Series 65

AAA

Conflicts of Interest - Investment Adviser Duties

Confidentiality
An IA must maintain confidentiality about all aspects of client information, unless specifically authorized in writing by the client. This includes information on the client's:

  • Identity
  • Investments
  • Transactions
  • Trust arrangements
  • Legal affairs
  • Tax information

However, disclosures required by governmental authorities (e.g., SEC, IRS, FINRA) are permitted, since they are required under law.


Exam Tips and Tricks
You are sure to be tested on the issue of "arm\'s length" transactions, such as borrowing money from or loaning moneyto a client. Consider this sample question:
An investment adviser cannot borrow money from:

  1. An affiliated investment adviser
  2. An affiliated broker-dealer
  3. An accredited investor
  4. An unaffiliated bank

The correct answer is "c" - an IA cannot borrow money from an advisory client!

Anti-fraud provisions and fiduciary duties
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