Rose,a financial advisor,recommended that a client,Maureen,purchase shares in Mad Money Mutual Fund.Relying on Rose's recommendation the client purchased 100 units.The entire stock market collapsed and the value of Mad Money Mutual Fund was reduced significantly.Maureen was surprised to learn that Rose earned a commission on each unit sold to her clients.Is Rose liable to Maureen?
A)No,mutual fund dealers are not liable to their clients for losses incurred.
B)No,Rose met the standards of care for a financial adviser.
C)No,Rose's advice did not cause the loss.
D)Yes,Rose breached her fiduciary duty by not disclosing that she received a commission on sale.
E)Yes,Rose failed to meet the stand of care for a financial adviser by recommending a mutual fund that failed.

Question

Quizplus · Accepted Answer

Rose had a fiduciary duty to disclose her commission to Maureen as it was a potential conflict of interest. Therefore, Rose breached her duty by not disclosing this information and could be held liable for any losses incurred by Maureen as a result of her recommendation.

Rose,a Financial Advisor,recommended That a Client,Maureen,purchase Shares in Mad Money