Question

An investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under NASAA rules, the investment adviser:

Answer 1

Complete Question:

An investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under NASAA rules, the investment adviser:

I. is deemed to have taken custody of the customer's funds

II. has not taken custody of the customer's funds

III. must keep a record of the check received

IV. is not required to keep a record of the check received

A. I and III

B. I and IV

C. II and III

D. II and IV

Answer:

C. II and III

Explanation:

In this scenario, an investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under North American Securities Administrators Association (NASAA) rules, the investment adviser has not taken custody of the customer's funds and must keep a record of the check received.

According to NASAA rules, if an investment adviser inadvertently receives a check made out to a third party like it was made out to the "Jones Cleaning Service" in error, provided that the investment adviser mails the check to the third party (customer) within 3 business-working days, then the adviser has not taken custody of the customer's funds. Also, it is required that the investment adviser must keep a record of the check received.