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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Artie

1 months ago

Option E: When a broker recommends investing in a pyramid scheme. Now that's what I call an unsuitable recommendation!

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Mireya

1 months ago

Option C is just too specific. Suitability is about the bigger picture, not just getting approval for every trade. B is the most comprehensive answer here.

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Jolanda

1 months ago

Haha, Option A? Really? Like a client is just going to request an unsuitable trade. That's not how this works. Option B is the way to go, folks.

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Theron

1 months ago

I'm going with Option D. When a broker makes trades just to rack up commissions, that's a clear violation of the suitability rules. Gotta keep the brokers honest, you know?

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Detra

3 days ago

It's important for investors to be aware of these rules to protect their interests.

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Skye

4 days ago

That's right, recommending investments just to generate commissions is not ethical.

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Marti

19 days ago

I agree, brokers should always act in the best interest of their clients.

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Shawn

2 months 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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Raina

1 months ago

User 2: Definitely, putting the client's needs first is crucial in the financial industry.

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Fannie

1 months ago

User 1: I agree, option B is the most accurate. It's important to consider the client's objectives when making recommendations.

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Blair

2 months ago

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

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Lavera

2 months 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:

Artie

Mireya

Jolanda

Theron

Detra

Skye

Marti

Shawn

Theresia

Raina

Fannie

Blair

Lavera