Q:
In your initial meeting with an investment advisor representative (IAR), she fails to provide you with the ADV Part II as per the brochure rule. She then goes on to talk about the advisory firm, which of the following statements made by her would be considered as fraudulent?
a) Our firm’s investment style follows that of efficient market theory
b) Once you sign a contract with our firm, it can be terminated within 3 days without penalty
c) Our firm requires that all of our advisors are certified financial planners (CFP)
d) You should research our firm’s disciplinary history through the SEC and NASD
A:
The correct answer is b):
The investment advisor representative (IAR) can tell the prospective client all of the following statements above, with the exception of termination within 3 days without penalty. Per the Brochure Rule, since the IAR failed to provide the prospective client with the written disclosure statement (ADV Part II) at the initial meeting, the client must be given 5 days to terminate the contract without penalty.

RELATED FAQS

  1. Under the “Brochure” rule of the Investment Advisers Act of 1940, which of these ...

    Under the "Brochure" rule of the Investment Advisers Act of 1940, which of these statements is true? a. The ADV Part II or ...
  2. Under the USA, registration as an IAR includes all of the following EXCEPT:

    Under the USA, registration as an IAR includes all of the following EXCEPT: A. Minimum net capitalB. Passing a qualification ...
  3. Which of the following qualifies as an Investment Advisor Representative ...

    The correct answer is b. An Investment Advisor Representative (IAR) is defined as any partner, officer, or other individual ...
  4. Your firm is a registered investment advisor that specializes in investment management ...

    The correct answer is b: As a professional, you must be able to recognize when clients make requests for services that are ...
RELATED TERMS
  1. Investment Advisory Representative - IAR

    Personnel that work for investment advisory companies whose main ...
  2. Brochure Rule

    Under the Investment Advisor's Act of 1940, the Brochure Rule ...
  3. ADV Form

    A required submission to the Securities and Exchange Commission ...
  4. Form ADV

    A required submission to the Securities and Exchange Commission ...
  5. Registered Investment Advisor - RIA

    An advisor or firm engaged in the investment advisory business ...
  6. Investment Advisor

    As defined by the Investment Advisors Act of 1940, any person ...
Hot Definitions
  1. Quadruple Witching

    The expiration date of various stock index futures, stock index options, stock options and single stock futures. All stock ...
  2. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  3. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  6. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
Trading Center