Investment Adviser Representatives (IARs) must disclose certain events to regulators and clients to ensure transparency and maintain trust in the financial industry. These events may include disciplinary actions, criminal convictions, or financial issues that could impact the IAR's ability to provide investment advice.
Which of the following is considered a reportable event for an Investment Adviser Representative?
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Correct!
Select an option above to see an explanation here.
A) Attending a financial conference is not a reportable event. B) Receiving a speeding ticket is not a reportable event. C) Being convicted of a felony is a reportable event that must be disclosed to regulators and clients. D) Changing their home address is not a reportable event.
What form is used by Investment Adviser Representatives to register with regulatory authorities and disclose reportable events?
A) Form ADV is used by investment advisers to register with the SEC and state securities regulators. B) IARs use Form U4 to register with regulatory authorities and disclose reportable events. C) broker-dealers use Form BD to register with the SEC and state securities regulators. D) Form CRS is used by investment advisers and broker-dealers to provide clients with information about their services, fees, and conflicts of interest.
In the early 2000s, a prominent investment adviser was found to have failed to disclose multiple reportable events, including disciplinary actions and personal bankruptcy. This led to a loss of trust in the adviser and ultimately contributed to the firm's downfall.
Which of the following is NOT a reason for disclosing reportable events?
A) Ensuring transparency is a reason for disclosing reportable events. B) Maintaining trust in the financial industry is a reason for disclosing reportable events. C) Avoiding disciplinary action is a reason for disclosing reportable events. D) Increasing the IAR's client base is not a reason for disclosing reportable events.
An IAR is convicted of a DUI, considered a reportable event. The IAR must disclose this event to its regulatory authority and update Form U4 accordingly. This ensures that clients and regulators are aware of the IAR's criminal conviction and can make informed decisions about working with the IAR.
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Example Series 65 Example Practice Question
- *Reportable Events*: Events or actions that require disclosure to regulatory authorities, clients, or prospective clients by investment adviser representatives (IARs) under the Uniform Securities Act, the Investment Advisers Act of 1940, and the Investment Company Act of 1940.
- *Criminal Convictions*: An IAR must disclose any criminal convictions related to their professional activities or financial crimes. - *Regulatory Actions*: An IAR must disclose any disciplinary actions taken by regulatory authorities, such as fines, suspensions, or registration revocations.