FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProfessional Conduct and Ethical ConsiderationsHard
A registered representative learns that a client, who is a close friend, has been diagnosed with a serious illness and is expected to incur significant medical expenses. The representative, out of concern, accesses the client's account information to review their investment portfolio for potential liquidity options, without the client's explicit permission for this specific access. Which FINRA rule is most likely being violated?
- AFINRA Rule 2090 (Know Your Customer)
- BFINRA Rule 2165 (Financial Exploitation of Specified Adults)
- CFINRA Rule 2231 (Customer Account Statements)
- DFINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade)
Show answer & explanationAnswer & explanation
Correct answer: D. FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade)
Even with good intentions, accessing a client's account without their explicit permission for that specific purpose, especially due to personal knowledge outside of a professional request, violates the Standards of Commercial Honor and Principles of Trade, which encompasses client confidentiality and acting with integrity.
Why the other options are wrong
- A. Know Your Customer relates to understanding a client's investment profile, not unauthorized access to account details.
- B. While the client is a specified adult, the primary violation is unauthorized access, not exploitation. This rule would apply if the representative *used* the information to exploit the client.
- C. This rule deals with the content and delivery of account statements, not unauthorized access.
Client Confidentiality (Unauthorized Access)
The ethical and regulatory obligation to protect client information and prevent unauthorized access or disclosure, even if the intent is benevolent.
- Client information must be kept private.
- Access should be limited to legitimate business purposes.
- Requires explicit client permission for non-routine access.
- Covered under broader ethical principles like 'Standards of Commercial Honor'.
Memory trick: Client's data is a locked vault; access without permission is a fault.