Series 63 practice questionmediumProhibited Practice: Unsuitable Recommendations
An agent in State Q recommends high-risk penny stocks to all clients, regardless of their investment goals. Under the USA, this is:
- APermissible if the stocks are legal
- BA prohibited practice as recommendations must be suitable✓ Correct answer
- CPermitted for clients with high net worth
- DAllowed if the agent discloses the risk
Explanation
Why B — A prohibited practice as recommendations must be suitable
Recommending unsuitable investments is prohibited under antifraud provisions. Suitability must be based on client objectives, regardless of legality (A), wealth (C), or disclosure (D).
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,051+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Remedies & Administrative Provisions questions
- A broker-dealer's advertisement claims, 'Our market timing system guarantees you will beat the market.' Under the USA,…
- Under the USA, a fact is considered 'material' if:
- An agent sells securities to a client, representing that they own the securities when the agent does not. Under the…
- If an agent provides clients with false account statements showing higher returns than actually earned, this is:
- An agent executes trades in a client’s account without written authority and without discussing the trades with the…
- A representative tells a client, 'This stock will double in a month.' Under the USA, this statement is:
- A broker-dealer changes a client's investment profile on account paperwork to make a transaction appear suitable. Under…
- Which of the following is NOT considered a fraudulent device under the USA?