Question

"A registered representative of a member firm markets private placements to wealthy accredited investors. Before the member firm can market these private placement securities, it MUST conduct a reasonable investigation concerning the:"

Answer 1

I. issuer and its management

II. business prospects of the issuer

III. assets held by the issuer

IV. claims being made

Step-by-step explanation:

According to Financial Industry Regulatory Authority, FINRA, the requirement for a private placement to be offered, is for the broker-dealer or its representatives to perform a necessary and an adequate inquiry pertaining to the security and the issuer's representations concerning it.

Hence, the Broker-dealer must conduct a reasonable investigation concerning the following:

• issuer and its management

• business prospects of the issuer

• assets held by the issuer

• claims being made

• intended use of the proceeds of the offering