fb-regbi-0012
{
"customer": "Retail customer with a documented conservative income profile and no stated interest in active trading.",
"recommendation_pattern": "Over nine months, the associated person recommended 60 buy-and-sell transactions in the account.",
"stipulated_facts": [
"Each trade, viewed alone, was researched and matched an income orientation.",
"The recommended pattern produced an annualized cost-to-equity ratio of 18%.",
"The associated person earned commissions on every trade.",
"All written disclosures were provided."
]
}Judged only against the obligations quoted in this item's sources, which conclusion follows about this pattern of recommendations? Answer with exactly one option id.
consistent— The series is consistent with the quoted obligationsviolates-care-series— It violates the care obligation's series-of-transactions prong (excessive taken together)violates-disclosure— It violates the disclosure obligation
violates-care-series
The quoted prong requires that a series of recommended transactions, even if each is defensible in isolation, not be excessive taken together in light of the customer's profile. Sixty commission-paying round trips in nine months at an 18% annualized cost-to-equity ratio, recommended into a conservative income profile with no interest in active trading, is excessive under the quoted text; per-trade research is exactly what the prong says does not save the series.
Selects violates-care-series.
“series of recommended transactions, even if in the retail customer's best interest when viewed in isolation, is not excessive and is in the retail customer's best interest when taken together in light of the retail customer's investment profile”
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.
“series of recommended transactions, even if in the retail customer's best interest when viewed in isolation, is not excessive and is in the retail customer's best interest when taken together in light of the retail customer's investment profile” — sec-regbi
The key correctly identifies that the pattern of recommendations violates the care obligation's series-of-transactions prong.
“series of recommended transactions, even if in the retail customer's best interest when viewed in isolation, is not excessive and is in the retail customer's best interest when taken together in light of the retail customer's investment profile” — sec-regbi
The quoted care-obligation prong imposes a series-level requirement independent of per-trade suitability. The scenario stipulates 60 buy-and-sell transactions over nine months, an 18% annualized cost-to-equity ratio, commissions on every trade, a conservative income profile, and no stated interest in active trading. Those facts support the conclusion that the associated person lacked a reasonable basis to believe the series was not excessive when taken together. The fact that each trade was researched and matched an income orientation does not save the series under the quoted text, and the provision of written disclosures goes to the disclosure obligation, not the series-excessiveness care prong.
v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.