A mutual fund representative misrepresents the risks associated with a particular mutual fund in order to encourage a conservative client to purchase it. What part of MFDA Rule No. 2 “Business Conduct” did the representative violate?
A.
Deal fairly, honestly, and in good faith with clients
B.
Have such experience and training as is consistent with the standards acceptable to the industry
C.
Not engage in business conduct or practice that is unbecoming or detrimental to the public interest
Misrepresenting risks violates the MFDA Rule No. 2 requirement to deal fairly, honestly, and in good faith with clients. The feedback from the document states:
"MFDA Rule No 2 ‘Business Conduct’ sets out the standards applicable to all MFDA members and their respective dealing representatives. In this case, the representative has not dealt honestly with the client by misrepresenting information."
[Reference: Chapter 17 – Mutual Fund Dealer RegulationLearning Domain: Ethics, Compliance and Mutual Fund Regulations, , , ]
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