market. The Act also serves to regulate the exchanges and broker-dealers in order to protect the investing public
TransPlanet Transactions is a broker-dealer registered in Philadelphia, PA, where it keeps its corporate offices. Since it provides investment advisory services as well, is TransPlanet required to maintain dual registration in the state of Pennsylvania?
Answer(s): D
A broker-dealer is also permitted to operate as an investment advisor without maintaining dual registration. However, the state administrator has the authority to deny registration to a broker-dealer who is not considered qualified to dispense investment advisory services
Which of the following provides uniform interpretations of the application of state and federal laws to investment advisors?
Answer(s): B
SEC Release IA-1092 resulted from a discussion between the Securities and ExchangeCommission (SEC) and the North American Securities Administrators Association (NASAA) in 1987. Both organizations shared views on how to interpret the Investment Advisor's Act of 1940 as it relates to a significant increase in the number of financial planners and other individuals who provide investment advice as a key part of other financially related services. SEC Release IA- 1092 provides uniform interpretations of the application of state and federal laws to the definition of an investment advisor
Which of the following does NOT describe a person affiliated with an investment company?
Answer(s): E
All of the options describe persons who are affiliated with an investment company. Also included under the definition are: the company's investment advisor, a member of the company's advisory board or someone owning at least 5% of the voting stock. The Investment Company Act of 1940 provides this and other definitions because such terms are contained in many of its provisions
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