Chapter 4: Communication with Customers and Prospects - B. Disclosure of Material Information Flashcards
1
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Disclosure of Material Information
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The Uniform Securities Act (USA) specifies that it is fraudulent and deceitful to withhold material information from a client. A material fact is one that would be essential in making an informed investment decision.
It is not possible to know or disclose all facts about an investment. An agent must be careful not to be selective in which information is communicated to the client. Disclosing only positive information about an investment while withholding adverse information is a violation of the Act. Information must be fair and balanced between benefits and risk. Agents and adviser representatives must be certain that the client receives all essential facts known to make an informed and educated decision.
