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2011 IA COORDINATED EXAM REPORT FORM State: Exam Number: # of IA Reps: SEC Switch Firm? Are IA Reps also BD reps? # of individual accounts: Firm’s 1st State Exam? Act as Solicitors? Pay Solicitors? Assets under management Does IA advise or manage PIVs (hedge funds)? Does IA have Financial Planning Only clients? Manage Hedge Funds Only (No other IA clients)? If Yes, how many FP Only clients? BOOKS AND RECORDS No/missing complaint-litigation file No/incomplete journals-ledgers No list of discretionary accounts No/missing correspondence file No bills, receipts, invoices Missing client statements No/missing advertising file No cancelled checks, statements Missing financial plans Inaccurate corporate books No third party agreements No performance supporting docs Improper location of records No cash/securities Inadequate suitability information No trial balances, fin’l stmts receipt/disbursement log Other (describe) FINANCIAL MATTERS Poor fin’l condition Deficient surety bond Inaccurate financials No/inaccurate net worth calculation Deficient net worth No bank reconciliation Other (describe) REGISTRATION Discretionary disclosure Inaccurate business description Unregistered activity – firm Affiliations disclosure Inaccurate services provided Unregistered activity – IAR Inaccurate assets under mgmt No initial delivery of disclosure doc Other inaccurate ADV Inaccurate fee structure No annual offer of disclosure doc Other delivery deficiencies Inaccurate personnel ADVISORY FEES Overcharging/billing errors Missing/incomplete fee calc Inconsistent fees with contract Missing fee invoices Inconsistent fees with ADV Different fees for same service Other ADVERTISING Inaccurate website Misleading ads/correspondence Improper use of “RIA” Missing seminar information Inaccurate business card Misleading performance ads Other PRIVACY No privacy policy No initial delivery Deficient privacy policy No annual delivery Other Use “Other” for additional category deficiencies, comments, or explanations if needed. 1 SUPERVISION INVESTMENT ACTIVITIES Activities inconsistent with No written procedures Inadequate written procedures contract/brochure CLIENT PERFORMANCE REPORTING (not advertising) Inaccurate results Failed to follow procedures Non-disclosure of soft dollars Other Supervisory Unfair allocation of aggregate trades Misleading presentation of results Other Other CUSTODY Non-disclosed custody Physical Custody Non-compliance w/safeguards for: General Power of Attorney Inadvertent custody Signatory-client account(s) Direct fee deduction Other General partner of partnership Trustee/Executor Trustee for relative Explain SOLICITATION HEDGE FUNDS IA did not screen solicitors Non-disclosure of Fees No IA – Solicitor agreement Non-disclosure of Conflicts of Interest No solicitor disclosure Registration-Exemption Issues Non-delivery of ADV by solicitor Non-Accredited Investor Issues Other Solicitor Issues Other Hedge Fund Issues DISHONEST AND UNETHICAL BUSINESS PRACTICES Unsuitable Recommendations Non-authorized Discretion 206(4)-1 Disclosing Client Information Excessive Trading Unauthorized Trades Trading on Unauthorized Advertising Not in Compliance with Custody w/o safekeeping 3rd Party Instruction Advisory Contract No Written Contract Inadequate Procedure for Use of Non-Public Information Performance Fees contrary to Sect 205 Borrowing from Client No Services Fraud (explain) Lending to Client No Term of Contract Engaging in Unlawful Conduct Misrepresentation of Adviser’s No Fee Qualifications, Services, or Fees Misuse of 3rd Part Reports No Fee Formula through another Person Other Unethical Conduct (explain No Refund of Pre-paid Fees Unreasonable fee No Discretion Not Disclosing Conflicts of Interest No Non-assignment Guaranteeing Results Hedge Clause Other Contract Deficiency Use “Other” for additional category deficiencies, comments, or explanations if needed. 2 FINANCIAL PLANNING ONLY ISSUES How many client complaints regarding FP services during last two years? Other FP Only Issues ADDITIONAL COMMENTS/DEFICIENCIES Use “Other” for additional category deficiencies, comments, or explanations if needed. 3