p. 105-107

Sales Load Communications

• a front-end load
• a contingent deferred sales load (CDSC)
• a Rule 12b-1 fee or a service fee if such fees > .25% of average net fund assets per year

Breakpoints

• sales charge discount on the  purchase of shares in dollar amounts at or above a breakpoint
• letter of intent feature which will reduce the sales charges

Selling Dividends

• the purchase of such shares shortly before an ex-dividend date is better for some customers unless there are 1.) tax advantages, 2) specific advantages
• a distribution of long-term capital gains by an investment company is part of the income yield from an investment in such shares

Share Classes

• recommend a specific class of investment company shares in connection with a multi-class sales charge or fee arrangement without 1) investment objectives, 2) financial situation, 3) knowledge of other securities holdings

Switching Funds

• recommend the redemption of investment company shares to buy shares in a different investment company portfolio with similar objectives
• need to invest in something with different objectives to justify?

Proper yield disclosures

• need to disclose most recent average annual return for 1, 5, and 10 years

Lending or borrowing

• lending or borrowing money/securities from a customer
• need to be in the business of lending money/securities

Case study:

• agent borrows cash from discretionary account. Customer gave agent latitude because of high returns. Agent always repays. Don't borrow from bank because of high interest rates
• Analysis: agent broke rule and violated USA. He is allowed to trade securities not take his money for personal use
• You cannot borrow money from a client unless it is from a lending institution

Selling away

• effecting securities transactions not recorded on the regular books/records of the broker/dealer which the agents represents. Need transactions to be authorized 

Case study:

• agent is a part owner of privately held Computer Inc. Agent is friends with Aircraft Parts Inc. chairman. Agent sells shares in Computer Resources to client, shares are not publicly traded, does not log transactions on the books. 
• Verdict: an agent may NOT make transactions that are not recorded on the books without written consent of B/D

Fictitious accounts

• prohibited
• used to make client's net worth look larger, make him appear to have more investment experience