Question

If an investment adviser wishes to hire an individual to solicit business for the advisory firm:

I the solicitor must be registered as an agent of that investment adviser in the State
II the adviser must be registered with either the SEC or the State as appropriate
III there must be a written agreement between the adviser and the solicitor
IV there must be a written agreement between the adviser and the SEC or the State Administrator, as appropriate
A I and III
B I and IV
C II and III
D II and IV

Answer 1

The correct answer is option C: II and III. An investment adviser must be registered accordingly, and there must be a written agreement between the adviser and the solicitor, but not between the adviser and the SEC or State Administrator.

Step-by-step explanation:

If an investment adviser wishes to hire an individual to solicit business for the advisory firm, there are certain regulatory requirements that must be followed. According to regulations that address the use of third-party solicitors:

• The solicitor is typically required to be registered as an agent of the investment adviser in the state where they are soliciting business (Registration Requirement).
• The investment adviser themselves must be registered with either the Securities and Exchange Commission (SEC) or the state securities administrator, depending on the assets under management and other criteria (Adviser Registration Requirement).
• There is a necessity for a written agreement between the adviser and the solicitor outlining the terms and conditions of their arrangement (Written Agreement with Solicitor).

With these considerations, the correct answer to the question is option C: II and III. There is no requirement for a written agreement directly between the investment adviser and the SEC or the State Administrator, which excludes options that suggest such a requirement (IV).

Answer 2

The correct answer is A) I and III. The solicitor must be registered as an agent in the State, and there must be a written agreement between the adviser and the solicitor.

Step-by-step explanation:

If an investment adviser wishes to hire an individual to solicit business for the advisory firm, then it is generally true that:

• I. The solicitor must be registered as an agent of that investment adviser in the State.
• III. There must be a written agreement between the adviser and the solicitor.

Therefore, the correct answer would be A) I and III. The solicitor's registration ensures that they are legally authorized to solicit clients on behalf of the adviser, and the written agreement outlines the terms, compensation, and obligations of the solicitor relationship, which serves to protect both parties and ensure compliance with regulations.

The adviser must be registered with the appropriate regulatory body (SEC or state), but this is assumed rather than specified in the question.

There is typically no requirement for a written agreement between the adviser and the regulatory agency (SEC or State Administrator) beyond the adviser's normal registration requirements.