SIE practice questionmediumReg BI - Best Interest
Under SEC Regulation Best Interest (Reg BI), a broker-dealer must act in the best interest of the retail customer when making a recommendation. This obligation includes all of the following EXCEPT:
- AAddressing conflicts of interest
- BDisclosure of material facts about the recommendation
- CGuaranteeing investment returns✓ Correct answer
- DExercising reasonable care and diligence
Explanation
Why C — Guaranteeing investment returns
Reg BI requires broker-dealers to satisfy four obligations: Disclosure (material facts about the relationship and conflicts), Care (reasonable diligence and understanding of risks/rewards), Conflict of Interest (policies to address conflicts), and Compliance (written policies and procedures). No regulation requires or permits guaranteeing investment returns — all investments carry risk, and guaranteeing returns would itself be a violation of securities rules.
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