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?
- AFailure to ensure the recommendation is suitable for each client.✓ Correct answer
- BImproper use of third-party data.
- CUse of technology without client consent.
- 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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