Securities Training Series 7 Practice Test

A registered representative can require a customer to sign a suitability statement when the investor is not considered an established customer. This requirement stems from the obligations imposed on financial professionals to ensure that investment recommendations align with the customer's financial situation, investment objectives, and risk tolerance.

When dealing with new customers or those who do not have a long-standing relationship with the firm, the representative must gather adequate information to accurately assess suitability. This is particularly important as these customers may have different expectations or understanding of risk compared to established customers. The suitability statement serves as documentation that the representative has taken steps to understand the investor’s needs and has made appropriate recommendations based on that understanding.

The other options do not reflect the actual rules surrounding suitability assessments. A requirement for a statement does not depend solely on the customer being new, nor does it need to be signed after every transaction or at the end of every financial year. Instead, the emphasis is on ensuring that appropriate measures are taken when working with customers who may not have a detailed history with the firm, thus safeguarding both the investor's interests and the firm's regulatory compliance.