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Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questionhardHard: ambiguous compensation structures

A broker-dealer charges both a fixed fee and per-transaction commissions within the same client account, but fails to provide clear invoices differentiating the two. What USA violation does this MOST LIKELY constitute?

  1. AFailure to supervise agents
  2. BImproper disclosure of compensation conflicts
  3. CUnethical business practices regarding compensation transparency✓ Correct answer
  4. DImproper registration of agent compensation plans
Explanation

Why CUnethical business practices regarding compensation transparency

Section 406 requires clear, transparent disclosure of compensation. Failing to differentiate fees/commissions impairs client understanding and constitutes an unethical business practice. A and D are unrelated; B is too narrow.

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