Laws & RegulationsQuestion 89 of 110
An adviser wishing to enter into an agency cross transaction (acting as broker for both sides) must generally do which of the following?
a.Obtain prior written client consent and disclose the conflict
b.Never disclose the arrangement to clients
c.Guarantee the client a profit
d.Charge a performance fee
Explanation
An adviser engaging in an agency cross transaction, acting as broker for both the advisory client and the other party, must obtain the client's prior written consent, disclose the conflict of interest, and comply with related requirements. This protects clients from undisclosed conflicts. Such transactions may not be recommended to both sides of the trade.
Law Reference: Investment Advisers Act of 1940Practice all 110 questions free — no signup required.
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