NASAA Series 65, Uniform Investment Adviser Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesEasy
A state-registered investment adviser (IA) has established a new policy that all client communications, including emails and text messages, must be retained for a minimum of five years from the last entry date. This policy also mandates that these records be readily accessible for examination by the state administrator. This practice primarily addresses which regulatory requirement?
- ABest Execution Obligation
- BFiduciary Duty of Care
- CClient Disclosure Rules
- DRecordkeeping Requirements
Show answer & explanationAnswer & explanation
Correct answer: D. Recordkeeping Requirements
The retention of client communications for a specified period and their accessibility for examination directly align with the recordkeeping requirements for investment advisers under state securities laws.
Why the other options are wrong
- A. Best execution relates to trade execution quality, not the retention of communication records.
- B. While good recordkeeping supports fiduciary duty, it is not the primary regulatory category this policy addresses.
- C. Client disclosure rules pertain to what information must be provided to clients, not how communications are stored.
IA Recordkeeping Requirements (State)
State-registered investment advisers are required to maintain specific records for a prescribed period, typically five years, and ensure they are readily accessible for regulatory examination.
- Records include client communications, contracts, and financial statements.
- Minimum retention period is usually five years.
- Records must be easily retrievable for regulators.
Memory trick: Keep records safe, five years and clear, for administrator's watchful peer!