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NEW QUESTION: 1
John Ketchum is an investment adviser representative with Load Investment Advisers, which has a family
of load funds that it encourages its representatives to promote. Representatives of the firm that sell
shares in these funds to their clients receive a greater share of the load than they do if they sell load funds
offered by other firms. Based on these facts, which of the following statements is true?
A. Both A and B are true.
B. John must provide his clients with a written disclosure that he will receive a greater remuneration for
selling shares in the Load family of funds than if he sells them shares in other funds before he provides his
clients with any investment advice.
C. If, after reviewing the information form a client has filled out, John believes that one of Load's funds is
an appropriate investment, John can recommend that the client invest in that fund. There is no disclosure
requirement necessary if the recommendation is a sound one that can be proved to be based on the
client's specific situation.
D. John is obligated to try to sell his clients the funds offered by Load first since he is affiliated with them
and has a fiduciary responsibility to them.
Answer: B
Explanation:
As a representative for a family of load funds who receives greater remuneration for selling
those funds, John must provide his clients with a written disclosure of this fact before providing any advice,
according to NASAA Model Rules. This constitutes a material conflict of interest that must be disclosed "to
clients in writing before any advice is rendered." John is not obligated to try to sell his clients the funds
offered by Load first. His fiduciary responsibility is to his clients, not his employer.

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