Study Question of the Week: June 11, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 63, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 63, Series 65, and Series 66)

Which of the following are likely to be exempt from state registration as an investment adviser under the Uniform Securities Act?

I. A certified public accountant (CPA) who reviews client asset allocations upon request

II. An individual representative of a firm that offers investment advice and management for a fee

III. A federally covered investment adviser

Answers: 

A. I and II

B. I and III

C. I, II, and III

D. II and III

Correct Answer: C.

Rationale: Federal law and the Uniform Securities Act define investment advisers as people who provide investment advice in exchange for compensation of some kind, but there are several types of exemptions, including: an investment adviser representative (IAR) working for an investment adviser (so II is exempt); a bank, savings institution, or trust company; a lawyer, accountant, teacher, or engineer whose provision of investment advice is incidental to their profession (so the CPA is exempt); a broker-dealer or its agents if the provision of investment advice is incidental to its business of buying and selling securities and not directly compensated; a publisher of a bona fide publication of general and regular circulation; a federally covered investment adviser (III is exempt). If the RIA is federally covered (registered with the SEC as an RIA), then it does not have to register at the state level. However, any of its IARs doing business in the state are required to register.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

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