SIE Exam Question 741: Answer and Explanation

Question: 741

An investment adviser will be deemed to have custody of client assets if which of the following apply?

• A. The advisor has possession of client funds or securities and does not return them to the client within 3 days.
• B. The advisor is authorized or permitted to withdraw client funds or securities.
• C. The adviser has legal ownership or access to client funds or securities.
• D. All of the above are correct.

Correct Answer: D

Explanation:

An investment advisor will be deemed to have custody of client assets if the advisor has possession of client funds or securities and does not return them to the client within 3 days, the advisor is authorized or permitted to withdraw client funds or securities, or the adviser has legal ownership or access to client funds or securities.