Agency Cross Transactions

What this video covers

• The exact definition of an agency cross transaction: an adviser acting as broker-dealer for both its advisory client and another party to the same trade
• Why blanket prospective written consent is required for agency cross transactions, and how this differs from the per-transaction consent required for principal transactions
• The six non-negotiable conditions: prospective written consent, pre-consent written disclosure, written confirmation per transaction, annual summary of transactions and commissions, conspicuous right to revoke, and the dual-recommendation ban
• What the pre-consent written disclosure must specifically state: dual broker-dealer role, commissions from both sides, and the potentially conflicting division of loyalties
• What must appear in every written confirmation and disclosure: nature of transaction, date, offer to provide time on request, source and amount of remuneration, and the conspicuous revocation statement
• Why the dual-recommendation ban is the most tested trap: an adviser may execute a cross where one side initiates, but may never recommend the same trade to both buyer and seller
• Why satisfying all six conditions does not relieve the adviser of best execution, best price, or any other disclosure duties under state securities law