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Q17 Single choice

Mr. Schaker hasn't been seeing a lot of clients these days with the recent market downturn-which means he hasn't been generating any commissions, and commissions are his bread and butter. So, Mr. Schaker does some Googling on his computer and notes that a prominent family of load funds has just introduced a new global fund. Scribbling the name and contact information of the fund family on his notepad, he begins calling his existing clients and promoting the new fund, encouraging his clients to redeem some shares in their existing funds to invest in this fund.

Has Mr.
Schaker violated any securities laws?

A
No. In FINRA's rules regarding fair dealing with customers, the SRO clearly states that "This does not mean that legitimate sales efforts in the securities business are to be discouraged. . . "
B
Yes. Mr. Schaker is recommending the fund to his existing clients to benefit himself, not them.
C
No. Research indicates that new funds tend to offer abnormally high returns for the first 12 months of their existence, so Mr. Schaker is doing his clients a favor even if he himself stands to profit.
D
Yes. A registered representative should always refrain from recommending shares of a load fund;
trades involving load funds should always be "unsolicited."

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