Definition of Know Your Customer Rule

Know Your Customer Rule is an industry regulation, which requires a Registered Representative to be familiar with the customer’s financial objectives and needs, prior to making a recommendation; also known as Rule 405.

Applying "Know Your Customer Rule" to Securities Exams:

All registered reps must make an effort to learn about their customer’s financial needs and objectives to ensure that they can make suitable recommendations. All recommendations must be suitable based on the customer’s investment objectives and their current and future needs

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