STUDY FOR THE SERIES 66 EXAM

  If you plan to sit for the Series 66 Exam, know in advance that the Series 66 contains questions on Capital Market Theory. How do I know this? I know it because NASAA Series 66 Test Specifications clearly indicate in Section III(C)(2) that questions exist that ask about investment theories, such as Capital Market Theory, Capital Asset Pricing Model, Modern Portfolio Theory, and Efficient Market Hypothesis. Bob Eder in his Study for the Series 66 Exam devotes Chapter 8 to Portfolio Management and discusses Capital Market Theory and Capital Asset Pricing Model (CAPM) in detail. Here is an example of Bob Eder's treatment: Capital Market Theory                                                                      III(C)(1) When we talk about capital market theory, we mean the various ways that finance academics explain market portfolio techniques, analysis of pricing, returns, risk, and preservation of capital. Capital Asset Pricing Model (CAPM)                                   

Picture yourself CCO (Chief Compliance Officer) of ABC Advisory Firm. One of your I.A. representatives makes use of her personal smart phone to stay in contact with clients by texting, as she finds it easier to communicate in writing on her personal phone when she is out of the office. Does the SEC's Rule on Keeping Written Records of Client Communications include such electronic written messages or SMS if they are sent via personal computers, cell phones, et al? The answer is emphatically yes! The Record Keeping Rule applies, even though the rep or registered associate uses his or her own electronic device or smart phone to send the written communication or message. The SEC recently brought charges against Scotia Capital and HBSC for widespread record-keeping failures, attributed to permitting associates to send written communications via their personal devices. (See SEC Press Release 2023-91.) Here's what the SEC said in this case: "The SEC’s investigation of HSBC Securi

   Taking the Series 66 Exam? Are you familiar with NASAA's Test Specifications for the Series 66 Exam? If yes, then you know that these Test Specifications list topics that will appear on the Series 66 Exam one way or other. Specifically for this blog, I refer to Series 66 Test Specifications Section II(E)(2-3) which refer to Recommendation of Leveraged and Inverse ETFs. Just recently, on May 4, 2023, the SEC issued a Cease-and-Desist Order, File No. 3-21403, dealing with an investment advisory firm, Classic Asset Management LLC (CAM). Why? For Breach of Fiduciary Duty in Connection with Use of Leveraged ETFs. Here's what the SEC said in its Press Release 2023-88 on this matter: According to the SEC’s order, from at least 2017 through December 2020, CAM and Schmitz [an investment adviser representative] invested advisory clients in leveraged ETFs for extended periods of time, often in significant concentrations, despite warnings in the funds’ prospectuses that the products car