fb-regbi-0007
{
"customer": "Retail customer, age 68, documented profile: income objective, moderate risk tolerance, ten-year horizon, adequate emergency reserves held elsewhere.",
"recommendation": "The associated person recommends a ladder of investment-grade corporate bonds maturing over two to ten years.",
"stipulated_facts": [
"The associated person, in making the recommendation, exercised reasonable diligence, care, and skill and understands the bonds' risks, rewards, and costs, having compared the recommendation against reasonably available alternatives on the firm's menu; the firm's own diligence supports the same conclusions.",
"The ladder matches the documented income objective, risk tolerance, and horizon.",
"Written full and fair disclosure of all material facts relating to the scope and terms of the relationship — capacity, fees and costs, and the type and scope of services — and all material facts relating to conflicts of interest associated with the recommendation was provided at the time of the recommendation.",
"Compensation on the recommended bonds is no higher than on the considered alternatives."
]
}Judged only against the obligations quoted in this item's sources, which conclusion follows about this recommendation? Answer with exactly one option id.
consistent— The recommendation is consistent with the quoted obligationsviolates-care-reasonable-basis— It violates the care obligation's reasonable-basis prongviolates-care-customer-specific— It violates the care obligation's customer-specific prongviolates-disclosure— It violates the disclosure obligation
consistent
On the stipulated facts, every quoted obligation is satisfied: the associated person personally exercised reasonable diligence, care, and skill and understands the recommendation's risks, rewards, and costs (reasonable-basis prong); the recommendation matches the documented investment profile, supplying the customer-specific reasonable basis the quoted prong requires; and written full and fair disclosure of the relationship's material facts and of conflicts of interest was provided at the time of the recommendation (disclosure obligation). No stipulated fact places the broker's interest ahead of the customer's.
Selects consistent; the profile-to-product match is direct.
“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.
“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 answer key correctly concludes that the recommendation is consistent with the quoted obligations. The stipulated facts explicitly confirm that the associated person exercised reasonable diligence, care, and skill to understand the risks, rewards, and costs (satisfying the reasonable-basis prong), that the recommendation matches the customer's investment profile without placing the broker's interest ahead of the customer's (satisfying the customer-specific prong), and that written full and fair disclosure of all material facts regarding the relationship and conflicts of interest was provided at the time of the recommendation (satisfying the disclosure obligation).
“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 and does not place the financial or other interest of the broker, dealer, or such natural person ahead of the interest of the retail customer;” — sec-regbi
The stipulated facts satisfy the quoted customer-specific care prong: the ladder matches the documented investment profile, and no stipulated fact places the broker's interest ahead of the customer's. The stipulated reasonable diligence and written full and fair disclosure also satisfy the other quoted obligations. Therefore the conclusion 'consistent' is correct.
v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.