Series 63 practice questionmediumChurning
An agent in State Z executes frequent trades in a client’s account that are not consistent with the client’s investment objectives, resulting in high commissions for the agent. The client is a conservative investor. This activity is best described as:
- ASelling away
- BChurning✓ Correct answer
- CUnsuitable recommendations
- DUnauthorized trading
Explanation
Why B — Churning
Excessive trading for commissions, especially in conflict with the client's profile, constitutes churning (USA Section 402). Unsuitable recommendations involve inappropriate investments but not excessive frequency.
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