Series 63 practice questionmediumDisclosure Practices
An agent in State Y receives a bonus from her broker-dealer for selling a specific mutual fund family. According to the Uniform Securities Act, what is her disclosure obligation to the client?
- ADisclose the bonus arrangement to the client before or at the time of the sale✓ Correct answer
- BDisclose only if the client asks about compensation
- CNo disclosure required, as bonuses are internal matters
- DDisclose after the sale, if the client buys the fund
Explanation
Why A — Disclose the bonus arrangement to the client before or at the time of the sale
Material conflicts—such as special bonuses for recommending a product—must be disclosed prior to or at the time of sale (USA Section 402). Waiting until after the sale or disclosing only if asked is not sufficient.
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