A registered representative, Ms. Lee, manages a discretionary account for a high-net-worth client, Mr. Kim. Ms. Lee's brother is a director of 'GreenTech Innovations Inc.', a small-cap company. Ms. Lee's firm has a 'no-trade' policy on GreenTech Innovations Inc. for all employees due to an ongoing related party transaction. However, Ms. Lee believes that GreenTech, despite the 'no-trade' policy, would be an excellent, unique fit for Mr. Kim's aggressive growth portfolio segment, which clearly falls within his stated risk parameters. What is the most appropriate action for Ms. Lee?

Question: A registered representative, Ms. Lee, manages a discretionary account for a high-net-worth client, Mr. Kim. Ms. Lee's brother is a director of 'GreenTech Innovations Inc.', a small-cap company. Ms. Lee's firm has a 'no-trade' policy on GreenTech Innovations Inc. for all employees due to an ongoing related party transaction. However, Ms. Lee believes that GreenTech, despite the 'no-trade' policy, would be an excellent, unique fit for Mr. Kim's aggressive growth portfolio segment, which clearly falls within his stated risk parameters. What is the most appropriate action for Ms. Lee?

Answer options: ✅ She must not purchase shares of GreenTech Innovations Inc. for Mr. Kim's account, even if suitable, due to the firm's 'no-trade' policy and the potential conflict of interest.

• She should document her rationale for suitability and seek special approval from her firm's compliance department to make the trade, disclosing her brother's involvement.
• She should inform Mr. Kim of her brother's involvement and the firm's policy, then allow him to make the final decision to invest or not.
• She should quietly purchase a small number of shares for Mr. Kim's account, as it is a discretionary account and she believes it is genuinely suitable.

Correct answer: She must not purchase shares of GreenTech Innovations Inc. for Mr. Kim's account, even if suitable, due to the firm's 'no-trade' policy and the potential conflict of interest.

Explanation: A registered individual must adhere to their firm's internal policies, especially those designed to manage conflicts of interest and prevent trading on advantageous information or connections. A 'no-trade' policy is a firm directive that must be followed regardless of perceived client suitability, particularly when a direct familial relationship exists within the company.