Trading, Accounts & Prohibited ActsQuestion 263 of 398
To close a sale, a representative tells a customer that a corporate bond is 'guaranteed by the FDIC and can never lose money.' The statement is false. This is an example of:
a.A permissible sales puff
b.Suitable recommendation
c.Selling away
d.Misrepresentation
Explanation
Misrepresentation is making a false or misleading statement of material fact to induce a securities transaction. Falsely claiming FDIC backing or a guarantee against loss is a serious violation of the antifraud provisions.
Law Reference: Securities Exchange Act of 1934Practice all 398 questions free — no signup required.
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