Under the standards currently in effect, which statement best describes the obligation a representative owes when recommending a security to a retail customer, relative to FINRA Rule 2111 suitability?
- ASEC Regulation Best Interest has replaced FINRA Rule 2111 for every customer, so a suitability analysis is no longer performed for any account.
- BSEC Regulation Best Interest governs the recommendation to the retail customer and sets a best-interest standard that is higher than FINRA Rule 2111 suitability. Correct
- CFINRA Rule 2111 suitability remains the governing standard for a retail recommendation, and Regulation Best Interest applies only to institutional accounts.
- DThe two standards are identical in substance, so satisfying FINRA Rule 2111 suitability automatically satisfies Regulation Best Interest for the retail customer.
Why A is wrong: Tempting because Regulation Best Interest is newer and does govern retail recommendations, but it is wrong: FINRA Rule 2111 still frames suitability for non-retail recommendations, so it was not universally replaced.
Why B is correct: Correct: for recommendations to retail customers, Regulation Best Interest is the governing standard and raises the bar above bare suitability by requiring the firm not to place its interests ahead of the customer's.
Why C is wrong: Tempting because suitability is the older, familiar framework, but it inverts the rule: Regulation Best Interest was written specifically for retail customers, while suitability now frames non-retail contexts.
Why D is wrong: Tempting because both assess the fit of a recommendation, but it is wrong: Regulation Best Interest adds a best-interest duty and conflict controls that go beyond what suitability alone requires.