Question

According to the Investment Advisers Act of 1940, which of the following statements about agency cross transactions is NOT true?

A)These transactions are allowed if the adviser is acting in the best interest of the client with respect to obtaining the best possible price.
B)Advisers must send statements to clients no less frequently than annually that identify the total number of these transactions during the period and the total amount of commissions received.
C)Investment advisers can recommend these transactions to both the buyer and the seller if both clients give written consent.
D)Advisers must provide a written disclosure of potential conflict of interest before obtaining the client's written consent to execute such a transaction.

Answer 1

B. Advisers must send statements to clients no less frequently than annually that identify the total number of these transactions during the period and the total amount of commissions received.

Step-by-step explanation:

According to the Investment Advisers Act of 1940, agency cross transactions are allowed as long as the adviser is acting in the best interest of the client with respect to obtaining the best possible price (A). Investment advisers can recommend these transactions to both the buyer and the seller if both clients give written consent (C). Advisers must provide a written disclosure of potential conflict of interest before obtaining the client's written consent to execute such a transaction (D).