I remember seeing this question on Mock 1 (Question 14) and I was not sure about the violation. Two clients have the same risk, return objectives and marginal tax rate. Is it safe to assume that investments suitable for one client will be suitable for the other or will the question explicitly state the suitability criteria? I don’t remember the exact question. It went something like this. Company A allocates IPO shares to mutual funds (with same risk, return objectives , tax rate) followed by individuals. what is the violation ? a) suitability b) fair dealing I picked suitability over fair dealing because the company did not ensure that IPO was suitable for mutual funds… then came the issue of fair dealings… The correct answer is fair dealing due to favorable treatment of mutual funds. Why is it? Aren’t both voilations?
I dont think it is suitability because it says they have the same risk, return objects etc… But as for fair dealing it seems clear, you’re giving IPO shares to mutual funds instead of all clients as it says.