General Securities Sales Supervisor (Series 10) Practice Exam 2026 - Free Series 10 Practice Questions and Study Guide

Question: 1 / 400

If a broker-dealer is wholly owned by a publicly traded company, what must it disclose when recommending that company’s stock?

No disclosure is required

Only the profit made must be disclosed

The relationship with the parent company must be communicated

When a broker-dealer is wholly owned by a publicly traded company, it is essential for transparency and to ensure that investors are aware of potential conflicts of interest that may arise from the recommendation of that company’s stock. The relationship with the parent company must be communicated to the investors. This is crucial because it informs them that the broker-dealer has a vested interest in the performance of the company's stock, which could influence their investment advice.

This disclosure is in line with regulatory requirements aimed at protecting investors and maintaining integrity in the financial markets. By revealing this relationship, the broker-dealer allows investors to make informed decisions considering potential biases or motivations behind the recommendation.

Get further explanation with Examzify DeepDiveBeta

This relationship is prohibited from being disclosed

Next Question

Report this question

Download General Securities Sales Supervisor (Series10) Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy