fb-regbi-0008
{
"customer": "Retail customer, age 41, documented profile: saving for a home purchase expected in 18 months; funds must remain accessible; low risk tolerance for these funds.",
"recommendation": "The associated person recommends placing the entire home-purchase fund into a product with a seven-year surrender-charge schedule starting at 8%.",
"stipulated_facts": [
"The firm fully understands the product; it could be in the best interest of some retail customers with long horizons.",
"Written disclosure of scope, capacity, fees, and the surrender schedule was provided.",
"This is a single recommendation, not part of a series."
]
}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
violates-care-customer-specific
The quoted prong ties the required reasonable basis to this particular customer's investment profile. The stipulated profile requires the funds within 18 months; the recommended product imposes a seven-year surrender schedule starting at 8% on the entire fund. A reasonable basis to believe this serves this customer's best interest cannot exist on those facts. Product-level diligence and disclosure are stipulated satisfied, so the other options are not the breached obligations.
Selects violates-care-customer-specific on the liquidity-horizon mismatch.
“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” — sec-regbi
The key correctly identifies that the recommendation violates the customer-specific prong of the care obligation. The customer's profile requires liquidity in 18 months, but the recommended product has a seven-year surrender schedule starting at 8%. This directly conflicts with the requirement to have a reasonable basis to believe the recommendation is in the best interest of the particular retail customer based on their investment profile.
“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 evaluating the recommendation against this particular customer's investment profile, including time horizon, liquidity needs, and risk tolerance. The stipulated profile requires the funds within 18 months, accessibility, and low risk; recommending the entire fund into a product with a seven-year surrender schedule starting at 8% directly conflicts with those needs. The other options are not implicated because the scenario stipulates that the firm understands the product and that written disclosure was provided. Therefore the key's value is correct.
v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.