1. Answer: C. The fees associated with an account would be material to the decision-making process for a customer and must be included. While holding an additional, non-mandatory designation such as the CFP or having worked in the industry for many years may be advantageous for a professional to mention, they are not required since they’d be unlikely to cause a potential client to find someone else. Lawsuits against professionals not working with a client’s account would not be considered material and would not need to be disclosed.
2. Answer: A. Research prepared by a third party must be accurately represented as such and should not be passed off as the research of an investment adviser or investment adviser representative. Securities that are new offerings must be disclosed as such and purchasers must be provided with a prospectus by the confirmation due date. Previously working for a securities issuer and filing a personal bankruptcy would not require disclosure unless they somehow caused a current conflict of interest.
3. Answer: B. A preliminary prospectus must be delivered to clients at least 48 hours prior to the confirmation of a sale. The final prospectus must be delivered by the date of purchase confirmation.
4. Answer: D. It is unethical for professionals to misrepresent that they or their practice is somehow approved by the state securities administrator. Communicating that professionals have passed the Series 63, are registered to sell securities, and have never had a complaint are not unethical as long as the statements are true.
