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

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

AA suitability violation occurs when a broker does not carry out a trade requested by or promised to a customer

BA suitability violation occurs when a broker recommends an investment or investment strategy that is inconsistent with the client's objectives

CA suitability violation occurs when a broker trades in a client's account without obtaining prior approval for making the transaction(s).

DA suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions

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

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23 comments · newest first

Alona 3 days ago

I feel like C is too specific. It’s not the main issue.

Odelia 8 days ago

D sounds valid too, but it’s more about commissions.

Mariann 13 days ago

Right, A doesn’t fit. B is clear and accurate.

Sherrell 18 days ago

A is misleading. Not executing a trade isn’t a suitability issue.

Lemuel 24 days ago

Agreed, B makes the most sense. Client objectives are key!

Sena 29 days ago

I think B is the best choice. It really captures the essence of suitability.

Darrel 1 month ago

I just hope we don’t overthink it.

Milly 1 month ago

Right! B really captures the essence of suitability.

Ilene 1 month ago

Exactly! It’s about aligning with client goals.

Gertude 2 months ago

I feel like A is misleading. Not executing a trade isn’t the same.

Bernardo 2 months ago

True, but B covers the core issue of suitability.

Darrel 2 months ago

But what about D? Excessive commissions are a big deal.

Ilene 2 months ago

Agreed! Client objectives are key.

Milly 2 months ago

I think B is the right answer. It makes sense.

Twana 3 months ago

C is just common sense, right?

Jarvis 3 months ago

Wow, I didn't know brokers could get in trouble for that!

Patti 3 months ago

D sounds like a serious issue, but is it really a violation?

Marcos 3 months ago

I disagree, A seems more accurate to me.

Milly 3 months ago

B is definitely the right choice!

Kenda 3 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.

Teddy 4 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.

Lettie 4 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.

Daron 4 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.

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