Free NASAA Series 66 (Uniform Combined State Law Examination) Laws, Regulations, and Guidelines Practice Questions
Laws, regulations, and guidelines on the NASAA Series 66 exam cover the Uniform Securities Act, Investment Advisers Act of 1940, state and federal registration, fiduciary duty, ethical practices, and enforcement provisions.
Sample Questions
Question 1
Easy
Under the Uniform Securities Act, the maximum criminal penalty for a willful violation is:
Solution
A is correct. Under the Uniform Securities Act, a willful violation carries a maximum criminal penalty of 3 years imprisonment and/or a fine of $5,000, with a statute of limitations of 5 years. Memorize as "3-5-5": 3 years prison, $5,000 fine, 5-year statute of limitations.
Question 2
Medium
Which of the following items MUST be disclosed in an investment adviser's Form ADV Part 2A (the Brochure)?
Solution
Choice D is correct because Form ADV Part 2A is the narrative brochure that investment advisers must deliver to clients. It must describe the adviser's advisory business, types of clients, methods of analysis and investment strategies, material risks of those strategies, fees and compensation, disciplinary information, other business activities, code of ethics, brokerage practices, account review procedures, client referral arrangements, custody practices, investment discretion, proxy voting policies, and financial information.
Question 3
Hard
Under the Investment Advisers Act of 1940 and SEC rules, what obligation does a registered investment adviser have with respect to its code of ethics and its clients or prospective clients?
Solution
Choice A is correct. SEC Rule 204A-1 requires registered investment advisers to adopt a written code of ethics. With respect to client disclosure, the adviser must: (1) describe its code of ethics in Part 2A of Form ADV (the brochure that is delivered to clients and prospective clients), and (2) offer to provide a copy of the code upon request. Proactive delivery of the full code to every client is not required — the obligation is to describe it and make it available. This rule ensures clients know a code exists and can review it if they choose.