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Series 7 practice questionmediumSocial Media — Suitability in Digital Recommendations

A representative uses a firm-approved app to recommend a specific ETF to all clients on his contact list. Which potential regulatory issue arises from this communication?

  1. AFailure to ensure the recommendation is suitable for each client.✓ Correct answer
  2. BImproper use of third-party data.
  3. CUse of technology without client consent.
  4. DNon-compliance with anti-money laundering rules.
Explanation

Why A — Failure to ensure the recommendation is suitable for each client.

Recommendations must be suitable based on each client's profile; blanket recommendations to all clients without regard to individual circumstances could violate suitability rules.

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