Business PracticesCâu 56 / 100
An agent handles a conservative retiree's account and generates 60 round-trip trades in six months, producing commissions that consume a large share of the account's value. This practice is best described as:
a.Churning, which is excessive trading in light of the customer's resources, objectives, and account character
b.Front-running, because the agent traded ahead of the customer
c.A permissible active management style since the customer never objected
d.Selling away, because the trades were placed outside the firm
Giải thích
Churning is trading that is excessive in size or frequency given the customer's financial resources, investment objectives, and the nature of the account, and it is judged by the pattern rather than by any single trade. The customer's silence is not consent and does not cure the violation. Front-running involves trading ahead of a known block order, and selling away involves transactions outside the employing firm, neither of which is described here.
Trích dẫn luật: NASAA Model RuleLuyện miễn phí toàn bộ 100 câu hỏi — không cần đăng ký.
Câu hỏi liên quan cùng chủ đề
- A customer tells his agent, 'Buy 500 shares of a good technology company sometime this week.' The agent selects the issuer and buys the shares two days later. The agent has:
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