IACCP Examination Study Guide | 100 Questions | 100% Correct Answers

process; 2) Risk disclosure (particularly if holdings include illiquid or difficult-to-price); and 3) Firm’s conflicts of interest and measures to mitigate those. Types of investors and disclosure materials include: Registered Investment Companies: Prospectus and Statement of Additional Information (SAI) Private Investment Funds: Private placement memorandum (PPM) Advisory clients: Form ADV Part 2 (if adviser recommends or places accounts in difficult-to-price investments ANSWER-What should a securities valuation disclosure include, and in what materials would the various investor types receive such disclosure? Consistent and clear written procedures for: Process for securities pricing or, when not available, process for determining fair and accurate valuation which could include established committee to perform valuation, identify methodologies and factors, establish procedures and regularly review and test or third party valuation service Written valuation policies should identify all parties involved in valuation process, appropriate, reasonable and consistent valuation methodologies (including sources of prices for different types of investments, priority of sources, and how sources are used) for the various types of liquid illiquid investments; Procedures for use and oversight of pricing service or other 3rd parties; Procedures to manage potential conflicts of interest; Documentation requirements; Procedures to prevent, detect and correct violations; Regular review and updating of process Disclosures ANSWER-What should a consistent securities valuation are some procedures that should be consistent as related to securities valuation? Direct obligations to US Gov, Banker’s products (CDs, commercial paper, certain debt instruments, etc.), Money-market funds, Open-end funds (MFs), Unit investment trusts invested exclusively in 1 or more MFs (REITs); Accounts over which access person has no direct or indirect control or influence; Automatic investment plan transactions; Duplicate reports otherwise contained in broker trade confirmations received by firm ANSWER-Holdings exempt from reportable securities include Dodd-Frank also resulted in changes to AUM by 1) raising registration threshold to $100M, and creating Mid-Sized adviser category w/ AUM $25-100M (w/ $100-115 Buffer Zone); and 2) “RAUM” Uniform Calculation of Gross Basis at Market Value (or fair value if n/a) to include: (i) “Securities Portfolios” (any consisting of at least 50%) and/or Private Funds to which adviser provides Regular/Continuous Supervisory or Management services; (ii) Proprietary accounts (owned in aggregate 25% or more), accts managed w/out compensation and those of foreign clients; and (iii) uncalled capital commitments to private fund(s) ANSWER-Repeal of Private Adviser Exemption (per Dodd-Frank) brought into SEC’s regulatory view hedge, private equity, venture capital, and other private funds by adding regulation to circumvent adviser’s use of a loop-hole to avoid registration in which each fund, and not it’s underlying investors, is counted as a “client” Duty to seek best execution on behalf of client by considering a variety of factors so that securities transactions are executed in such a manner that the client’s total cost or proceeds in each transaction is the most favorable under the circumstances ANSWER-Define adviser’s best execution duty/obligation EXCLUDED from Definition of “IA” are: 1) Domestic banks and bank holding companies; 2) Services SOLELY Incidental by lawyers, accountants, engineers, teachers, (and) 3) BD advisory services w/out special compensation; 4) Publishers of bona fide newspapers/mags w/Regular Circulation; 5)