Series 65 Unit 1 – Kaplin || A+ Verified Solutions.
Investment advisor act of 1940 correct answers Is the federal legislation that defines the term
investment advisor and requires persons that fall within the definition to register with the SEC or
with the states in which they do business. 2 primary purposes:
regulation of persons both natural and legal in the business of giving investment advice
-the establishment of standars of ethical business conduct for the industry
National Securities Markets Improvement Act of 1993 (NSMIA) correct answers Under this act
investment advisors who are registered wit the SEC under the Investment advisers act of 1940
*federal covered advisors) do not register with the state securities administrators
Broker correct answers This means any persons engaged in the buesiness of effecting
transactions in securties for the account of others
Dealer correct answers any person regularly engaged in the business of buying and selling
securities as principal for his own account, but doesnt include a bank, insurance copnay, or
investment company
Fiduciary correct answers a person legally appointed and authorized to hold assets in trust for
another person. They managed the assets for the benefit of the other person rahter than for his or
her own profits must exercise a standard of care imposed by law. exampls are an executor of an
estate a trustee and an investment advisor
Person assosciated with an investment advisor correct answers means any partner, officer, or
director of the investment advisor or directly or indirectly controllign or controlled by the
investment adivor including any employees of the investment advisor
Supervised Person correct answers means any partner, officer, director or employees of an
envestment adviser on behalf of the investment adviser and is subject to the supervision and
control of the ivnestment adviser. includes all employees even those who perfrom clerical
functions and are not required to become registered.
Principal office and place of business correct answers the executive office of the investment
adviser from which the officers, partners, or managers of the investment adviser direct, control,
and cooridnate activities o the investment adviser
investment adviser correct answers is defined as any person who, for compensation, engages in
the business of advising others as to the value of securities or the advisability of investing in
securities or, as part of a regular business, issues analyses or reports converning scurities
SEC Release IA-1092 correct answers interprets the definition of investment adviser under the
IAA act of 1940 to include financial planners, pension consultants, and others who offer
investment advice as part of their financial practices.
, Financial Planners correct answers persons who make recs regarding a person's financial
resources or perform analyses that concern securities are investmnet advisers if such cservices
are performed as part of a business and for compensation. SEC holds that there is no such thing
as a comprehensive financial plan that does not involve securites
pension consultants correct answers consultants who advise employee benefit plans on how to
fund their plans with securities are also considered investment advisers by the SEC.
Sports and entertaintment reps correct answers persons who provide financially related servces to
entertainers and athletes that include advice related to investments, tax planning, budgeting and
money management are also investment advisors. *A sports agen who secures a favorable
contract for a football player and receives a commission of 10% of the player's salary is not
necessarily an investment adviser. However - once they advise the player to invest his money in
specific securities the agent is then in the business of offering investment advice and would then
be subject to the investment advisor act of 1940 or uniform securities act
Compensation correct answers A person who receives any economic benefit as a result of
providing investment advice is an investment adviser. Includes advisory fees, commissions, or
other types of fees relating to the service redered. Can be payed by a third party but always must
be disclosed to the client.
Fees receied from a corporation for advice given to the corporations emlpyees or retirees are
considred compensation
Intrastate Advisers correct answers Advisers whose clients are residents of the state in which the
adviser has its principal oiffice and place of business and who do not give advice dealing with
securities listed on any national exchange are exempt
Private fund adviser exemption correct answers an exeption for advisers solely to proivate funds
with less than $150million in assets under management in the US without regard to the number
or type of private funds
foreign private adviser exemption correct answers an exeption for certain non-UXS advisers with
no place of business in the US and minimal assets under management (less than $25m)
attributable to US clients and investors
venture capital fund exemption correct answers an exerpmtion for advisers solely to venture
capital funds
3(c)1 issuer correct answers is one whose outstanding securities are beneficially owned by not
more than 100 and which is not making and does not presently propose to make a public offering
of its securities.
3(c)7 issuer correct answers is one whose outstanding securities are owned exclusively by
persons who, at the time of acquisition of such securities are qualified pruchasers. at least $5mil
in investments for individuals and $25m in investments for business entitities and which is not
making and does not at the time propose to mkae a public offering of such securities,.
Investment advisor act of 1940 correct answers Is the federal legislation that defines the term
investment advisor and requires persons that fall within the definition to register with the SEC or
with the states in which they do business. 2 primary purposes:
regulation of persons both natural and legal in the business of giving investment advice
-the establishment of standars of ethical business conduct for the industry
National Securities Markets Improvement Act of 1993 (NSMIA) correct answers Under this act
investment advisors who are registered wit the SEC under the Investment advisers act of 1940
*federal covered advisors) do not register with the state securities administrators
Broker correct answers This means any persons engaged in the buesiness of effecting
transactions in securties for the account of others
Dealer correct answers any person regularly engaged in the business of buying and selling
securities as principal for his own account, but doesnt include a bank, insurance copnay, or
investment company
Fiduciary correct answers a person legally appointed and authorized to hold assets in trust for
another person. They managed the assets for the benefit of the other person rahter than for his or
her own profits must exercise a standard of care imposed by law. exampls are an executor of an
estate a trustee and an investment advisor
Person assosciated with an investment advisor correct answers means any partner, officer, or
director of the investment advisor or directly or indirectly controllign or controlled by the
investment adivor including any employees of the investment advisor
Supervised Person correct answers means any partner, officer, director or employees of an
envestment adviser on behalf of the investment adviser and is subject to the supervision and
control of the ivnestment adviser. includes all employees even those who perfrom clerical
functions and are not required to become registered.
Principal office and place of business correct answers the executive office of the investment
adviser from which the officers, partners, or managers of the investment adviser direct, control,
and cooridnate activities o the investment adviser
investment adviser correct answers is defined as any person who, for compensation, engages in
the business of advising others as to the value of securities or the advisability of investing in
securities or, as part of a regular business, issues analyses or reports converning scurities
SEC Release IA-1092 correct answers interprets the definition of investment adviser under the
IAA act of 1940 to include financial planners, pension consultants, and others who offer
investment advice as part of their financial practices.
, Financial Planners correct answers persons who make recs regarding a person's financial
resources or perform analyses that concern securities are investmnet advisers if such cservices
are performed as part of a business and for compensation. SEC holds that there is no such thing
as a comprehensive financial plan that does not involve securites
pension consultants correct answers consultants who advise employee benefit plans on how to
fund their plans with securities are also considered investment advisers by the SEC.
Sports and entertaintment reps correct answers persons who provide financially related servces to
entertainers and athletes that include advice related to investments, tax planning, budgeting and
money management are also investment advisors. *A sports agen who secures a favorable
contract for a football player and receives a commission of 10% of the player's salary is not
necessarily an investment adviser. However - once they advise the player to invest his money in
specific securities the agent is then in the business of offering investment advice and would then
be subject to the investment advisor act of 1940 or uniform securities act
Compensation correct answers A person who receives any economic benefit as a result of
providing investment advice is an investment adviser. Includes advisory fees, commissions, or
other types of fees relating to the service redered. Can be payed by a third party but always must
be disclosed to the client.
Fees receied from a corporation for advice given to the corporations emlpyees or retirees are
considred compensation
Intrastate Advisers correct answers Advisers whose clients are residents of the state in which the
adviser has its principal oiffice and place of business and who do not give advice dealing with
securities listed on any national exchange are exempt
Private fund adviser exemption correct answers an exeption for advisers solely to proivate funds
with less than $150million in assets under management in the US without regard to the number
or type of private funds
foreign private adviser exemption correct answers an exeption for certain non-UXS advisers with
no place of business in the US and minimal assets under management (less than $25m)
attributable to US clients and investors
venture capital fund exemption correct answers an exerpmtion for advisers solely to venture
capital funds
3(c)1 issuer correct answers is one whose outstanding securities are beneficially owned by not
more than 100 and which is not making and does not presently propose to make a public offering
of its securities.
3(c)7 issuer correct answers is one whose outstanding securities are owned exclusively by
persons who, at the time of acquisition of such securities are qualified pruchasers. at least $5mil
in investments for individuals and $25m in investments for business entitities and which is not
making and does not at the time propose to mkae a public offering of such securities,.
