Practice Exam #1 Answers

1. 1. Answer: B. An employee of an investment advisory firm would register as an investment adviser representative. Someone working as an employee of a broker-dealer would register as an agent, though someone could technically be registered as both, if she works for a firm that is both an investment adviser and a broker-dealer.
2. 2. Answer: B. Pension plan consultants do not need to register on a federal level unless they have $200 million in assets. Operating as a mid-sized investment adviser with clients in 15 or more states would require someone to register federally, as would serving as an adviser to registered investment companies or sharing a principal office with an affiliated SEC-registered investment adviser.
3. 3. Answer: A. Investment adviser registration expires on December 31 of each year, so an adviser registering late in the year will only have a few months before he needs to reregister.
4. 4. Answer: B. Staff members performing basic secretarial or customer service duties do not need to be registered. Direct supervision does not remove the need for registration. An investment adviser representative must always register in his or her primary state. Giving someone advice to not buy a security still constitutes providing investment advice that could require someone to register.
5. 5. Answer: A. Form ADV is filed by an investment adviser to register itself, not an investment adviser representative. All the other mentioned forms must be filed for an IAR.
6. 6. Answer: A. Registrations for IARs become effective 30 days after they are filed unless the state’s administrator intervenes.
7. 7. Answer: C. Registration and withdrawal must be completed within 30 days after the application is filed, assuming there are no administrative orders against the application or pending proceedings.
8. 8. Answer: D. Agents are employees of a broker-dealer or issuer and thus do not need to register as a broker-dealer.
9. 9. Answer: A.