SIE practice questioneasyProhibited Activities
A registered rep recommends mutual fund switches just to increase commissions, rather than for the customer’s benefit. This practice is:
- AA normal sales practice
- BProhibited as unsuitable and abusive✓ Correct answer
- CPermitted under Reg D
- DOnly prohibited for institutional clients
Explanation
Why B — Prohibited as unsuitable and abusive
Switching mutual funds to earn commissions, without client benefit, is abusive and unsuitable, violating FINRA and SEC rules. It’s never legitimate, regardless of account type.
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