fb-regbi-0002

status: publishedversion: v1corpus: 2026.9key: derivedseverity: high

Scenario (all facts stipulated)

{
  "customer": "Retail customer, age 82, retired. Documented investment profile: capital preservation objective, low risk tolerance, anticipated liquidity needs for medical expenses, two-year investment horizon.",
  "recommendation": "The associated person recommends moving 85% of the customer's investable assets into a single 15-year illiquid product with a 9% surrender charge in the first seven years.",
  "stipulated_facts": [
    "The firm performed full diligence on the product and reasonably understands its risks, rewards, and costs; the product could serve some retail customers with long horizons.",
    "Written disclosure of the relationship's scope, capacity, fees, and the surrender schedule was provided.",
    "This is a single recommendation, not part of a series."
  ]
}

Question posed to the model under test

Judged only against the obligations quoted in this item's sources, which conclusion follows about this recommendation? Answer with exactly one option id.

Answer options

consistent — The recommendation is consistent with the quoted obligations
violates-care-reasonable-basis — It violates the care obligation's reasonable-basis prong
violates-care-customer-specific — It violates the care obligation's customer-specific prong (best interest of this particular customer given their profile)
violates-disclosure — It violates the disclosure obligation

Answer key

violates-care-customer-specific

Derivation from the cited text

The customer-specific prong requires a reasonable basis to believe the recommendation is in the best interest of this particular retail customer based on that customer's investment profile. The stipulated profile — age 82, capital preservation, low risk tolerance, near-term medical liquidity needs, two-year horizon — cannot support a reasonable basis for concentrating 85% of assets in a 15-year illiquid product with a 9% surrender charge; the mismatch is between product and this customer, not product and any customer. Diligence and disclosure are stipulated satisfied, so the reasonable-basis and disclosure options are not the breached obligations.

Rubric

Selects violates-care-customer-specific and anchors the mismatch to the stipulated profile.

Cited primary sources (quote-gated)

17 CFR § 240.15l-1 · (a)(2)(ii)(B)

“Have a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer based on that retail customer's investment profile and the potential risks, rewards, and costs associated with the recommendation”

Each quoted passage is exact-matched, after typographic normalization, against the corpus text fetched from the issuing authority (hashes in the corpus manifest). An item whose quote stops matching fails the build.

Verification record

generator: claude-fable (session 2026-09-01)disagreements: 0controls: fb-2026-09-a (5/5 caught)adjudicated by: — (none required or pending)

gemini-3.1-pro-previewagrees the key is correctquote matched

“Have a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer based on that retail customer's investment profile and the potential risks, rewards, and costs associated with the recommendation” — sec-regbi

The key correctly identifies that the recommendation violates the customer-specific prong of the care obligation. The stipulated facts show that the product's 15-year illiquidity and 9% surrender charge directly conflict with the 82-year-old customer's 2-year time horizon, low risk tolerance, and anticipated liquidity needs for medical expenses. Therefore, there is no reasonable basis to believe the recommendation is in the best interest of this particular retail customer based on their investment profile, as required by paragraph (a)(2)(ii)(B).

deepseek-v4-proagrees the key is correctquote matched

“Have a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer based on that retail customer's investment profile and the potential risks, rewards, and costs associated with the recommendation” — sec-regbi

The customer-specific prong requires that the recommendation be in the best interest of this particular retail customer based on the stated profile. The stipulated profile — age 82, capital preservation objective, low risk tolerance, anticipated medical liquidity needs, and a two-year horizon — is fundamentally inconsistent with concentrating 85% of assets in a 15-year illiquid product with a 9% surrender charge. Product-level diligence is stipulated to satisfy the reasonable-basis prong, and disclosure is stipulated to have been provided, so the only breached obligation is the care obligation's customer-specific prong.

Version history & errata

v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.