IACCP Master QBank
The SMC Capital, Inc. No-Action Letter (September 5, 1995) states that trade allocations may
occur:
A. Only on a rotational basis
B. On a pro rata basis but other allocation methods can be used wit
...
IACCP Master QBank
The SMC Capital, Inc. No-Action Letter (September 5, 1995) states that trade allocations may
occur:
A. Only on a rotational basis
B. On a pro rata basis but other allocation methods can be used without violating the Advisers
Act
C. Only on a pro rata basis
D. Based on the trader's good faith discretion - ✔✔B. On a pro rata basis but other allocation
methods can be used without violating the Advisers Act
Which of the following should NOT be a factor when evaluating best execution?
A. Price
B. Transaction costs
C. Availability of affiliated brokerage services
D. Service and execution capability - ✔✔C. Availability of affiliated brokerage services
Under the safe harbor provided by Section 28(e) of the Securities and Exchange Act of 1934, a
"mixed use" product/service, purchased with soft dollars, most likely refers to which of the
following:
A. A research newsletter used by analysts
B. A computer terminal used only to place client trades
C. Portfolio management software used to calculate client returns
D. A junket to Pebble Beach for golf - ✔✔C. Portfolio management software used to calculate
client returns
An adviser's valuation procedures should, practically speaking, be prepared with the LEAST
attention to:
A. Large cap stocks
B. Illiquid investments
C. Foreign issues
D. Micro cap stocks - ✔✔A. Large cap stocks
Agency cross transactions do NOT require:
A. Annual disclosure to advisory clients of the number of agency cross transactions
B. Annual disclosure of the total remuneration received by the adviser through agency cross
transactions
C. Consent from at least two advisory clients
D. Disclosures that written consent may be revoked at any time - ✔✔C. Consent from at least
two advisory clients
"Bailey disclosure" refers to the concept of advising clients of the effect of directing the adviser
to use a particular broker(s). Disclosure about the ramifications of brokerage direction should
include:
A. Potential conflicts of interest when a directed broker referred the client to the adviser
B. Limits on the ability of the adviser to negotiate commissions
C. Restrictions on placing directed trades with other client trades
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