Compliance Procedures for Investment Advisors
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Questions and Answers

What should be done if client orders are entered against the advice of the IA?

  • Consult the branch manager before deciding on the orders
  • Do not mark the orders as 'unsolicited' to avoid raising red flags
  • Mark the orders as 'unsolicited' and document the circumstances of the transaction (correct)
  • Ignore the advice and proceed with the orders

    • What is the foremost consideration in all business dealings for registrants?

  • The client's interest (correct)
  • The branch manager's interest
  • The compliance department's interest
  • Their own interest

    • Under what circumstances may firms refuse to accept orders?

  • When the orders are too complicated
  • When they are too busy
  • When the orders are unsuitable (correct)
  • When they are implementing new policies

    • What should be done if IAs are unable to dissuade clients from making apparently unsuitable trades?

    <p>Clear such orders with the branch manager or compliance department before putting them through</p> Signup and view all the answers

    What should registrants be able to do in addition to 'Know Your Client'?

    <p>Prove the suitability of their investment advice</p> Signup and view all the answers

    What could happen if a client complained about poorly performing securities?

    <p>The registrant might have to justify the orders</p> Signup and view all the answers

    What changes must compliance registrants document about their clients' situations?

    <p>Marital status changes</p> Signup and view all the answers

    What did Stanley Kowalski do after discussing the speculation with Doris Green?

    <p>He invested Doris Green's excess margin in shares of the company</p> Signup and view all the answers

    What must the firm do in relation to any business dealings outside of normal business?

    <p>Give written consent and have knowledge of the dealings</p> Signup and view all the answers

    Under what conditions should the IA place securities with clients?

    <p>If the firm agreed to participate in the distribution and perform due diligence</p> Signup and view all the answers

    What must be done with regards to recording trades and issuing statements to clients?

    <p>Record trades in a normal way and issue monthly statements to clients</p> Signup and view all the answers

    In the example provided, what was the relationship between IA Edgar Brown and his client Michelle Green?

    <p>They socialized to some extent and might be considered friends</p> Signup and view all the answers

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