SIE practice questionmediumInvestment Company Act of 1940
If a mutual fund advisor gives one group of investors favorable information not disclosed in the prospectus, this could be considered:
- APermitted selective disclosure
- BViolation of full and fair disclosure obligations✓ Correct answer
- CA routine communication
- DAllowed only for institutional clients
Explanation
Why B — Violation of full and fair disclosure obligations
The Investment Company Act requires full, fair, and equal disclosure to all investors. Selective disclosure is prohibited, and all communications must be consistent with the prospectus.
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