Introduction

Welcome to Required Disclosures and the Brochure Rule, 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: Prospectus delivery timelines, trade confirmations, account statements, disclosures at financial institutions, and penny stock requirements
• 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: The three-part Form ADV structure, the 18/19 required items in Part 2A, brochure supplements, and delivery deadlines
• Privacy of Consumer Financial Information: Regulation S-P, privacy notices, opt-out rights, and safeguarding requirements
• Recordkeeping Requirements: Securities and Exchange Commission (SEC) Rules 17a-3 and 17a-4, what records broker-dealers must create, and how long they must keep them

Why This Matters

Communication with customers is the single heaviest-weighted section on the Series 63, accounting for 20% of all scored 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.