Customer-initiated Order

An unsolicited transaction initiated by the customer is:

1. A.Always prohibitedThis reverses the treatment. Customer-initiated orders get relief precisely because nobody solicited the customer, so there was no sales pressure for the registration requirement to guard against.
2. B.An exempt transactionCorrect - unsolicited orders are exempt.
3. C.A registered offeringA registered offering is a distribution that cleared registration before it began. What the stem describes is one customer's own order, which reaches the same result by a different route: exempt rather than registered.
4. D.FraudNothing deceptive took place. The customer picked the security unprompted, so there was no statement made to induce the purchase and nothing withheld that would have changed the decision.

Why: Unsolicited (customer-initiated) transactions are exempt transactions under the USA.

A customer initiates an unsolicited purchase. Under the USA this is:

1. A.An exempt transactionCorrect - unsolicited orders are exempt transactions.
2. B.A registered offeringThis confuses the security's status with the transaction's. Whether the security is registered is a separate question from whether this particular trade is exempt, and the stem speaks only to the latter.
3. C.FraudThe customer picked the security with no prompting from the agent. There is no recommendation that could be unsuitable and no statement that could be false.
4. D.A prohibited transactionUnsolicited orders are among the most routine trades any firm handles. The Act singles them out for exemption rather than for prohibition.

Why: Unsolicited (customer-initiated) transactions are exempt transactions.