FINRA Series 6

Answer: C - The activities described in Selections I, II, and IV are prohibited by the FINRA when a representative is selling shares of a mutual fund. Representatives are prohibited from recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed-a practice known as “selling dividends”-- unless this recommendation is justified by the specific circumstances of the client; they are prohibited from telling a client that a fund that has only a contingent deferred sales charge is a no load fund; and they are prohibited from withholding an order-i.e., refraining from placing a customer’s order promptly--in order to profit themselves as a result of having done so. There is nothing wrong with telling a client that the interest he earns on a municipal bond fund will be free from federal taxation since this is a true statement.