Series 63 practice questionmediumOngoing Disclosure
A broker-dealer increases standard commissions without informing existing clients. Is this compliant with the USA?
- ANo; changes in compensation must be disclosed to clients✓ Correct answer
- BYes, because the change is company-wide
- CNo, unless the commission becomes higher than industry norms
- DYes, as long as commissions are not excessive
Explanation
Why A — No; changes in compensation must be disclosed to clients
Material changes to compensation must be disclosed to clients to comply with the USA (Section 402). General changes, industry comparison, and excessiveness do not remove the disclosure requirement.
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