Which of the following statements correctly describe the regulatory definitions, execution capacities, and duties of broker-dealers and investment advisers?
- Broker-dealers acting in an agency capacity match buyers with sellers and charge a commission for executing the trade.Cevap
- BInvestment advisers may receive transaction-based commissions for executing securities trades without registering as broker-dealers.
- Investment advisers owe a fiduciary duty to their clients, requiring them to put client interests ahead of their own at all times.Cevap
- DFINRA functions as a federal government department with statutory authority to prosecute criminal violations of securities law.
Cevap
The correct statements are that broker-dealers executing trades in an agency capacity earn a commission by matching buyers and sellers, and investment advisers owe a fiduciary duty to prioritize client interests at all times.
Executing transactions in an agency capacity means the firm acts as a broker facilitating trade matching for a commission. Additionally, investment advisers are governed by the Investment Advisers Act of 1940 and common law standards that impose a strict fiduciary duty to act in the best interest of clients at all times.
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Distinctions in capacity, compensation, fiduciary standard, and SRO oversight between Broker-Dealers and Investment Advisers
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