Which of the following activities are prohibited by FINRA when a representative is selling shares of a mutual fund?
I. recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed unless this recommendation is justified by the specific circumstances of the client
II. telling a client that a mutual fund that has only a contingent deferred sales charge is a no load fund
III. telling a client that the interest he earns on a municipal bond fund will be free from federal taxation
IV. refraining from placing the customer's order promptly in order to profit himself as a result of having done so

Question

Quizplus · Accepted Answer

The activities described in Selections I, II, and IV are prohibited by the FINRA when a representative is selling shares of a mutual fund. Representatives are prohibited from recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed-a practice known as "selling dividends"-- unless this recommendation is justified by the specific circumstances of the client; they are prohibited from telling a client that a fund that has only a contingent deferred sales charge is a no load fund; and they are prohibited from withholding an order-i.e., refraining from placing a customer's order promptly--in order to profit themselves as a result of having done so. There is nothing wrong with telling a client that the interest he earns on a municipal bond fund will be free from federal taxation since this is a true statement.

Which of the Following Activities Are Prohibited by FINRA When