Exam CIFC Topic 1 Question 213 Discussion

Explanation
According to the MFDA Rules, a Dealing Representative is required to make a suitability determination every time:
The Dealing Representative makes a recommendation to a client;
The Dealing Representative accepts a trade instruction from a client;
The Dealing Representative opens a new account for a client or changes the account type; The Dealing Representative becomes aware of a material change in the client's KYC information; Securities are transferred or re-registered into the client's account; or There has been a change in the Approved Person responsible for the client's account2 A suitability determination is the process of ensuring that any investment action taken for a client is suitable for the client based on their KYC information, such as investment objectives, risk tolerance, time horizon, financial situation, and investment knowledge. A suitability determination also requires putting the client's interests first and disclosing any material factors involved in the investment action2 Therefore, Winter is required to make a suitability determination every time she makes a recommendation to a client (i) or she opens a new client account (iii). She is not required to make a suitability determination every time a client's investment returns decline (ii) or the markets fluctuate (iv), unless these events trigger a material change in the client's KYC information or affect the suitability of the client's portfolio.
References: 1: MSN-0069 | MFDA 2 (Know-Your-Client (KYC) and Suitability)