General Securities Sales Supervisor (Series10) Practice Exam

Under MSRB Rule G-32, which of the following must be disclosed to customers in a negotiated offering?

1. Underwriting spread

2. Initial offering prices of each serial maturity

3. Amount of any fee received by the dealer for acting as agent for the issuer

4. Participation percentage of each syndicate member

The correct answer is: Amount of any fee received by the dealer for acting as agent for the issuer

In the context of a negotiated offering under MSRB Rule G-32, the requirement to disclose the amount of any fee received by the dealer for acting as an agent for the issuer is important for transparency and to ensure that customers are fully informed about the costs associated with the transaction. This rule aims to protect investors by requiring that they be aware of any potential conflicts of interest or extra costs that may impact their investment decisions. The rationale behind this requirement is to maintain a fair marketplace, wherein customers can make informed choices based on all necessary information. By disclosing the fee, the dealer provides clarity about the compensation structure, which could influence the pricing of the securities being offered. The other options—underwriting spread, initial offering prices of each serial maturity, and participation percentage of each syndicate member—are not specifically mandated disclosures under Rule G-32 for negotiated offerings. While these elements may be relevant information, they do not carry the same regulatory requirement for disclosure as the fees received by the dealer in this context.