- guaranteed, guaranteed as to payment of principal, interest, or dividends
Disseminating false trading information
- need to believe quote is bona fide to publish
Deceptive advertising practices
- can't use 1. nonfactual data, 2) unfounded/unrealistic claims, 3) assertions to supplement/detract from prospectus/disclosure 4) sales brochure with only positive information, 5. highlighting-making other marks on prospectus to draw more attention to key points
Failing To Disclose Conflicts Of Interest
- house-fund, mutual fund with underwriter/advisor is affiliated with broker dealer
- if your sister was a control person, you would need to disclose that as a conflict of interest
Withholding shares of a public offering
- need to allocate IPO shares in an equitable manner and not keep any
Responding to complaints
- need to give customer information they are entitled to
- written complaint, action must be taken, kept in firm's complaint file
- if complaint is withdrawn, firm must make a copy and return original to client
Reporting errors
- trades/operational errors must be reported to supervisor
front running
- unethical business practice of placing a personal order ahead of customer's order received earlier, firm can profit on movement
Case study p. 103
- Thompson recommends ABC Shoe Co, a thinly traded chain store that First Securities analysts have recommended highly before IPO. Agent bought 200 shares for himself. Client found out agent bought securities ahead of time and wrote complaint letter. Agent ignored complaint.
- Verdict: 1) inappropriate to enter personal order before client order, 2) must bring all written complaints to employer's attention
Spreading rumors
- agent must report rumors to supervisor
Backdating records
- all records and documents must reflect their actual dates
Waivers
- any condition, stipulation or provision to waive compliance is prohibited
Investment company sales
NASA Statement of Policy Dishonest of Unethical Business Practices by Broker-Dealers and Agents in Connection with Investment Company Shares
1. grounds for denial/suspension/revocation of registration
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