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Flashcards in USA - Business Practices Deck (68)
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1

Advisory contracts must be _____ and have ______

be in writing and have a defined term

2

Prepayment of fees is permitted. T/F

True

3

Refund for early terminations are permitted. T/F

True

4

If the firm is a partnership, any change in ownership must be _____

communicated promptly to customers

5

A change in a majority of partners requires _____

customer consent

6

A performance fee is allowed for _______

wealthy clients

7

Soft dollar arrangements are allowed as long as the "give backs" benefit the _____

adviser's clients

8

An adviser can also collect _____ fees if they place client funds into a particular mutual fund

12b-1 fees

9

You cannot include hedge clauses in an advisory contract that are ______ or hold the adviser _____

unreasonable or hold the adviser harmless for misconduct

10

Each client must receive the adviser's brochure and brochure supplement, also known as Form ADV part ____ and form ADV part _____

2A and 2B

11

The brochure and supplement must be delivered either _____ before signing, or if after, the customer has _____ to rescind the contract

48 hours before signing or has 5 days to rescind afterwards

12

If there is a material change to the brochure, it must be sent to the customer no later than _____ after fiscal year end

120 days

13

An adviser may not take custody of client assets if there is a specific ______ or, if no ____, then if they have not given ______

if there is a specific rule, or if no rule, if they have not given notice

14

In order to take custody, adviser must notify the state using form _____

ADV

15

Assets held by an adviser must be held by a ______ who must be _______ annually

custodian who must be audited annually

16

The IA must file audit results of the custodian within ______

120 days

17

Qualified custodians under the NASAA rules are:

- FDIC insured deposit taking institutions
- registered BDs
- registered futures commissions merchants
- foreign financial institutions

18

"Custody" also pertains to taking more than _____ in advance fees and accounts with full _____

more than $500 in advance fees and accounts with full POA

19

If funds received mistakenly are returned within _____, then not considered custody

3 days

20

Annual updates to ADV must be filed within _____ of fiscal year end; material changes filed within _____ of event

90 days of year end; 30 days of event (for Fed covered advisers, material change is required "promptly")

21

Under NASAA rules, customer must sign margin agreement ______ after the first trade occurs

promptly

22

For discretionary accounts, written authority must be received no later than ______ after verbal authority is given (does not apply to BDs - Fed laws)

10 business days

23

For BDs, written authority for discretion must be received ______ to placing trades

prior

24

Payment for trades by a customer must be received no later than _____ after the trade date

5 days (S+2)

25

If account is frozen, customer can still trade but needs to _____

have the cash deposited up front

26

A loan amount to a customer with a margin account cannot exceed limits placed by ______

Reg T (for instance, since margin on a LEAP is 75%, then loan cannot exceed 25%)

27

If a customer wants securities transferred and shipped, must be ______

fully paid

28

Order tickets must be stamped with time of _____, _____, and ______

time of receipt, time of execution, and time of cancellation (if canceled)

29

For IAs, orders must show name of person who recommended transaction, name of person who entered the ticket, the ______ of the order, name of account, name of the _____ who will execute the order, and whether or not it is ______

date of the order; name of the BD, and whether is discretionary or not

30

Limit order display rule states that if a customer places an order with a better price than the market maker, the market maker must ______

display those customer quotes