21.20.702 - Suitability of recommendation--Reasonable grounds required. - Washington Statutes

Suitability of recommendation — Reasonable grounds required.

(1) In recommending to a customer the purchase, sale, or exchange of a security, a broker-dealer, salesperson, investment adviser, or investment adviser representative must have reasonable grounds for believing that the recommendation is suitable for the customer upon the basis of the facts, if any, disclosed by the customer as to his or her other security holdings and as to his or her financial situation and needs.

     (2) Before the execution of a transaction recommended to a noninstitutional customer, other than transactions with customers where investments are limited to money market mutual funds, a broker-dealer, salesperson, investment adviser, or investment adviser representative shall make reasonable efforts to obtain information concerning:

     (a) The customer's financial status;

     (b) The customer's tax status;

     (c) The customer's investment objectives; and

     (d) Such other information used or considered to be reasonable by the broker-dealer, salesperson, investment adviser, or investment adviser representative in making recommendations to the customer.

[1994 c 256 § 26; 1993 c 470 § 2.]

Notes: Findings -- Construction -- 1994 c 256: See RCW 43.320.007.