All recommendations to customers must be suitable based upon the customer’s investment objectives, their financial profile, and their attitudes towards investing. Representatives usually make verbal recommendations to customers. The representative will review the customer’s investment objective with them and offer facts to support their basis for the recommendation, as well as an explanation as to how the recommendation will help the customer meet their objectives. Any predictions about the performance of an investment should be stated strictly as an opinion or belief, not as a fact. If the firm uses reports that cite past performance of the firm’s previous recommendations, the report must contain:
- The prices and dates when the recommendations were made
- General market conditions
- The recommendations in all similar securities for 12 months
- A statement disclosing that the firm is a market maker (if applicable)
- A statement regarding whether the firm or its officers or directors own any of the securities being recommended, or options, or warrants for the same security
- If the firm managed or co-managed an underwriting of any of the issuers securities in the last three years
- A statement regarding the availability of supporting documentation for the recommendations
While making a recommendation, a representative may not:
- Guarantee or promise a profit or promise no loss
- Make false, misleading, or fraudulent statements
- Make unfair comparisons to dissimilar products
Professional Conduct In The Securities Industry
InvestingDiscover the true motivations and priorities of sell-side analysts and why individual investors should ignore consensus estimates for earnings and revenues.
InvestingAmid weaker growth in China, rising populism in Europe and a Donald Trump presidency, here are Goldman Sachs's top trade recommendations for 2017.
Small BusinessCustomer service is the part of a business tasked with enhancing customer satisfaction.
Small BusinessManagement by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals.
InvestingAn investment or financial advisor makes investment recommendations and analyzes securities.
InvestingAnalyst reports can be an investor's best friend - but without knowing how to read them, you won't be able to fully utilize them.
InvestingInvestment banks provide financial advice to businesses and governments and help them raise capital through the sale of stocks, bonds and other products.
InvestingFind out how five leading investors recommend investing $10,000, including top contrarian, dividend-focused, value investing and emerging market ETF picks.
Financial AdvisorThe DoL had proposed rules that would have a major impact on financial advisors. If they are approved here's what it would mean.
InsightsBig data has enabled marketers to enhance their customer engagement and customer retention strategies by providing insight into behavior and thoughts.