Rules, regulations and guidelines are everywhere in modern society. Whether you want to drive a car, buy a gun, get married or fight in a war, there are rules, regulations and guidelines. This is no more apparent than in your new career as a life insurance agent. Not only do you need to understand and obey what is deemed acceptable in selling to the public life insurance products but you also need to know what is acceptable in other areas within the financial services sector.

Module 8 of the Advocis/Foran LLQP study guide deals with “investment products other than life insurance”. It outlines some of the rules, regulations and guidelines relating to investments and yes, you may be tested on this on your Advocis LLQP certification exam and/or LLQP provincial final exam.

Questions

The following questions deal with investments, like mutual funds.

1) An individual commits to a new mutual fund offered and managed by Lightning Rod Investments Ltd. She purchases $50,000 of the fund on Monday, May 5th, and is given a prospectus on the same day. She is getting cold feet and contemplates cancelling her sales contract. Before what date must she notify her agent or mutual fund dealer?

1. Tuesday, May 6th.
2. Wednesday, May 7th.
3. Thursday, May 8th.
4. Friday, May 9th.

Answer: Thursday, May 8th.

Rationale: The investor has two business days to withdraw, from the point of receiving or being deemed to have received the final prospectus or simplified prospectus. This is Wednesday, May 7th. The investor must withdraw before Thursday, May 8th.

Reference: LLQP Study Guide, Volume 1, Module 8, 8:7 Rights of the purchaser on new issues of securities.

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2) Securities regulations in Canada fall under the jurisdiction of the …?

1. provinces/territories
2. federal government
3. IIROC
4. MFDA

Answer: a) provinces/territories

Rationale: Canada’s 10 provinces and three territories are responsible for securities regulation. The regional securities regulators administer and enforce securities violations in their jurisdictions.

Reference: LLQP Study Guide, Volume 1, 1:1 Financial Institutions: an overview

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3) What are a purchaser’s two statutory rights when mutual funds issued under prospectus requirements are involved?

1. Right of Withdrawal, Right of Compensation
2. Right of Performance, Right of Rescission
3. Right of Withdrawal, Right of Action
4. Right of Rescission, Right of Withdrawal

Answer: d. Right of Rescission, Right of Withdrawal

Rationale: The purchaser of a new issue of securities, like mutual funds, has two legal rights:

• Right of rescission: The right to rescind the purchase within a prescribed time limits should it turn out that the prospectus omitted a material fact (or facts) or contained an inaccurate or untrue declaration.
• An absolute right of withdrawal: The right to void the purchase within two business days after receiving (or being deemed to have received) a copy of the prospectus or simplified prospectus.

Reference: LLQP Study Guide, Volume 8, 8:7 right of the purchaser of new issues of securities.

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All of us at Foran/Advocis want to wish you all the best for first time exam writing success on your Advocis LLQP certification exam and Provincial LLQP final exam.

We hope you find some time to enjoy the lazy days of summer!