Which prohibition prevents charging a client a higher price than achieved in the market?

Which prohibition prevents charging a client a higher price than achieved in the market?

• A. Duty of diligence
• B. Parking
• C. Prohibition of price fraud
• D. Creating a squeeze

Answer: (C)

Charging a client more than the market price is price fraud. This prohibition is about pricing fairly and not taking advantage of a client by inflating charges beyond what the market would support. It protects clients from deceptive or improper pricing practices and ensures fees or prices reflect real market conditions rather than the advisor’s gain. The other concepts address different misconduct: the duty of diligence is about acting with appropriate care and competence, creating a squeeze is about manipulating market liquidity to push prices up, and parking refers to improper handling of funds. So, the rule that directly targets charging above market prices is the prohibition of price fraud.

Charging a client more than the market price is price fraud. This prohibition is about pricing fairly and not taking advantage of a client by inflating charges beyond what the market would support. It protects clients from deceptive or improper pricing practices and ensures fees or prices reflect real market conditions rather than the advisor’s gain. The other concepts address different misconduct: the duty of diligence is about acting with appropriate care and competence, creating a squeeze is about manipulating market liquidity to push prices up, and parking refers to improper handling of funds. So, the rule that directly targets charging above market prices is the prohibition of price fraud.