SIE (Securities Industry Essentials) Practice Exam

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When a broker-dealer charges a commission on a securities transaction, it has acted as:

an agent
a principal
an underwriter
a trustee

The correct answer is: an agent

When a broker-dealer charges a commission, it means they are acting as an agent for their client. This means they are executing the transaction on the client's behalf and receiving compensation for their services. Option B, a principal, would refer to a situation where the broker-dealer is buying or selling securities for their own account. Option C, an underwriter, would apply to situations involving the sale of new securities to the public. Option D, a trustee, would refer to a fiduciary role where the broker-dealer is managing securities or assets on behalf of a trust.