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NEW QUESTION: 1
Goldie Locks is an agent with Bear Broker-Dealers. One of her clients is a single woman, Annie Spinster,
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assures Annie. Has Goldie violated any laws or engaged in any prohibited practices?
A. Yes. As the agent of a broker-dealer, Goldie is not permitted to make recommendations for specific
investments. Only investment adviser representatives and investment advisers can do that.
B. No. Goldie merely responded to a recommendation request from a client, and the recommendation is
suitable since the client has a need for current income and the recommended stock pays a high dividend.
C. Yes. At the very least, Goldie has committed fraud since she cannot guarantee that a firm's dividend
will continue or increase.
D. Both A and B are true.
Answer: C
Explanation:
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dividend of $2.21 a share or higher, Goldie has committed fraud. The company itself could not even make
such a guarantee legitimately. Goldie may also be guilty of an unsuitable recommendation since factors
other than dividend yield-such as the risk of the investment--should have been considered. That being
said, Goldie is permitted to make recommendations for specific investments as an agent of a
broker-dealer, as long as she doesn't receive special compensation for it.
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