Series 63 practice questionhardCross Trades and Disclosure
A broker-dealer arranges a trade between two of its clients (a cross trade) and collects a commission from both. According to the USA, what must the broker-dealer do?
- ADisclose to both clients the dual agency and the commissions charged✓ Correct answer
- BCharge only one commission
- CDisclose only if the Administrator requires
- DNo special disclosure is needed
Explanation
Why A — Disclose to both clients the dual agency and the commissions charged
Dual agency and receipt of commissions from both parties is a material fact that must be disclosed to both clients (USA Section 402). Charging one commission or limited disclosure is insufficient.
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