Disclosure of Compensation
Chapters in this video
- 0:00 Trade confirmation timing: at or before completion
- 0:39 Agent capacity: commissions and the other-party caveat
- 1:31 Principal capacity: embedded markups and the exam trap
- 2:01 The non-negotiable capacity disclosure rule
- 3:01 Broker-dealer affiliation: the radioactive hamster farm scenario
- 4:22 Disclosure alone does not cure unfair pricing
- 5:39 Rapid-fire exam recap
What this video covers
- When a trade confirmation must be sent to the customer, and why "at or before completion of every transaction" is the exact phrasing the exam wants
- What must appear on a trade confirmation for an agency transaction versus a principal transaction, and why principal markups are embedded in the price rather than separately disclosed
- Why capacity (agent or principal) must be disclosed on every single trade confirmation, with no exceptions
- When broker-dealer affiliation disclosure must occur, and why the initial disclosure must precede the contract even if written follow-up comes later
- The golden rule that disclosure alone does not cure unfair pricing, and why an 8% markup remains a violation even when fully disclosed in advance
- Why agents cannot split commissions with unregistered persons as an ongoing compliance obligation
Read the full lesson, free
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