Welcome to Required Disclosures, the unit that covers everything securities professionals must tell their clients (and what they must never say).
Exam Weight: 20% (12 questions, shared across Units 11-13)
What You'll Learn
In this unit, you'll cover:
- Required Product Disclosures: Disclosures required at financial institutions (the FDIC/NCUA "not insured" disclosures), prospectus delivery timing, trade confirmations, account statements, and penny stock disclosures
- Unlawful Representations Concerning Registration: Why registration never equals approval, and the statements that will get you in trouble
- Performance Guarantees Prohibition: The line between stating a bond's coupon rate and guaranteeing investment returns
- Filing of Sales and Advertising Literature: The Administrator's authority to require pre-use, concurrent, or post-use filing of marketing materials
- Form ADV and the Brochure Rule: What the firm brochure and brochure supplement must contain, and when they must be delivered under both the federal and state timing rules
- Privacy and Information Security: Privacy notices, nonpublic personal information, and the NASAA cybersecurity-policy rule for state-registered advisers
- Recordkeeping Requirements: The federal record-and-retention schedule for broker-dealers, and the state's limited authority over it
Why This Matters
Communication with customers is the second heaviest-weighted section on the Series 63, accounting for 20% of all scored questions (12 of 60). Only Ethical Practices and Obligations carries more (25%, 15 questions). The exam tests whether you know exactly what must be disclosed, when it must be disclosed, and what statements cross the line into unlawful territory. Mastering these rules is essential for passing.
Let's start with the specific product disclosures required when selling securities.