ACFE Exam CFE-Law Topic 1 Question 39 Discussion

Actual exam question for ACFE's CFE-Law exam

Question #: 39
Topic #: 1

Which of the following is the MOST ACCURATE statement about rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies?

AA suitability violation occurs when a broker does not carry out a trade requested by or promised to a customer

BA suitability violation occurs when a broker recommends an investment or investment strategy that is inconsistent with the client's objectives

CA suitability violation occurs when a broker trades in a client's account without obtaining prior approval for making the transaction(s).

DA suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions

Show Suggested Answer

Suggested Answer: B

by Noah at Jun 23, 2024, 07:48 PM

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Shawn

10 days ago

I'm not sure, but I think D could also be a suitability violation because it involves generating excessive commissions.

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Option B is the most accurate. A suitability violation occurs when a broker recommends an investment or strategy that doesn't align with the client's objectives. It's all about putting the client's needs first.

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Blair

14 days ago

I agree with Lavera, recommending an investment inconsistent with the client's objectives is definitely a suitability violation.

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Lavera

18 days ago

I think the most accurate statement is B.

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ACFE Exam CFE-Law Topic 1 Question 39 Discussion

Contribute your Thoughts:

Shawn

Theresia

Blair

Lavera