Series 63 practice questionhardOmission of Material Facts
If an agent omits to tell a client about a higher fee associated with a class of mutual fund shares recommended, this is considered:
- AA violation of the USA for failure to disclose a material fact✓ Correct answer
- BAcceptable if the prospectus is provided
- CIrrelevant if the client is sophisticated
- DNot a violation if the client does not ask
Explanation
Why A — A violation of the USA for failure to disclose a material fact
USA Section 402 requires disclosure of all material facts, including higher fees, regardless of prospectus delivery or client sophistication. Not disclosing unless asked is also a violation.
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