Series 63 practice questionmediumDisclosure of Affiliated Products
A brokerage firm recommends only mutual funds managed by its affiliate. Under the USA, what is required?
- ADisclosure of the relationship to clients✓ Correct answer
- BNo disclosure if the funds are suitable
- CDisclosure only if asked
- DObtain pre-approval from the Administrator
Explanation
Why A — Disclosure of the relationship to clients
Material conflicts, such as affiliated product recommendations, must be disclosed (USA Section 402). Suitability or pre-approval doesn’t substitute for disclosure; waiting until asked is insufficient.
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