Series 66: Acting As Agent To Both Parties (Agency Cross Transactions)

Acting as Agent to Both Parties (Agency Cross Transactions)

Underlying the very concept of being an “investment adviser” for a client is the idea that you are working in his best interest. Naturally, it creates a conflict of interest when you are representing both sides of a transaction (the buyer and the seller), since to work in one person’s best interest is to potentially do harm to the other. When an adviser represents both sides of the transaction it is called an agency cross transaction. If the investment adviser is dually registered as a broker-dealer, and the adviser arranges a transaction between an advisory client and a broker-dealer client, this is still an agency cross transaction. In fact, even if the IA uses an affiliated broker-dealer to execute transactions and the broker-dealer is representing a client on the other side of the trade as well as the advisory client, it is still considered an agency cross transaction.

If an investment a