Series 63 practice questioneasyCompensation Structure
A broker-dealer charges higher commissions on securities it owns compared to those it does not own. Under the USA, what must the firm do?
- ADisclose this compensation difference to customers✓ Correct answer
- BOnly charge the lower commission to all customers
- CKeep compensation details confidential
- DObtain written approval from the state Administrator
Explanation
Why A — Disclose this compensation difference to customers
Disclosure of compensation differences, particularly if it could influence recommendations, is required (USA Section 402). Lowering commissions, confidentiality, or state approval are not required or appropriate per the USA.
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