Series 7 practice questionhardSocial Media and Digital Communications — Suitability and Recommendations
A registered representative posts on Twitter: 'TechCo stock is set to soar—buy now!' Several followers purchase the stock based on this tweet. Which statement best characterizes the regulatory risks in this scenario?
- AThe tweet is only subject to advertising regulations, not suitability requirements
- BThe tweet is considered a recommendation and must meet FINRA suitability standards for each recipient✓ Correct answer
- CThe tweet is not a recommendation since it is a general statement to the public
- DThe tweet is exempt from suitability rules if no specific clients are named
Explanation
Why B — The tweet is considered a recommendation and must meet FINRA suitability standards for each recipient
Public social media posts that urge action on specific securities are considered recommendations under FINRA rules, so the rep must ensure suitability for any investors acting on them.
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