A registered representative is considering entering into a networking arrangement with a local credit union to refer members to the broker-dealer. Under FINRA rules, which of the following is required to ensure the arrangement complies with compensation and disclosure regulations?

1. AThe representative may pay a percentage of the commissions earned to the credit union, provided this is disclosed on trade confirmations.
2. BThe referral fee may be based on assets invested, as long as the arrangement is disclosed in the broker-dealer's annual report.
3. CThe representative may pay transaction-based compensation to the credit union only if the credit union registers as a broker-dealer.✓ Correct answer
4. DThe arrangement must be disclosed to the credit union's members and the representative may only pay a nominal, flat fee per referral, not tied to transaction size.

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