Series 7 practice questionmediumNetworking Arrangements — Disclosure Requirements
A broker-dealer conducts business on the premises of a bank through a networking arrangement. What must be disclosed to bank customers to comply with FINRA regulations?
- AThat the bank is responsible for the performance of the securities sold.
- BThat all investment products are suitable for all bank customers.
- CThat securities products are not guaranteed by the bank and are subject to investment risk, including possible loss of principal.✓ Correct answer
- DThat broker-dealer products are insured by the FDIC.
Explanation
Why C — That securities products are not guaranteed by the bank and are subject to investment risk, including possible loss of principal.
FINRA requires clear disclosure that securities are not FDIC insured, not guaranteed by the bank, and are subject to investment risk, including loss of principal.
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