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ACFE CFE-Fraud-Investigations-and-Legal-Issues Exam - Topic 4 Question 4 Discussion

Which of the following is the MOST ACCURATE statement about rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies?
D) A suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions
A) A suitability violation occurs when a broker does not carry out a trade requested by or promised to a customer
B) A suitability violation occurs when a broker recommends an investment or investment strategy that is inconsistent with the client's objectives
C) A suitability violation occurs when a broker trades in a client's account without obtaining prior approval for making the transaction(s).

ACFE CFE-Fraud-Investigations-and-Legal-Issues Exam - Topic 4 Question 4 Discussion

Actual exam question for ACFE's CFE-Fraud-Investigations-and-Legal-Issues exam
Question #: 4
Topic #: 4
[All CFE-Fraud-Investigations-and-Legal-Issues Questions]

Which of the following is the MOST ACCURATE statement about rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies?

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Suggested Answer: D

This question tests your knowledge of Domain 4.

In the context of Securities Fraud, specifically relating to securities, unsuitable recommendations, the question asks about MOST ACCURATE, rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies.

The correct answer is D: A suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions.

This question tests knowledge of securities fraud and regulation. The correct answer accurately describes the role of regulatory bodies, securities laws, or fraud schemes in this context. Securities fraud is a specialized area requiring knowledge of specific regulations and oversight mechanisms.


- CFE Exam Content Outline: Domain 4: Securities Fraud

- securities

- unsuitable recommendations

- Fraud Examiners Manual, Law Section

by Lavonda at Jun 30, 2026, 09:18 AM

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Gertude
4 days ago
I feel like A is misleading. Not executing a trade isn’t the same.
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Bernardo
9 days ago
True, but B covers the core issue of suitability.
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Darrel
15 days ago
But what about D? Excessive commissions are a big deal.
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Ilene
20 days ago
Agreed! Client objectives are key.
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Milly
25 days ago
I think B is the right answer. It makes sense.
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Twana
1 month ago
C is just common sense, right?
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Jarvis
1 month ago
Wow, I didn't know brokers could get in trouble for that!
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Patti
1 month ago
D sounds like a serious issue, but is it really a violation?
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Marcos
2 months ago
I disagree, A seems more accurate to me.
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Milly
2 months ago
B is definitely the right choice!
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Kenda
2 months ago
I keep getting confused about the specifics of these violations. I thought option A was about not executing trades, but that doesn't seem to fit the definition of suitability.
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Teddy
2 months ago
I practiced a question similar to this, and I believe that a broker's recommendations should always match the client's objectives, so B sounds right to me.
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Lettie
2 months ago
I'm not entirely sure, but I feel like option D could also be relevant since it talks about excessive commissions, which seems like it could be a violation too.
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Daron
2 months ago
I think I remember that suitability violations are mainly about aligning recommendations with the client's goals, so I might lean towards option B.
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