Series 65 || with 100% Error-free Answers.
Investment Advisor correct answers "any person who, for compensation, engages in the
business of advising others, either directly or through publications or writings, as to
the value of securities or as to the advisability of investing in, purchasing, or selling
securities, or who, for compensation and as a part of a regular business, issues or
promulgates analyses or reports concerning securities."
administrator correct answers The administrator has jurisdiction over the registration of
securities professionals and securities he has the power to make rules and issue orders he can
deny suspend or revoke registrations
person correct answers Anyone who can open an account
Everyone except:
(A minor, a deceased individual, and an individual declared mentally incompetent by the courts)
Investment advisor Three prong test correct answers The person is considered an investment
advisor if:
1. They give advice to others on securities
2. Does so as part of regular business activities
3. Directly or indirectly receives compensation for performing this activity
Investment Counsel correct answers 2 criteria in the Inv Act of 1940 that must be met in order to
use this term:
1. The investment advisors principal service must be giving investment advice. This basically
includes financial planners and others for whom investment advice is only part of what they do.
2. Provide investment supervisory services: this includes consistent monitoring of account
Exclusions to investment advisers act of 1940 and USA: correct answers • any bank and bank
holding company, savings institution, or trust company. This exclusion is generally limited to the
US Banks and bank holding companies. This exclusion is unavailable to credit unions and
investment advisor subsidaries of banks or bank holding companies.
• (L.A.T.E. Exclusion) any lawyer, accountant, teacher, or engineer who is advice is solely
incidental to the practice of his profession is excluded. This exclusion is not available to any of
these who have established a separate advisory business.
• any broker dealer who's performance of such services is solely incidental to the conduct of its
business as a broker dealer and who receives no special compensation is included. This exclusion
also applies to registered representatives of broker-dealers (this is true as long as the person does
not have a "wrapped fee" for its services)
• publishers may qualify for an exclusion from the definition but they must meet certain criteria.
Excluded from the definition of investment advice would be a publisher of any bona fide
newspaper news magazine or business or financial publication of general and regular circulation
• certain individuals who are employed by investment advisors - (investment advisor
representatives)
,• any person who is a federal covered advisor is excluded
• any other person the administrator specifies is excluded
• Any person who's advice, analyses, or reports are related only to securities that are direct
obligations of, or obligations guaranteed by, the United States.
Exemptions from investment advisor act of 1940 (federal) correct answers • intrastate advisors
(only within one state) - Investment advisors other than an investment advisor who acts as an
investment advisor to any private fund, who is clients, or resident of the state in which the
advisor has its principal office in only place of business and who do not give advice dealing with
securities listen on any national exchange are exempt.
• advisors whose only clients are insurance companies are exempt
Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers,
Investment Adviser Representatives, and Federal Covered Advisers, which of the following must
be included in an investment advisory contract? correct answers The formula used to determine
the investment adviser's compensation
A statement of the discretionary authority, if any, given to the investment adviser
If an agent chooses to appeal an Administrator's order, when must the agent file for review of the
order with the appropriate court? correct answers Within 60 days of the entry of the order
The Uniform Securities Act provides that the state Administrator may deny the registration of a
broker-dealer for all of the following reasons EXCEPT correct answers that the applicant is not
qualified due to a lack of experience
Witherspoon, Eustis, and Brahmin (WEB), an investment banking firm and SEC-registered
investment adviser, is the principal underwriter for MTEX's upcoming stock issue. Lynn Black is
an analyst and IAR with WEB, and she learned from an employee in MTEX's programming
department that a serious problem was recently discovered in the software program of its major
new product line. In fact, the problem is so bad that many customers have canceled their orders
with MTEX. Black checked the stock's prospectus and found no mention of this development.
The red herring prospectus has already been distributed. According to WEB's required code of
ethics, Black's best course of action is to correct answers inform her immediate supervisor at
WEB of her discovery
Under the Uniform Securities Act, unless renewed, the registration of which of the following
securities professionals expires on December 31? correct answers Agents
Broker-dealers
Investment advisers
Investment adviser representatives
To assist broker-dealers with compliance, NASAA prepared a fee disclosure template. Based on
the template, all of the following broker-dealer charges would be disclosed except correct
answers Brokerage comissions
, An investment adviser registered with the SEC could use the term investment counsel if correct
answers its principal business consists of rendering investment advice
a substantial portion of its business involves investment supervisory services
Under the Investment Advisers Act of 1940, an investment adviser would be prohibited from
engaging in which of the following practices, even if disclosed in writing to the customer?
correct answers Putting the adviser's own interests before those of the customer
Creative Wealth Management (CWM), an investment adviser registered in five states, has a
preferred brokerage arrangement with Bullish Bobbie Brown Securities (BBBS), a FINRA
member broker-dealer. If one of CWM's clients chooses to use a broker-dealer other than BBBS,
CWM must disclose that correct answers in a client-directed brokerage account, the client may
pay higher brokerage commissions because the IA may not be able to aggregate orders to reduce
transaction costs
the client may receive less favorable prices because the IA has arranged a preferred commission
rate with a preferred broker-dealer
Plenitude Premier Solutions (PPS) is registered in State C. If PPS wished to maintain custody of
client funds or securities, correct answers prompt notice would have to be given to the State C
Administrator on Form ADV.
A client of a broker-dealer calls his agent and submits an order to purchase 1,000 shares of a
Peruvian copper mining company. As the order ticket is being prepared, the agent notices that
this is a nonexempt unregistered stock. The agent should correct answers continue to process the
order because this is an exempt transaction
Those persons meeting the Uniform Securities Act's definition of a broker-dealer in a state must,
unless otherwise exempted, register in that state. Which of the following is correct regarding the
initial registration and expiration of the registration of a broker-dealer? correct answers The
effective date of an initial registration is at noon on the 30th day after receipt of a completed
application; expiration, unless renewed, is each December 31st.
An agent's customer says that ABC Corporation is about to be bought out. The customer wishes
to place an order to buy ABC common stock based upon this yet unreleased information, which
he claims he learned from an officer in the company. How should the agent respond in this
situation? correct answers Bring the information to the attention of the firm's supervisory
principal named to handle such matters in the Supervisory Procedures Manual
Functioning responsibly as an agent requires disclosure of any potential conflicts of interest that
could arise from a securities recommendation. Examples of potential conflicts of interest that
must be disclosed to clients would include all of the following EXCEPT correct answers
recommending shares of a pharmaceutical company that manufactures a drug that the agent takes
for chronic indigestion
