Jackson violated Standard III(C) – Suitability by allocating shares of the public offering to the two new client accounts without establishing an investment objective or guidelines for the accounts. Standard III(C) requires a reasonable inquiry into the client’s financial situation, investment experience, and investment objectives prior to taking any investment actions. Such information must also be updated regularly. The Standard also requires that the appropriateness and suitability of investment recommendations or actions be considered for each client, including 1) client needs and circumstances; 2) basic characteristics of the investment involved; and 3) basic characteristics of the total portfolio. Although the shares were allocated pro rata across all client portfolios, no investment action should have been initiated for the new clients without appropriate consultation regarding investment objectives and guidelines |
