CPH — CSI Conduct and Practices Handbook Cheat Sheet

Use the tables for a quick pre-exam check. Expand a topic’s notes for explanations, examples, and additional distinctions.

Scope and study context

CPH answer pattern

For most scenario questions, work in this order:

1. Identify the role: firm, Approved Person, Registered Representative, supervisor, branch manager, compliance, client, issuer, insider.
2. Classify the issue: KYC, KYP, suitability, conflict, trading conduct, disclosure, complaint, account authority, privacy, AML.
3. Apply the client-protection rule: honest and fair dealing, client interest first where required, suitability, disclosure, supervision, escalation.
4. Choose the required action: document, disclose, obtain approval, refuse, escalate, reverse/correct, supervise, report, preserve records.
5. Avoid exam traps: “client requested it,” “high net worth,” “family member,” “everyone does it,” or “no loss occurred” rarely cures a conduct breach.

After reading this Cheat Sheet, move into independent companion practice. CPH preparation improves fastest when you practice judgment under exam-style wording.

Best practice sequence

1. Start with topic drills
   Drill KYC/suitability, conflicts, account authority, trading conduct, communications, complaints, and AML separately.

2. Read detailed explanations carefully
   Do not only mark right or wrong. Identify why the tempting answer was weaker.

3. Build a trap log
   Track errors such as “ignored conflict,” “assumed client consent was enough,” or “missed escalation.”

4. Move to mixed sets
   Mixed questions force you to identify the topic before choosing the rule.

5. Finish with mock exams
   Use mock exams to improve pacing, stamina, and scenario recognition.

Regulatory and conduct map

Core duties and standards

Client and account lifecycle

Notes and examples

Quick map

Stage	High-yield duties	CPH-style risk
Prospecting	Fair communication, no misleading claims, proper use of titles	Overstating credentials or implying guaranteed results
Account opening	Identity, authority, KYC, disclosures, conflicts, account approval	Incomplete or stale information
Recommendation	KYP, suitability, costs, risks, alternatives, conflicts	Selling a product because it is available or profitable
Order handling	Client instructions, suitability concerns, best execution, priority, records	Treating an order as “safe” because it is unsolicited
Ongoing relationship	KYC updates, account reviews when required, communication records	Failing to reassess after a material client change
Complaints / issues	Prompt escalation, documentation, cooperation	Private settlement or informal promises
Account closure / transfer	Timely processing, records, unresolved issues	Delaying action due to compensation or conflict

KYC quick reference

KYC elements

Notes and examples

KYC update triggers

Trigger	Required conduct response
New account	Complete required KYC before trading or recommendations as required by firm rules
Material client change	Update KYC and reassess holdings/recommendations
Major market or portfolio event	Consider whether risk, concentration, leverage, or liquidity remains suitable
New product or strategy	Confirm both KYP and client-specific suitability
Transfer-in portfolio	Review transferred positions, not only new trades
Client becomes vulnerable or subject to exploitation concern	Follow firm procedures; consider trusted contact and permitted temporary hold process
Periodic review required by firm/rules	Refresh KYC, document contact attempts and client responses

KYP and product due diligence

Notes and examples

Product selection matrix

Product / strategy	Usually tested benefit	Main conduct risks
Government bonds / high-grade fixed income	Income, capital preservation relative to equities	Interest-rate risk, inflation risk, credit assumptions, concentration
Corporate bonds / preferred shares	Higher income potential	Credit risk, liquidity, rate sensitivity, ranking, call features
Common shares	Growth, dividend income, voting interest	Volatility, concentration, suitability for time horizon
Mutual funds / ETFs	Diversification, professional management, access	Embedded costs, fund risk rating, sales charges, suitability of class/series
Leveraged or inverse ETFs	Tactical short-term exposure	Daily reset, compounding, high volatility, unsuitable buy-and-hold use
Options	Hedging, income, speculation	Complexity, expiry, leverage, margin, loss potential
Structured notes / principal-protected notes	Defined payoff, conditional protection	Credit risk of issuer, liquidity, complex formula, fees, opportunity cost
Exempt market products	Private issuer exposure, potential higher return	Limited disclosure, illiquidity, valuation uncertainty, resale restrictions
Alternative funds / hedge strategies	Diversification, absolute-return objectives	Leverage, shorting, derivatives, liquidity gates, strategy opacity
Margin / borrowing to invest	Increased exposure and potential return	Magnified loss, margin calls, interest cost, forced liquidation

Suitability decision rules

When suitability must be considered

Notes and examples

Suitability factors

Factor	Ask	Unsuitable example
Objective	What result is the client seeking?	Speculative options for “capital preservation”
Time horizon	When is money needed?	Illiquid private placement for near-term home purchase
Risk tolerance	What loss/volatility is acceptable?	High-volatility portfolio for conservative client
Risk capacity	Can the client financially absorb loss?	Leveraged strategy for client with low surplus cash
Investment knowledge	Does the client understand product risk?	Complex note sold as “just like a GIC”
Liquidity	Can client access funds when needed?	Locked-in product for emergency funds
Concentration	Is exposure diversified enough?	Most assets in employer stock or one sector
Costs	Are fees justified by benefit and service?	Fee-based account for inactive buy-and-hold client without added service
Reasonable alternatives	Is there a less costly or lower-risk way to meet the objective?	Recommending high-commission product when simpler product fits better
Account constraints	Does the account permit the strategy?	Margin/short strategy in an account where not permitted

Solicited, unsolicited, and discretionary

Label	Meaning	Conduct consequence
Solicited order	Representative recommended or influenced the trade	Full suitability and documentation of rationale expected
Unsolicited order	Client initiated without recommendation or influence	Do not use label to hide advice; suitability/escalation may still be required by rules and firm policy
Discretionary authority	Representative chooses key trade elements without client’s specific instruction	Requires proper account approval and authorization; unauthorized discretion is a serious breach
Time and price discretion	Client specifies security, side, and amount; representative selects timing/price execution details	Not the same as full discretionary authority
Managed account	Approved discretionary portfolio management arrangement	Requires appropriate authorization, mandate, and supervision
Order-execution-only account	Client directs trades without advice	Suitability is generally not provided, but disclosure, account appropriateness, and trading integrity still matter

High-Yield CPH Decision Rules

If the scenario involves…	Think first about…	Best exam instinct
A client recommendation	KYC, KYP, suitability, conflicts	Do not recommend until facts are current and product risks are understood
A client order that seems unsuitable	Clarify, warn, document, escalate if needed	“Unsolicited” does not eliminate all duties
Non-public information	Insider trading, tipping, confidentiality	Do not trade, recommend, or pass along the information
A complaint	Prompt escalation and recordkeeping	Do not handle privately or promise a result
A conflict of interest	Avoid, control, disclose, client’s interest	Disclosure alone may not be enough
Discretion over trades	Authority, account approval, supervision	Do not exercise discretion without proper authorization
Marketing or social media	Fair, balanced, approved communication	Avoid guarantees, misleading claims, cherry-picked performance
Vulnerable client concerns	Capacity, undue influence, trusted contact concepts	Escalate and follow firm procedures
Account opening	Identity, capacity, KYC, risk profile, objectives	Incomplete onboarding can contaminate later suitability
Suspicious money movement	AML/ATF, sanctions, source of funds	Escalate through firm reporting channels

Account types and authority

Notes and examples

Account authority distinctions

Concept	What it means	CPH trap
Non-discretionary account	Client makes investment decisions and gives specific instructions	Representative cannot decide key trade terms without authority
Trading authorization	Someone is authorized to place orders for the client	Authorization to place orders is not automatically full discretion
Power of attorney	Legal authority granted by the client, often broader than trading instructions	Must be valid, documented, and accepted under firm procedures
Discretionary account	Approved arrangement where an authorized person can make investment decisions	Requires proper authorization, supervision, and account approval
Managed account	Portfolio managed under a documented mandate	Do not treat ordinary advisory accounts as managed accounts
Time / price discretion	Limited discretion over execution timing or price after client gives key instructions	Do not confuse with selecting security, quantity, or buy/sell decision

Account opening red flags

Red flag	Why it matters
Third party gives all instructions	Possible unauthorized trading, undue influence, or beneficial ownership issue
Client does not understand account purpose	KYC and informed consent concern
Frequent address or banking changes	Fraud, identity, or AML concern
Client refuses to provide basic information	Account approval and AML issue
Elderly or vulnerable client suddenly changes strategy	Capacity, undue influence, or exploitation concern
Corporate account lacks authority documents	Instructions may not be legally valid
Client insists on secrecy	AML, tax, fraud, or misconduct concern

Required account documentation themes

Margin and leverage formulas

Use the margin rates, loan values, or requirements provided in a question or by the applicable rule/firm policy. Do not assume a rate unless the question gives it.

Long margin account

\[ \text{Equity} = \text{Long Market Value} - \text{Debit Balance} \]\[ \text{Required Margin} = \text{Long Market Value} \times \text{Margin Requirement} \]\[ \text{Excess or Deficiency} = \text{Equity} - \text{Required Margin} \]\[ \text{Loan Value} = \text{Long Market Value} - \text{Required Margin} \]

Short margin account

\[ \text{Equity} = \text{Credit Balance} - \text{Short Market Value} \]\[ \text{Required Margin} = \text{Short Market Value} \times \text{Margin Requirement} \]

Margin conduct points

Order handling and trade execution

Trading misconduct reference

Insider, issuer, and material information distinctions

Conflicts of interest

Conflict handling sequence

Notes and examples

Common conflicts

Conflict	Why it matters	Likely exam answer
Proprietary product	Firm earns more or has business interest	Compare alternatives; disclose conflict; recommend only if suitable
Underwriting relationship	Firm may be connected to issuer	Provide required issuer relationship/conflict disclosure
Referral fee	Payment may influence recommendation	Written arrangement, disclosure, qualified registrant for registrable activity
Sales contest / incentive	May bias product choice	Ensure incentive does not compromise client interest; disclose/avoid as required
Outside activity	Time, loyalty, reputation, or client confusion risk	Prior firm approval and ongoing disclosure/control
Gifts and entertainment	Influence or appearance of influence	Keep reasonable, approved, recorded; avoid quid pro quo
Personal relationship with client	Bias, exploitation, confidentiality issues	Escalate; avoid prohibited personal financial dealings
Borrowing/lending with client	Creates severe conflict and exploitation risk	Generally prohibited except narrow firm-approved exceptions if any
Acting as executor/trustee/POA	Control over client assets and conflict risk	Requires firm review/approval; often restricted
Compensation grid	Higher payout can bias recommendation	Recommendation must remain client-specific and justified

Conflict analysis sequence

Use this sequence in CPH scenarios:

1. Identify the conflict or potential conflict.
2. Assess whether it is material.
3. Avoid the conflict if it cannot be properly addressed.
4. Control the conflict through supervision, restrictions, or process.
5. Disclose clearly and in a timely way where appropriate.
6. Document the analysis and action taken.

Common conflicts

Conflict	Example	Exam-safe response
Compensation conflict	Higher commission product recommended over lower-cost alternative	Consider client’s interest, costs, suitability, and disclosure
Proprietary product	Firm product recommended when similar third-party options exist	Address conflict and suitability; avoid implying independence if limited
Referral arrangement	Client referred for compensation	Disclose relationship and follow firm rules
Outside activity	Representative has business interest outside the dealer	Obtain approval and manage client confusion/conflict
Gifts and entertainment	Incentive from issuer, product provider, or client	Avoid influence or appearance of influence
Personal financial dealings	Borrowing from or lending to a client	High-risk conflict; follow firm prohibitions and escalation rules
Family / close relationship	Representative handles account for related person	Disclose, supervise, and manage preferential treatment risk
Underwriting relationship	Firm promotes securities of issuer it is financing	Ensure appropriate disclosure and suitability review
Research / banking pressure	Recommendation influenced by investment banking relationship	Maintain independence and information barriers

Communications, advertising, and client reporting

Complaints and dispute resolution

Complaint file checklist

• Client allegation and date received
• Accounts, trades, products, and representatives involved
• Notes, emails, recordings, order tickets, approvals
• KYC at relevant times
• Suitability rationale and disclosures
• Supervisory review history
• Client loss/remediation analysis if applicable
• Written response and escalation outcome

AML, sanctions, and suspicious activity

Notes and examples

AML red flags

Red flag	Possible concern
Client refuses normal identity or beneficial ownership information	Attempt to avoid detection
Frequent deposits and withdrawals with little investment purpose	Layering or movement of funds
Third party funds account without clear explanation	Concealed beneficial owner
Activity inconsistent with occupation/income/net worth	Source-of-funds concern
Sudden liquidation under pressure from unknown person	Exploitation or fraud
Client asks how to avoid reporting	Suspicious intent
Complex entity structure with no business rationale	Beneficial ownership concealment

AML, ATF, Sanctions, and Suspicious Activity

CPH candidates should understand the conduct logic: securities firms must know who they are dealing with, understand suspicious activity, and escalate through appropriate reporting channels.

Common red flags

Red flag	Possible concern
Client reluctant to provide identification	Identity or beneficial ownership concern
Funds from unrelated third party	Source of funds or beneficial ownership concern
Transactions inconsistent with profile	Suspicious activity
Rapid in-and-out movement of funds	Layering or money movement concern
Client unconcerned with investment return	Money laundering concern
Use of multiple accounts without clear purpose	Structuring or concealment concern
Unusual foreign transfers	Sanctions, AML, or source of funds issue
Client asks how to avoid reporting	Evasion concern
Corporate structure is opaque	Beneficial ownership concern

Exam-safe AML response

• Do not ignore red flags because the client is profitable.
• Do not warn the client inappropriately about internal reporting.
• Gather required information through approved processes.
• Escalate to the firm’s AML/compliance function.
• Keep records and follow firm procedures.

Privacy and confidentiality

Notes and examples

Privacy, Confidentiality, and Cybersecurity

Issue	Review point
Client information	Collect, use, share, and retain only for proper business and regulatory purposes
Consent	Use client information consistently with consent and legal requirements
Confidentiality	Do not discuss client accounts with unauthorized third parties
Secure communication	Use approved systems and protect sensitive information
Cyber incidents	Escalate suspected compromise promptly
Internal access	“Need to know” matters; curiosity is not a business reason
Third-party requests	Verify authority before releasing information

Registration, supervision, and firm controls

Outside activities and personal conduct

Vulnerable clients and trusted contact

Notes and examples

Vulnerable Clients, Trusted Contacts, and Undue Influence

CPH scenarios may include elderly clients, cognitive decline, unusual withdrawals, a new friend or relative giving instructions, or sudden changes to beneficiaries, risk profile, or strategy.

Warning sign	Better response
Client seems confused about recent trades	Pause, clarify, document, and escalate
New third party dominates meetings	Confirm client wishes privately if appropriate and follow procedures
Sudden large withdrawal inconsistent with profile	Ask reasonable questions and escalate concerns
Client changes long-standing conservative strategy abruptly	Update KYC and assess suitability carefully
Suspected financial exploitation	Follow firm procedures for escalation and protective steps
Client refuses help but appears capable	Respect autonomy while documenting and escalating concerns as required

Key trap: do not assume age alone means incapacity. Focus on facts, behaviour, authority, and firm procedures.

High-yield comparison table

Common CPH scenario traps

Fast review checklist before practice questions

• Can you separate KYC, KYP, suitability, and conflict issues in one fact pattern?
• Can you identify when disclosure is necessary but not sufficient?
• Can you distinguish unsolicited, solicited, discretionary, and time/price discretion?
• Can you calculate long and short margin equity, requirement, excess, and deficiency when rates are given?
• Can you spot unauthorized trading, churning, selling away, front-running, insider trading, and manipulation?
• Can you state why wealth, consent, or profit does not cure a conduct breach?
• Can you choose the correct first response: document, disclose, refuse, escalate, supervise, or correct?
• Can you explain why CIPF is not investment-loss insurance?
• Can you handle complaints, privacy requests, trusted contact, and AML red flags without informal shortcuts?

Cheat Sheet for CPH

This independent quick review is for candidates preparing for the Canadian Securities Institute exam CSI Conduct and Practices Handbook (CPH), exam code CPH. Use it to refresh the highest-yield conduct and compliance concepts before moving into topic drills, mock exams, and detailed explanations.

Exam mindset: CPH questions often test judgment. The strongest answer usually protects the client, preserves market integrity, avoids or controls conflicts, escalates compliance issues, and documents the decision.

Regulatory Framework: Know the Roles

CPH is less about memorizing one isolated rule and more about understanding how registrants, dealers, regulators, and clients interact.

Core Conduct Principles

The “CPH default answer” pattern

When two answer choices seem plausible, prefer the one that does more of the following:

1. Protects the client’s interest
2. Uses current and complete client information
3. Understands the product before recommending it
4. Identifies conflicts early
5. Avoids misleading statements
6. Escalates to supervision or compliance
7. Creates a clear record
8. Preserves market integrity
9. Does not bypass firm procedures
10. Does not rely on informal shortcuts

Professional conduct themes

KYC, KYP, and Suitability

The three-part chain

Notes and examples

If any link is weak, the recommendation is weak.

KYC: high-yield client facts

KYC area	What to capture or understand	Common mistake
Identity and legal capacity	Who the client is and who can act for the account	Taking instructions from an unauthorized person
Employment / business	Income source, stability, industry exposure, insider status	Ignoring employer restrictions or insider concerns
Financial situation	Income, assets, liabilities, liquidity needs	Looking only at net worth and ignoring cash flow
Investment knowledge	Experience with securities, leverage, complexity	Assuming wealth equals sophistication
Objectives	Growth, income, capital preservation, speculation, liquidity	Using vague objectives that do not guide recommendations
Time horizon	When funds are needed	Recommending illiquid or volatile products for short-term needs
Risk tolerance	Willingness to accept volatility or loss	Recording “high risk” because the client wants high returns
Risk capacity	Ability to absorb loss financially	Ignoring age, income stability, debts, dependants, and horizon
Tax considerations	Taxable versus registered account issues, income needs	Treating tax as the only driver of suitability
Concentration	Exposure to one issuer, sector, employer, strategy, or product type	Suitable security, unsuitable portfolio concentration

Risk tolerance vs. risk capacity

Scenario	Better suitability instinct
Client says they want aggressive growth but cannot afford loss	Risk capacity limits the recommendation
Client can afford risk but is emotionally uncomfortable with volatility	Risk tolerance limits the recommendation
Client wants high income with no risk	Explain trade-offs; do not imply risk-free yield
Client wants liquidity but buys illiquid securities	Reassess objective and explain liquidity risk
Client has concentrated employer stock	Consider diversification and insider/trading restrictions

KYP: what you must understand before recommending

Product feature	Why it matters
Structure	Debt, equity, fund, derivative, structured note, exempt product, managed product
Return drivers	Interest rates, credit, equity markets, commodities, volatility, currency, leverage
Downside risk	Market loss, credit loss, liquidity loss, early redemption limits, complexity
Costs	Commissions, spreads, embedded fees, management fees, performance fees, penalties
Liquidity	Exchange-traded, redeemable, lock-up, secondary market limitations
Conflicts	Proprietary product, referral fee, underwriting relationship, compensation incentive
Tax profile	Interest, dividends, capital gains, return of capital, registered-account fit
Complexity	Whether the client can understand the recommendation and its risks

Suitability: exam decision points

Suitability is not a one-time paperwork exercise. It is a judgment that connects the client’s facts to the recommendation, order, strategy, account type, and portfolio.

Trigger or situation	Suitability focus
New account	Is the account type, risk profile, and initial strategy appropriate?
Recommendation	Is the product or strategy suitable for this client?
Significant KYC change	Does the current portfolio still fit?
New product or strategy	Does the representative understand it and is it approved for the client?
Concentrated position	Is the overall portfolio too exposed to one risk?
Leverage or margin	Can the client understand and withstand amplified losses?
Unsolicited order	Is there a need to warn, document, or escalate if the order appears unsuitable?
Account review	Are objectives, risk profile, and holdings still aligned?

Suitability Traps Candidates Miss

Discretionary Trading and Managed Accounts

Discretion is a favorite CPH topic because the facts often look harmless: “The client was unavailable,” “the representative knew what the client wanted,” or “the market was moving quickly.” The exam usually wants formal authority, not convenience.

What makes a trade discretionary?

A trade may be discretionary if the representative chooses one or more essential elements without proper client instruction, such as:

• security or product;
• buy versus sell;
• quantity;
• account;
• timing beyond permitted limited discretion;
• price beyond permitted limited discretion;
• strategy or allocation.

Notes and examples

Safer exam approach

Situation	Better answer
Client says “do whatever you think is best” in a regular account	Obtain proper authority or specific instructions before trading
Client gave general objective but no trade details	Do not treat objective as an order
Client cannot be reached and market is moving	Follow firm procedures; do not create unauthorized discretion
Client previously bought similar securities	Past behavior does not authorize a new trade
Representative believes trade will help client	Good intention does not cure unauthorized trading

Client’s Interest and Standard of Conduct

CPH scenarios often test whether the registrant puts the client’s interest ahead of personal convenience, compensation, or firm pressure.

Communications, Advertising, and Social Media

High-yield communication rules

Notes and examples

Communication traps

Trap	Why it matters
“This is not a recommendation, just information.”	Context can make it a recommendation.
“Private message means no supervision.”	Business communications must be retained and supervised as required.
“Past performance speaks for itself.”	Past performance can mislead without context and risk disclosure.
“Low volatility means no risk.”	Credit, liquidity, inflation, concentration, and issuer risk may remain.
“Guaranteed income”	Income stream, principal protection, and issuer guarantee are different concepts.

Trading Conduct and Market Integrity

Core trading obligations

Notes and examples

Prohibited or high-risk market conduct

Conduct	Why it is a problem
Front-running	Trading ahead of client or firm orders using knowledge of those orders
Insider trading	Trading with material non-public information
Tipping	Sharing material non-public information with others
Wash trading	Trades with no real change in beneficial ownership to create false activity
Matched orders	Coordinated trades designed to mislead the market
Spoofing / layering	Orders intended to mislead rather than execute genuinely
Rumour-based trading	Acting on unverified or confidential information can harm market integrity
Manipulative marking-the-close activity	Trades designed to affect closing prices artificially

Insider Trading and Material Non-Public Information

Test yourself: is the information risky?

Exam-safe response

If a representative receives possible material non-public information:

1. Do not trade for self, client, or related accounts.
2. Do not recommend trading based on the information.
3. Do not tip others.
4. Preserve confidentiality.
5. Escalate to compliance or supervision.
6. Follow information barrier procedures if applicable.

Complaints, Errors, and Misconduct

Recognizing a complaint

A complaint does not need magic words. If a client alleges unfair treatment, loss due to advice, unauthorized trading, misrepresentation, fee issues, service failure, or misconduct, treat it seriously.

Notes and examples

Complaint-handling traps

Trap	Why it is wrong
Waiting to see if the client calms down	Delay can breach firm procedures and worsen harm
Paying the client personally	Creates conflict and may hide misconduct
Changing notes after the fact	Record integrity issue
Blaming the market	Complaint may be about process, disclosure, or suitability
Promising compensation	Unauthorized settlement risk
Ignoring oral complaints	Oral concerns can still require escalation

Fees, Costs, and Compensation

What candidates should review

Fee-based account trap

A fee-based account is not automatically better or worse. It depends on:

• client needs;
• account size;
• expected trading frequency;
• services provided;
• costs compared with alternatives;
• conflict disclosure;
• ongoing suitability.

If a buy-and-hold client pays a recurring fee but receives little ongoing service, the account may raise suitability and fairness concerns.

Leverage, Margin, Short Selling, and Complex Strategies

Leverage decision rule

Leverage magnifies both gains and losses. In CPH scenarios, leverage requires stronger KYC, clearer risk disclosure, and careful suitability analysis.

Notes and examples

Common leverage mistakes

Mistake	Better exam answer
Recommending leverage to meet an unrealistic return target	Revisit objectives and risk capacity
Using home equity or borrowed funds casually	Assess debt service, downside, and liquidity
Assuming sophisticated client means leverage is suitable	Still analyze purpose, risk, and capacity
Ignoring margin calls	Explain forced sale risk
Treating stop-loss orders as full protection	Stops may not execute at expected price

New Issues, Underwriting, and Primary Market Conflicts

Research, Recommendations, and Information Barriers

Supervision and Compliance

Who is responsible?

Supervision traps

Records and Documentation

What good documentation proves

Good records show what was known, considered, disclosed, recommended, instructed, approved, and escalated.

Documentation trap

Documentation should reflect reality. Backdating, altering notes, or creating after-the-fact justifications can be worse than weak documentation because it raises integrity and misconduct concerns.

Ethics Scenarios: Fast Answer Framework

When stuck, run this checklist:

1. Who is the client?
2. Who gave the instruction?
3. Is the account approved for this activity?
4. Is KYC current and complete?
5. Does the representative understand the product?
6. Is the recommendation suitable for the client and portfolio?
7. Is there a conflict?
8. Was disclosure clear, balanced, and timely?
9. Is the communication approved and not misleading?
10. Should the issue be escalated?
11. What records are required?
12. Would the action look fair to the client, firm, regulator, and market?

Common CPH Question Patterns

Rapid Review Tables by Topic

KYC / suitability quick table

Notes and examples

Conflict quick table

If you see…	Ask…
Higher commission	Is recommendation influenced by compensation?
Referral	Was the referral arrangement disclosed and approved?
Outside business	Could clients confuse roles or rely on registration?
Gift or entertainment	Could it influence advice or appear improper?
Personal loan	Is there prohibited personal financial dealing?
Proprietary product	Were alternatives and conflicts considered?
Related issuer	Was relationship clearly disclosed?

Communications quick table

If you see…	Watch for…
“Guaranteed”	Is the guarantee real and properly explained?
“No risk”	Misrepresentation
“Best return”	Unsupported performance claim
“Limited time only”	Sales pressure and suitability shortcuts
Social media post	Approval, supervision, recordkeeping
Client seminar	Balanced presentation and approved materials
New designation	Accuracy and approval of title
Performance chart	Benchmark, time period, assumptions, cherry-picking

Mini Scenario Practice

Use these as quick self-tests before doing original practice questions.

Scenario 1: The rushed trade

A long-time client leaves a voicemail: “Buy more of that same tech stock if it dips today.” The client does not specify quantity or price.

Best instinct: clarify instructions before trading. Past holdings and general interest do not automatically provide full trade authority.

Scenario 2: The wealthy client

A wealthy entrepreneur wants to place most liquid assets into a private illiquid investment. They say they understand business risk.

Best instinct: assess liquidity needs, concentration, time horizon, knowledge, risk capacity, documentation, product approval, and conflicts. Wealth alone is not suitability.

Scenario 3: The friendly settlement

A representative made an error and wants to personally reimburse the client to avoid a complaint.

Best instinct: report the error and complaint concern through firm procedures. Do not privately settle or hide the issue.

Scenario 4: The hot tip

A client who works at a public company hints that earnings will be much better than expected and asks the representative to buy shares immediately.

Best instinct: do not trade or recommend; treat as possible material non-public information and escalate.

Scenario 5: The social media post

A representative posts, “Our income strategy is ideal for retirees who need safe monthly cash flow.”

Best instinct: likely misleading and unbalanced. Review approval, risk disclosure, suitability, and prohibited guarantee implications.

Last-Week Review Plan

Final Cheat Sheet Checklist

Before your next practice set, confirm you can answer these without notes:

• What is the difference between KYC, KYP, and suitability?
• When does an order become discretionary?
• Why does an unsolicited order still create conduct obligations?
• What client facts matter most for risk capacity?
• What product facts matter most for KYP?
• When is disclosure not enough to handle a conflict?
• What should a representative do with possible material non-public information?
• How should complaints and errors be handled?
• What makes marketing communication misleading?
• What AML red flags require escalation?
• Why do records matter in suitability and complaint scenarios?
• What answer best protects the client, firm, and market?

Put the review into practice