CIC CIC - Certified Investment Counselor Securities Law and Regulatory Compliance Questions and Answers 2

Question 1

Which SEC rule requires investment advisers to adopt written policies and procedures reasonably designed to prevent violations of the Advisers Act?

Accepted Answer

Rule 206(4)-7

Answer

Rule 204A-1

Answer

Rule 17a-3

Answer

Rule 10b-5

Question 2

The SEC's Regulation Best Interest (Reg BI) applies primarily to:

Accepted Answer

Broker-dealers making recommendations to retail customers

Answer

Investment advisers providing ongoing portfolio management

Answer

Hedge fund managers with accredited investors only

Answer

Municipal advisers recommending bond issuance strategies

Question 3

Under the Investment Advisers Act, an investment adviser is prohibited from charging a performance fee to a client unless the client is a:

Accepted Answer

Qualified client meeting net worth or AUM thresholds

Answer

Registered investment company

Answer

Institutional investor only

Answer

Non-U.S. person

Question 4

The Investment Advisers Act's 'custody rule' (Rule 206(4)-2) requires advisers with custody of client assets to:

Accepted Answer

Maintain assets at a qualified custodian and in most cases undergo a surprise annual audit

Answer

Hold client funds in money market accounts only

Answer

Provide daily account statements to all clients

Answer

Segregate proprietary and client funds in the same account

Question 5

An investment adviser who receives soft dollars (research and brokerage services) in exchange for client commissions must:

Accepted Answer

Disclose the arrangement to clients and ensure it falls within the Section 28(e) safe harbor

Answer

Immediately disclose each transaction to regulators

Answer

Prohibit the practice entirely under SEC rules

Answer

Offset the cost against management fees charged

Question 6

ERISA fiduciary standards apply to investment advisers who manage assets in:

Accepted Answer

Qualified retirement plans such as 401(k) and pension funds

Answer

Individual taxable brokerage accounts

Answer

529 college savings plans only

Answer

Municipal bond portfolios for government entities