Series 63 practice questionmediumCompensation and Suitability
An agent recommends a security mainly because it pays the highest commission. Which USA principle is being violated?
- ASuitability and disclosure of conflicts✓ Correct answer
- BOnly the firm’s internal policies
- CReasonable basis suitability only
- DNo violation if the client agrees
Explanation
Why A — Suitability and disclosure of conflicts
Recommending for compensation alone is both a suitability violation and a failure to disclose a conflict (USA Section 402). Firm policies, reasonable basis alone, or client consent do not override these duties.
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