NASAA Series 66 — All Questions

Which part of Form ADV is prepared for individual supervised persons and is delivered to clients, but when amended is not filed with the SEC?

• a.Part 1A, the data and disclosure pages that are filed on the IARD
• b.Part 2A, the firm brochure that is filed on the IARD in narrative form
• c.Part 2B, the supplement describing each advising individual✓
• d.Part 3, the relationship summary for retail clients

Part 2B supplements describe the individuals who provide advisory services and are delivered to clients, but Rule 204-1 states that amendments to them are not filed with the SEC. The Part 2A firm brochure is filed electronically, Part 3 (Form CRS) is filed for advisers with retail investors, and Part 1A is the structured registration data filed through the IARD. Confusing the supplement with the firm brochure is the usual error because both are narrative documents delivered to clients.17 CFR 275.204-1(b)(1); Form ADV Part 2B

Wren Advisers is SEC-registered with a December 31 fiscal year and made material changes to its brochure during 2026. By what date in 2027 must it deliver to clients either the current brochure or a summary of material changes?

• a.March 31 (90 days)
• b.June 29 (180 days)
• c.April 30 (120 days)✓
• d.January 30 (30 days)

Rule 204-3(b)(2) gives the adviser 120 days after fiscal year end to deliver the current brochure, or a summary of material changes offering the brochure free, when there have been material changes since the last annual updating amendment. January has 31 days, February 28, March 31 and April 30, which makes April 30 day 120. March 31 is the 90-day deadline for filing the annual updating amendment with the SEC, a different obligation. January 30 and June 29 are not periods used in the rule.17 CFR 275.204-3(b)(2)

Mid-year, an SEC order is entered against an SEC-registered adviser, and the adviser must add it to its brochure under the disciplinary information item. What must it deliver to existing clients?

• a.Nothing until the annual summary of material changes, which goes out within 120 days after fiscal year end
• b.The amended brochure within 30 days, but only to clients whose accounts are discretionary
• c.Promptly, the amended brochure with a statement of the material facts, or that statement alone✓
• d.A statement of the facts, but only to clients who ask for one after seeing the order on IAPD

Rule 204-3(b)(4) singles out new or materially revised disciplinary disclosure. The adviser must deliver the amended brochure with a statement of the material facts, or just the statement, to each client promptly after creating the amendment. It may not wait for the annual summary, may not make delivery depend on a client request, and may not limit delivery to a subset of clients such as discretionary accounts.17 CFR 275.204-3(b)(4)

Eight supervised persons of an SEC-registered adviser jointly provide advice to one client. For how many of them must the client receive a Part 2B brochure supplement?

• a.One, only the team member with the longest tenure at the adviser firm
• b.All eight, because each team member helps to formulate the advice for the client
• c.Five, those with the most significant day-to-day advisory responsibility✓
• d.None, because supplements are required only for registered representatives

Rule 204-3(b)(3) requires a supplement before or when a supervised person begins to advise the client, but when advice comes from a team of more than five supervised persons, supplements are needed only for the five with the most significant responsibility for the day-to-day advice. Delivering all eight is not required, tenure is not the test, and the supplement requirement turns on providing advisory services rather than on separate registration status.17 CFR 275.204-3(b)(3)

On March 3, a state-registered adviser moves its principal place of business. Under the NASAA model rule on updating Form ADV, by what date is an amendment filed 'promptly'?

• a.March 13 (10 days)
• b.April 17 (45 days)
• c.June 1 (90 days)
• d.April 2 (30 days)✓

The NASAA model rule treats an amendment as filed promptly if it is filed within 30 days of the event that requires it. March 3 plus 28 days is March 31, and two more days make April 2. March 13 would be a 10-day period, April 17 a 45-day period, and June 1 is the 90-day period that applies to the separate annual updating amendment. Treating the annual deadline as the deadline for event-driven changes is the error the question tests.NASAA Model Rule USA 2002 403(a)(d); 1956 Act Rule 202(a)-1

A state administrator accepts the Part 2 brochure of a federal covered adviser as deemed filed rather than collecting it at notice-filing time. Under the NASAA model rule, how soon must the adviser furnish it on request?

• a.At the adviser's next annual renewal of the notice filing in the state
• b.Within 5 days of the request, with no routine filing beforehand✓
• c.Within 10 business days, as for curing a late or short fee payment
• d.Within 30 days, the same period that applies to event-driven amendments

Under the model rule on notice filings, the administrator may deem Part II of Form ADV filed if the federal covered adviser provides it within 5 days of a request, so the adviser is not required to submit it unless asked. The 30-day period belongs to amendments, and the 10-business-day period belongs to remedying late fees. Waiting for the next renewal would defeat the purpose of letting the state examine the document when it needs it.NASAA Model Rule USA 2002 405(b)

On June 10, an IAR of a state-registered adviser is named in a customer complaint that requires a Form U4 amendment. By what date must it be filed to be 'prompt' under the NASAA model rule?

• a.September 8 (90 days)
• b.July 10 (30 days)✓
• c.July 25 (45 days)
• d.June 20 (10 days)

The model rule on IAR registration treats a Form U4 amendment as prompt if filed within 30 days of the event that requires it. June has 30 days, so 20 days remain after June 10 and another 10 days reach July 10. June 20 would be a 10-day period. July 25 and September 8 are 45-day and 90-day periods that do not apply. The IAR keeps a continuing duty to update the form, and the adviser must file the amendment as well.NASAA Model Rule USA 2002 404(a)(c)

An SEC order bars a registered representative of a FINRA member from association with any broker or dealer, which makes her statutorily disqualified. Within how many days must her Form U4 be amended?

• a.At the next annual registration renewal on December 31
• b.Within 10 days after the disqualification occurs✓
• c.Within 60 days after the date the SEC issues its order
• d.Within 30 days after the member learns of the event

FINRA's By-Laws require Form U4 to be kept current by amendments filed within 30 days after learning of the facts that trigger a reporting obligation, but a filing that involves a statutory disqualification must be made within 10 days after the disqualification occurs. A bar from association is a statutory disqualification under the Exchange Act. The 30-day period is the general rule and the trap here, and nothing in the rules lets the amendment wait for annual renewal.FINRA By-Laws Art. V, Sec. 2(c); Exchange Act Sec. 3(a)(39)

An IAR terminates her employment with a state-registered adviser on June 12. By what date must Form U5 be filed on the IARD under the NASAA model rule?

• a.July 12 (30 days)✓
• b.June 22 (10 days)
• c.December 31 (expiry)
• d.July 27 (45 days)

The model rule on withdrawal of IAR registration calls for Form U5 to be filed electronically within 30 days of the date of termination. June 12 plus 18 days reaches June 30, and 12 more days make July 12. The 10-day and 45-day periods are not part of the rule, and December 31 is when registrations expire if not renewed, not when a termination notice is due.NASAA Model Rule USA 2002 408(a)-1

A state-registered adviser files Form ADV-W on April 1, and no proceeding is pending or begun within 30 days. Which statement about the withdrawal is correct under the Uniform Securities Act?

• a.It takes effect only after a hearing, which the Administrator must hold within 15 days of filing
• b.It takes effect 30 days after receipt, yet revocation may still be started within one year✓
• c.It takes effect 30 days after receipt, and the Administrator's power over past conduct ends then
• d.It takes effect on filing, which ends the Administrator's power over past conduct

Under Section 204(e), withdrawal becomes effective 30 days after receipt of the application unless a proceeding is pending or begins within those 30 days. Even when withdrawal takes effect automatically, the Administrator may begin a revocation or suspension proceeding within one year after it became effective. The 15-day hearing right belongs to summary postponement or suspension orders under Section 204(c), not to ordinary withdrawals.Uniform Securities Act Sec. 204(e); NASAA Model Rule USA 2002 409-1

A new broker-dealer is hiring a salesperson who will sell securities to retail customers. Which pair of forms registers the firm and the individual?

• a.Form ADV for the firm and Form U4 for the salesperson
• b.Form ADV for the firm and Form BD for the salesperson
• c.Form BD for the firm and Form U4 for the salesperson✓
• d.Form BD for the firm and Form U5 for the salesperson

A broker-dealer applies on Form BD, and an individual agent applies on Form U4, the Uniform Application for Securities Industry Registration or Transfer. Form ADV is the investment adviser firm application, and Form U5 is the uniform termination notice, not an application. Form BD is never filed by an individual.Uniform Securities Act Sec. 202(a); NASAA Model Rules USA 2002 403(a), 404(a)

An IAR moves her residence and tells only her supervisor. Under the NASAA model rule on IAR applications, who is responsible for keeping her Form U4 current?

• a.Neither until annual renewal, when all pending changes are reported together
• b.Only the adviser, because the representative has no direct access to the IARD system
• c.Only the representative, because the Form U4 is filed in the individual's own name
• d.Both: she must keep it updated, and she and the adviser file amendments promptly✓

The model rule says the IAR is under a continuing obligation to update the information on Form U4 as changes occur, and that the representative and the investment adviser must electronically file amendments promptly, meaning within 30 days. Telling a supervisor does not meet the duty. Leaving changes until renewal conflicts with the prompt-filing requirement.NASAA Model Rule USA 2002 404(a)(c)

Which of these people at a state-registered investment adviser is an investment adviser representative under the Uniform Securities Act?

• a.A branch manager whose only duty is supervising employees who advise clients✓
• b.An accounting clerk who posts trades after the advisers have already placed them
• c.A contractor who builds the technology used for client performance reports
• d.A receptionist who schedules client meetings and answers general firm questions

Section 401(g) reaches an individual who makes recommendations, manages accounts, decides what advice is given, solicits or sells advisory services, or supervises employees who do any of those things. The branch manager qualifies through the supervision clause even without personally advising clients. The receptionist, the clerk and the technology contractor perform no listed function.Uniform Securities Act Sec. 401(g)

A supervised person of an SEC-registered adviser has an office in the state and regularly meets with clients. Of her 80 clients, 6 are natural persons who are not excepted persons. Is she an IAR for state registration under SEC Rule 203A-3?

• a.No, because natural persons are only 7.5% of her clients, not over 10%✓
• b.No, because supervised persons of federal covered advisers are never IARs
• c.Yes, because she regularly meets with clients at an office in the state
• d.Yes, because she has more than five clients who are natural persons

Rule 203A-3 makes a supervised person an investment adviser representative only if she has more than five natural-person clients who are not excepted persons and those clients are more than 10% of all her clients, and she also regularly solicits or meets with clients. Six of 80 is 7.5%, so the percentage prong fails even though the count prong is met. Meeting clients is necessary but not sufficient. Supervised persons can be IARs when they satisfy the test.17 CFR 275.203A-3(a)

A supervised person of an SEC-registered adviser regularly meets clients at her state office. She advises 20 clients, 5 of whom are natural persons who are not excepted persons. Does she meet the SEC rule's definition of an IAR?

• a.No, because only supervised persons with at least ten clients can qualify
• b.No, because five is not more than five, though 25% exceeds the 10% share✓
• c.Yes, because 25% is above the 10% share, which is all the rule requires
• d.Yes, because five natural-person clients satisfies the client-count prong

Both prongs must be met: more than five natural-person clients and more than 10% of her clients being such persons. Five is not more than five, so the count prong fails, and the 25% share cannot cure it. The requirement is not satisfied by five, and the rule contains no ten-client minimum.17 CFR 275.203A-3(a)

A state-registered adviser lets a newly hired analyst, who is not registered in the state, begin meeting clients and recommending portfolios. Who violates the Uniform Securities Act?

• a.Only the adviser, because the analyst acts as the firm's employee
• b.Both: the adviser for employing her, and the analyst for acting as an IAR✓
• c.Neither, as long as the adviser's own registration is already effective
• d.Only the analyst, because the duty to register belongs to the individual

Section 201(c) makes it unlawful for a person to act as an IAR unless registered, and Section 201(d) makes it unlawful for an adviser required to be registered to employ an IAR who is not registered. Each violates a separate prohibition, so the firm cannot rely on its own registration and the individual cannot rely on the firm's supervision.Uniform Securities Act Sec. 201(c), 201(d)(i)

An IAR resigns from her state-registered adviser in March and consults for a fund sponsor for two months before joining a new registered adviser. During those two months her registration with the former adviser is:

• a.Effective until December 31, the date on which every registration expires
• b.Not effective, since it holds only while she works for a registered adviser✓
• c.Effective for 30 days, the period before a withdrawal takes effect
• d.Effective because the adviser has not yet filed her Form U5

Section 201(d) provides that the registration of an IAR is not effective during any period when she is not employed by a registered investment adviser. It is tied to the employment, so a gap leaves her unregistered regardless of the calendar or of pending paperwork. The 30-day withdrawal period and the December 31 expiry do not keep a registration alive when the employment link is broken.Uniform Securities Act Sec. 201(d)(i)

Under the 1956 Uniform Securities Act, an IAR with a place of business in the state leaves a federal covered adviser. Who must promptly notify the Administrator?

• a.No one, because representatives of federal covered advisers are exempt from state notice requirements
• b.The IAR herself, since the duty rests with her and not with the firm✓
• c.The federal covered adviser, as it does for a state-registered adviser's IAR, because the firm is the filer
• d.The SEC, which passes each change to the states through IARD

Under Section 201(d) of the 1956 Act, the notice duty depends on the employer. When the employer is a state-registered adviser, the adviser notifies the Administrator when an IAR begins or ends employment. When the employer is a federal covered adviser and the IAR has a place of business in the state, the IAR gives the notice herself. The 2002 Act (Section 408) puts the filing on the adviser instead. Such representatives are not exempt, and the SEC does not file for them.Uniform Securities Act (1956, as amended by NASAA) Sec. 201(d)

An independent marketer who is not a supervised person of an SEC-registered adviser sells the adviser's advisory services from an office in the state. Under the NASAA model rule defining an IAR, is the marketer an IAR?

• a.No, because the model rule covers only supervised persons of a federal covered adviser
• b.Only if the marketer has more than five natural-person clients making up over 10% of clients
• c.Yes, but only once the marketer becomes an employee of the adviser
• d.Yes, since an unsupervised person who sells its services from a state office is covered✓

Both alternatives of the NASAA model rule treat a person who is not a supervised person, has a place of business in the state, and solicits, offers or sells advisory services for a federal covered adviser as an IAR. The client-count and percentage tests apply to supervised persons, not to marketers. Becoming an employee would make the person a supervised person, which is not required for coverage.NASAA Model Rule USA 2002 102(16)

A newly formed adviser is registered under the Uniform Securities Act. Its president personally advises clients and is a director of the firm. What is her status as an IAR once the firm's registration is effective?

• a.She is unregistered until she files her own Form U4 and pays her own fee as an IAR
• b.Registered automatically, because firm registration covers a partner, officer or director✓
• c.She is registered for 30 days while her own separate application is processed
• d.She is registered only if she passes the same qualifying examination as the firm itself

Section 202(a) provides that registration of an investment adviser automatically constitutes registration of any investment adviser representative who is a partner, officer or director, or a person with similar status or functions. The firm registration therefore covers her, and no separate representative registration is needed under the statute. The 30-day processing period relates to the effective date of an application, not to an interim status.Uniform Securities Act Sec. 202(a)

A mid-sized, state-registered adviser reports $106 million of regulatory assets under management on its annual updating amendment. What is its SEC registration status?

• a.It may register with the SEC, but is not required to until assets reach $110 million✓
• b.It may register with the SEC only if it advises a registered investment company
• c.It must register with the SEC within 90 days, since assets are above $100 million
• d.It must stay with the state, because SEC registration begins only at $110 million

Rule 203A-1(a)(1) lets a mid-sized adviser with at least $100 million but less than $110 million register with the SEC without requiring it to, and an SEC-registered adviser need not withdraw until assets fall below $90 million. Mandatory SEC registration begins at $110 million, so passing $100 million does not trigger a 90-day duty. The buffer also allows voluntary registration below $110 million, so the state-only reading is wrong. Advising a registered investment company is a separate route to SEC registration that does not depend on size, and it is not a precondition to using the buffer.17 CFR 275.203A-1(a)(1); Advisers Act Sec. 203A(a)(2)

A state-registered adviser files its annual updating amendment on March 15, reporting $112 million of regulatory assets and that it is eligible for SEC registration. By what date must it apply for SEC registration?

• a.September 11 (180 days later)
• b.July 13 (120 days later)
• c.April 14 (30 days later)
• d.June 13 (90 days later)✓

Rule 203A-1(b)(1) requires a state-registered adviser to apply for SEC registration within 90 days of filing the annual updating amendment that reports eligibility. March has 16 days left after the 15th, April 30 and May 31 bring the count to 77, and 13 more days reach June 13. The 30-day figure is the NASAA period for event amendments. The 120-day figure appears in the SEC rule for advisers expecting to become eligible, and 180 days is the period for withdrawing SEC registration when an adviser falls out of eligibility, which runs in the opposite direction.17 CFR 275.203A-1(b)(1)

An SEC-registered adviser has a fiscal year ended December 31, 2026. Its annual updating amendment reports $85 million of regulatory assets and no exemption. By what date must it file Form ADV-W to withdraw its SEC registration?

• a.March 31, 2027 (90 days)
• b.December 31, 2027 (one year)
• c.April 30, 2027 (120 days)
• d.June 29, 2027 (180 days)✓

Below $90 million the adviser has lost the buffer, so Rule 203A-1(b)(2) requires Form ADV-W within 180 days of fiscal year end, and during that period it is registered with both the SEC and the state. Counting from December 31, January and February give 59 days, March, April and May reach 151, and 29 days of June reach June 29. March 31 is the 90-day deadline for filing the annual amendment itself, April 30 is the 120-day brochure delivery deadline, and nothing in the rule allows a full year.17 CFR 275.203A-1(b)(2)

An adviser has $30 million of regulatory assets and advises only ERISA retirement plans, including advice on selecting managers for $215 million of plan assets. What registration is available to it?

• a.SEC registration, but only if the plans' assets are at least $500 million
• b.SEC registration, as a pension consultant to plans with at least $200 million of assets✓
• c.State registration only, since its assets under management are below $100 million
• d.SEC registration only after its assets under management reach $100 million

Rule 203A-2(a) lifts the prohibition on SEC registration for a pension consultant whose advice covers plans with an aggregate value of at least $200 million, counting advice on selecting an adviser to manage the assets. The $215 million qualifies even though the adviser's own regulatory assets are small, so the $100 million line does not control. The $500 million figure is not part of the rule.17 CFR 275.203A-2(a)

An adviser with $40 million of regulatory assets is required by the laws of 16 states to register there. Where may it register?

• a.With the 16 states, because its assets are below the $100 million line
• b.With the SEC, by electing the multi-state exemption on Schedule D✓
• c.With the SEC only if it is required to register in at least 30 states
• d.With the SEC only if it also keeps a place of business in each state

Rule 203A-2(d) lets an adviser that is required to register in 15 or more states register with the SEC instead, by indicating on Schedule D that it has reviewed the laws and elects the exemption. The asset level does not decide the question, and the rule sets the number at 15, not 30. It also looks at the registration requirement of each state, not at whether the adviser maintains offices there.17 CFR 275.203A-2(d)

A federal covered adviser has no place of business in a state. Its only clients there are a bank and an insurance company. Must it make a notice filing under the Uniform Securities Act?

• a.No, because lacking an office in the state exempts it whatever its clients are
• b.Yes, but only the fee is due, because no documents are needed for institutions
• c.No, because its only clients in the state are institutions described in Section 201(c)(2)✓
• d.Yes, because every federal covered adviser must file before acting in the state

Sections 202(b) and 202(c)(3) exclude from both the notice filing and the fee any federal covered adviser whose only clients are the institutions listed in Section 201(c)(2), and a bank and an insurance company are on that list. The general duty to file before acting in the state therefore does not reach this adviser. The exception removes the fee as well as the documents. The test turns on who the clients are, so the absence of an office does not by itself exempt an adviser that has other clients.Uniform Securities Act Sec. 202(b), 202(c)(3), 201(c)(2)

A federal covered adviser makes its first notice filing in a state on September 20. Under the Uniform Securities Act, when does the notice filing expire unless renewed?

• a.At the next annual updating amendment to the adviser's Form ADV
• b.September 19 of the following year, twelve months after filing
• c.December 31 of the same year, like every registration✓
• d.March 19 of the following year, six months after filing

Section 201(e) provides that every registration or notice filing under the section expires December 31 unless renewed, so a September filing lasts only about three months and renewal is due for the next year. A twelve-month or six-month term from the filing date is not how the Act measures it. The annual updating amendment is the adviser's own SEC filing cycle and does not set the state expiration.Uniform Securities Act Sec. 201(e)

Quill Capital advises only venture capital funds, with $600 million of committed capital under management. Under the Advisers Act exemptions, Quill is:

• a.Exempt from SEC registration, but only while its fund assets stay below $150 million
• b.Required to register with the SEC, because its assets exceed $150 million
• c.Exempt from all reporting, because venture capital advisers file nothing
• d.Exempt from SEC registration as an exempt reporting adviser, with no assets cap✓

Section 203(l) exempts from registration an adviser that acts solely as adviser to venture capital funds, with no limit on size, but Rule 204-4 requires such an exempt reporting adviser to file reports on Form ADV. The $150 million ceiling belongs to the separate private fund adviser exemption in Rule 203(m)-1, not to the venture capital exemption. Exempt status does not remove the reporting duty.Advisers Act Sec. 203(l); 17 CFR 275.203(l)-1; 275.204-4(a)

Vale Partners, headquartered in New York, advises two qualifying private funds with $140 million of private fund assets. It also manages a $5 million account for one wealthy individual. May it rely on the private fund adviser exemption in Rule 203(m)-1?

• a.Yes, because the individual account is only a small share of assets
• b.No, because its private fund assets must be below $100 million
• c.Yes, because its private fund assets are below $150 million
• d.No, because it must act solely as an adviser to qualifying private funds✓

Rule 203(m)-1(a) requires a U.S. adviser to act solely as an adviser to qualifying private funds and to manage private fund assets of less than $150 million. The separate account breaks the first condition even though the $140 million satisfies the second. A small share does not cure it because the rule has no de minimis allowance for non-fund clients, and the dollar ceiling is $150 million rather than $100 million.17 CFR 275.203(m)-1(a)

An exempt reporting adviser's private fund assets rise above $150 million, and it applies for SEC registration. What must it do about its exempt reporting adviser status?

• a.File a final report on Form ADV through the IARD, without a filing fee✓
• b.File Form ADV-W through the IARD and pay the standard filing fee
• c.Continue annual exempt reporting until the SEC declares registration effective
• d.File a final report on Form ADV and pay the standard filing fee

Rule 204-4(f) requires a final report on Form ADV when an exempt reporting adviser ceases operation, no longer meets the definition, or applies for SEC registration, and the note says no filing fee is due for a final report. The adviser does not keep reporting as exempt once it applies. Form ADV-W is the withdrawal of a registration, which does not yet exist here. Paying a fee is the detail that the note removes.17 CFR 275.204-4(f)

Under the NASAA private fund adviser exemption, an adviser to a 3(c)(1) fund that is not a venture capital fund must also:

• a.deliver the fund's audited financial statements to each owner every year✓
• b.file its Part 2A brochure with the Administrator each year
• c.maintain a minimum net worth of $35,000 as if it had custody
• d.obtain the Administrator's written approval of each fund's offering

Paragraph (c) adds conditions for advisers to 3(c)(1) funds other than venture capital funds: the owners must be qualified clients, each owner must receive written disclosure at the time of purchase, and audited financial statements must be obtained annually and delivered to each beneficial owner. The net worth requirement and the brochure belong to registered advisers, and an exempt adviser is not asked to meet them. The model rule requires no approval of the fund's offering.NASAA Private Fund Adviser Model Rule, para. (c)(3)

Rowan Advisers is registered with the SEC and advises only qualifying private funds. Under the NASAA private fund adviser exemption, how does it satisfy state requirements?

• a.It is exempt, because every adviser solely to private funds is exempt in each state
• b.It is exempt after filing the reports an exempt reporting adviser files with the SEC
• c.It is ineligible for the exemption and makes the federal covered adviser notice filing✓
• d.It must register as a state investment adviser and pay the full registration fee

Paragraph (d) says that a private fund adviser registered with the SEC is not eligible for the exemption and must comply with the notice filing requirements for federal covered advisers. Registration with the SEC already removes it from the exempt reporting category. Being SEC-registered also makes it a federal covered adviser, whose state obligation is a notice filing rather than full state registration.NASAA Private Fund Adviser Model Rule, para. (d)

An agent of a state-registered broker-dealer churns several customer accounts. The Administrator finds the firm ignored exception reports and had no written supervisory procedures. On what statutory ground may it act against the firm's registration?

• a.Lack of qualification of the firm's principal, under Section 204(a)(2)(I)
• b.The agent's violation alone, since a firm answers for every act of its agents
• c.Failure reasonably to supervise its agents, under Section 204(a)(2)(J)✓
• d.A willful violation of the Exchange Act by the firm, under Section 204(a)(2)(B)

Section 204(a)(2)(J) lets the Administrator proceed against a broker-dealer that has failed reasonably to supervise its agents to assure compliance with the Act, and the official comment explains it was written for registrants held responsible for inadequate supervision. The Act does not make an agent's violation, by itself, a ground against the firm. Nothing in the facts addresses the principal's qualifications or a willful Exchange Act violation by the firm.Uniform Securities Act Sec. 204(a)(2)(J)

On June 1, a portfolio analyst at an SEC-registered adviser becomes an access person. By what date must she submit her initial holdings report, and how current must the information be?

• a.July 1, current as of April 17 or later
• b.June 11, current as of April 17 or later✓
• c.July 1, current as of May 2 or later
• d.June 11, current as of May 2 or later

Rule 204A-1(b)(1)(ii)(A) requires the initial holdings report no later than 10 days after the person becomes an access person, so June 11, and the information must be current as of a date no more than 45 days before that person became an access person. Forty-five days before June 1 is April 17. The alternatives swap in a 30-day delivery period, a 30-day look-back, or both, and the rule uses neither.17 CFR 275.204A-1(b)(1)(ii)(A)

An access person's only securities trades in the third quarter were executed through a broker whose confirmations the adviser receives directly within 30 days after quarter end. Must the access person also submit a quarterly transaction report?

• a.No, because transaction reports apply only to initial public offerings
• b.Yes, but only if a single trade exceeded the adviser's de minimis limit
• c.Yes, by October 30, because every access person must file a quarterly report
• d.No, because it would duplicate confirmations the adviser receives within 30 days✓

Rule 204A-1(b)(3)(iii) excuses a transaction report that would duplicate information in broker confirmations or statements the adviser holds, as long as the adviser receives them no later than 30 days after the end of the calendar quarter. The default deadline would have been October 30, but the exception removes the duty here. The rule has no de minimis trade limit, and quarterly reporting covers all reportable securities rather than only offerings.17 CFR 275.204A-1(b)(2), (b)(3)(iii)

An access person of an SEC-registered adviser wants to buy shares in a private placement. What must the code of ethics require before the purchase?

• a.Reporting the purchase on the next quarterly transaction report only
• b.Waiting 30 days after the offering closes before the person may buy
• c.Prior approval from the adviser before acquiring beneficial ownership✓
• d.Reporting the purchase to the chief compliance officer within 10 days afterward

Rule 204A-1(c) requires access persons to obtain the adviser's approval before they directly or indirectly acquire beneficial ownership in any security in an initial public offering or a limited offering, and a private placement is a limited offering. After-the-fact reporting on a quarterly report or within 10 days does not replace the approval, and the rule sets no waiting period.17 CFR 275.204A-1(c)

Which of these is required of an SEC-registered investment adviser under SEC Rule 206(4)-7 on compliance procedures?

• a.An annual compliance audit performed by an independent accounting firm
• b.A chief compliance officer who is not a supervised person of the adviser
• c.Filing its written compliance policies with the SEC each year
• d.A review of its policies and their implementation at least annually✓

Rule 206(4)-7 requires written policies and procedures reasonably designed to prevent violations, a review at least annually of their adequacy and the effectiveness of implementation, and a designated chief compliance officer who is a supervised person. The review is performed by the adviser, not by an outside auditor, and the policies are kept in the adviser's records rather than filed with the SEC. The compliance officer must be a supervised person, not an outsider.17 CFR 275.206(4)-7

A state-registered adviser with custody of client funds has a net worth of $22,000. Under the NASAA bonding model rule, for what amount must it be bonded?

• a.$15,000, the $13,000 deficiency rounded up to the nearest $5,000✓
• b.$10,000, the $13,000 deficiency rounded down to the nearest $5,000
• c.$35,000, the full net worth required of an adviser with custody
• d.$13,000, the exact amount of the net worth deficiency

An adviser with custody must keep $35,000 of net worth, so a net worth of $22,000 leaves a $13,000 deficiency. Rule 202(e)-1(a)(2) sets the bond at the deficiency rounded up to the nearest $5,000, which is $15,000. Rounding down or using the exact deficiency understates the bond, and the full $35,000 is the net worth minimum rather than the bond amount.NASAA Model Rule 202(e)-1(a)(2); Rule 202(d)-1(a)

A state-registered adviser with discretionary authority but no custody has a net worth of $6,200. Under the NASAA model rules, what bond must it post to cure the deficiency?

• a.$3,800, the exact amount of the net worth deficiency
• b.$10,000, the full minimum net worth for this type of adviser
• c.$35,000, the net worth required if it had custody
• d.$5,000, the $3,800 deficiency rounded up to the nearest $5,000✓

Discretion without custody carries a $10,000 minimum, so $6,200 leaves a deficiency of $3,800. The bond equals the deficiency rounded up to the nearest $5,000, which is $5,000. The full $10,000 is the net worth minimum rather than the bond, the unrounded deficiency ignores the rounding step, and $35,000 applies only to an adviser that has custody.NASAA Model Rule 202(e)-1(a)(2); Rule 202(d)-1(b)

On Friday, a state-registered adviser with discretionary authority learns that its net worth has fallen below the required minimum. What must it do?

• a.Notify the Administrator and file the report together, both by Monday's close
• b.Notify the Administrator by Monday's close, then file a financial report by Tuesday's close✓
• c.Notify the Administrator within five business days and file the report 30 days later
• d.Notify the Administrator by Monday's close, then file the report within 10 business days

Rule 202(d)-1(d) requires notice by the close of business on the next business day, and after the notice is sent a report of financial condition by the close of business on the next business day. With Friday as the day of discovery, notice is due Monday and the report Tuesday. The report includes a trial balance, a statement of unsegregated client funds, the client ledger debit balances and the number of client accounts. Combining both on the first day, or stretching either deadline to days or weeks, does not match the two sequential one-day periods.NASAA Model Rule 202(d)-1(d)

A state-registered adviser with no custody and no discretion charges each client $1,200 six months in advance. Which minimum financial requirement applies under NASAA Model Rule 202(d)-1?

• a.A net worth of at least $35,000 at all times
• b.A $35,000 surety bond instead of any net worth
• c.A positive net worth maintained at all times✓
• d.A net worth of at least $10,000 at all times

Rule 202(d)-1(c) requires only a positive net worth of an adviser that accepts prepayment of more than $500 per client and six or more months in advance. The $10,000 minimum applies to discretion without custody, and the $35,000 minimum applies to custody, and the adviser has neither. A bond is a remedy for a net worth deficiency, not a substitute for the positive-net-worth requirement.NASAA Model Rule 202(d)-1(c)

An SEC-registered adviser with a December 31 fiscal year last distributed a newsletter advertisement on October 5, 2026. Under Rule 204-2, through what date must it preserve the advertisement?

• a.October 5, 2031, five years from the day of last distribution
• b.December 31, 2028, two years from the end of the fiscal year of last use
• c.December 31, 2031, five years from the end of the fiscal year of last use✓
• d.December 31, 2029, three years from the end of the fiscal year of last use

Rule 204-2(e)(3)(i) measures retention of advertisements and performance-calculation records from the end of the fiscal year during which the adviser last disseminated the communication, for at least five years. The fiscal year ends December 31, 2026, so the period runs to December 31, 2031. The retention period is not counted from the distribution date, and three years and two years are not the periods in the rule.17 CFR 275.204-2(e)(3)(i)

An SEC-registered adviser dissolves. For how long must it preserve its articles of incorporation, charter and minute books?

• a.Five years from the end of the fiscal year of the last entry
• b.Until the next Form ADV annual updating amendment is filed
• c.Two years from the date of the final entry in the minute book
• d.At least three years after the enterprise terminates✓

Rule 204-2(e)(2) treats the organizational documents differently from ordinary books and records: they are kept at the principal office and preserved until at least three years after termination of the enterprise. The five-year, fiscal-year-based period is the general retention rule for other records, the annual amendment cycle has no bearing on retention, and the two-year figure is the portion of the general period that must be kept in an appropriate office.17 CFR 275.204-2(e)(2)

An SEC-registered adviser is closing its business before its required records reach the end of their retention periods. What must it do?

• a.Retain them five years from closing, without notifying any regulator
• b.Destroy the records and file Form ADV-W explaining the destruction
• c.Arrange preservation for the rest of each period and tell the SEC in writing where✓
• d.Give the records to each client, who must keep them for the remaining period

Rule 204-2(f) requires an adviser, before ceasing business, to arrange for and be responsible for preserving the required records for the remainder of the periods in the rule, and to notify the SEC in writing of the exact address where they will be kept. Closing does not shorten the periods, clients are not substitute custodians of the adviser's records, and a fresh five-year period from closing is not the measure.17 CFR 275.204-2(f)

Which record must an SEC-registered adviser keep specifically because it has custody or possession of client funds or securities?

• a.A list of all accounts in which the adviser holds discretionary power
• b.The charter and minute books, kept at the adviser's principal office
• c.A memorandum of each order given to buy or sell any security for a client
• d.A separate ledger for each client with every purchase, sale and delivery✓

Rule 204-2(b) adds records for advisers that have custody or possession, including a journal of purchases, sales, receipts and deliveries, a separate ledger account for each client, copies of confirmations, and a record of each security showing each client's interest and its location. The list of discretionary accounts, the order memoranda and the organizational documents are required of advisers under paragraph (a) whether or not they have custody.17 CFR 275.204-2(b)(2)

An SEC-registered adviser enters a trade for a client under the client's discretionary authority. What must the adviser's order memorandum under Rule 204-2 show about that order?

• a.That it was entered under the client's discretionary power✓
• b.Only the account and price, as the confirmation shows the terms
• c.That the client was told of it within two business days
• d.The client's written approval of that particular trade

Rule 204-2(a)(3) requires a memorandum of each order showing its terms and conditions, the person who recommended the transaction and the person who placed it, the account, the date of entry and the executing bank, broker or dealer, and orders entered pursuant to discretionary power must be so designated. A discretionary order by definition needs no trade-by-trade written approval, the memorandum must show the terms rather than just the price, and the rule has no two-day notice item.17 CFR 275.204-2(a)(3)

Which of these must an SEC-registered adviser keep as a written communication under Rule 204-2(a)(7)?

• a.A copy of an email sent to a client recommending a purchase of a specific fund✓
• b.An unsolicited market letter of general distribution not prepared by the adviser
• c.The name and address of each of 40 people sent a mass advertisement
• d.A newspaper article about markets that the adviser read but never sent out

Rule 204-2(a)(7) requires originals of written communications received and copies of those sent that relate to any recommendation or advice given, and an email recommending a fund purchase is such a communication. The same paragraph excuses unsolicited market letters of general public distribution not prepared by or for the adviser, and it excuses a record of names and addresses when an advertisement offering a service goes to more than ten persons. An article the adviser merely read relates to no recommendation sent to anyone.17 CFR 275.204-2(a)(7)

A broker-dealer made a blotter entry for a trade on March 3, 2021. Under SEC Rule 17a-4, what is the earliest date it may discard that entry?

• a.March 3, 2026 (five years)
• b.March 3, 2027 (six years)✓
• c.March 3, 2024 (three years)
• d.March 3, 2023 (two years)

A blotter is the itemized daily record of original entry required by Rule 17a-3(a)(1), and Rule 17a-4(a) requires a broker-dealer to preserve it for at least six years, the first two in an easily accessible place. Six years from March 3, 2021 is March 3, 2027. Five years is the retention period for an investment adviser's books under Advisers Act Rule 204-2, a different registrant. Three years applies to order memoranda, confirmations and the other records listed in Rule 17a-4(b). Two years is only the easily accessible portion of the six.17 CFR 240.17a-4(a); 240.17a-3(a)(1)

A registered representative joined a broker-dealer on June 15, 2023 and left on March 1, 2026. Under SEC Rule 17a-4, the firm may discard the representative's employment application and questionnaire on:

• a.March 1, 2027 (one year after exit)
• b.March 1, 2032 (six years after exit)
• c.March 1, 2029 (three years after exit)✓
• d.June 15, 2026 (three years after hire)

The application required by Rule 17a-3(a)(12) must be kept, under Rule 17a-4(e)(1), until at least three years after the associated person's employment and any other connection with the firm has ended, so the clock runs from March 1, 2026 to March 1, 2029. Counting from the hire date would end the period while the representative was still employed. Six years is the period for blotters, ledgers and account-opening records. One year is not a retention period in the rule.17 CFR 240.17a-4(e)(1); 240.17a-3(a)(12)

A customer opened a cash account on February 2, 2020 and closed it on November 15, 2025. Under SEC Rule 17a-4(c), the firm must keep the records of the account's opening and maintenance terms until at least:

• a.November 15, 2028 (three years after closing)
• b.February 2, 2026 (six years after opening)
• c.November 15, 2031 (six years after closing)✓
• d.November 15, 2030 (five years after closing)

Rule 17a-4(c) runs the six-year period from the closing of the account for account cards or records relating to the terms and conditions of opening and maintaining it. November 15, 2025 plus six years is November 15, 2031. Five years borrows the adviser recordkeeping period, and three years is the period for most Rule 17a-4(b) records. Counting from the opening date is wrong because the clock starts only when the account closes.17 CFR 240.17a-4(c)