Under U.S. federal securities regulations and market practices, which of the following statements correctly describe the regulatory distinctions, compensation structures, or operational roles governing Broker-Dealers, Investment Advisers, and financial market intermediaries? (Select ALL that apply.)
- An Investment Adviser (IA) is compensated primarily through fee-based structures (such as a percentage of assets under management) and owes a statutory fiduciary duty to act in the client's best interest at all times.Cevap
- A Broker-Dealer (BD) executes securities transactions for compensation derived from commissions when acting as an agent, or markups and markdowns when trading for its own account as a principal.Cevap
- CA Broker-Dealer may collect separate, standalone fees for investment advice without registering as an Investment Adviser, as long as the advice given is solely incidental to its brokerage operations.
- DA Transfer Agent is primarily responsible for providing safekeeping for customer cash and securities while offering SIPC coverage against firm insolvency.
Cevap
The correct statements are the one describing Investment Advisers as fee-compensated fiduciaries and the one describing Broker-Dealers as operating in agency (commission) or principal (markup/markdown) capacities.
The correct statements accurately reflect federal securities laws. Investment Advisers earn fee-based compensation (e.g., percentage of AUM) and act as fiduciaries bound to put client interests first. Broker-Dealers transact in securities, charging commissions when executing in an agency capacity or applying markups/markdowns when executing from inventory in a principal capacity.
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Regulatory Distinctions Among Broker-Dealers, Investment Advisers, and Intermediaries
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