CPH — CSI Conduct and Practices Handbook Quick Review

Last revised: June 17, 2026

High-yield Quick Review for the Canadian Securities Institute CSI Conduct and Practices Handbook (CPH), covering conduct, KYC, suitability, conflicts, trading, complaints, and compliance.

Quick Review 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.

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

Regulatory Framework: Know the Roles

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

Participant	Practical role in CPH scenarios	Common exam trap
Canadian Securities Institute	Official provider of the CSI Conduct and Practices Handbook (CPH) exam	Do not confuse education provider role with dealer supervision
Securities regulators	Oversee securities laws and registration framework	Assuming one firm policy overrides securities law
Self-regulatory organization / industry regulator	Sets and enforces conduct, supervision, and business rules for member firms and Approved Persons where applicable	Ignoring industry conduct rules because “the client agreed”
Dealer member / firm	Supervises representatives, accounts, trades, complaints, records, and compliance systems	Thinking responsibility sits only with the individual representative
Registered representative / advisor	Deals with clients, gathers KYC, makes recommendations, handles orders, documents and escalates issues	Treating client relationship management as separate from compliance
Client	Provides information, gives instructions, receives disclosures, makes decisions	Assuming the client’s consent cures misrepresentation, unsuitable advice, or conflicts

Core Conduct Principles

The “CPH default answer” pattern

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

Protects the client’s interest
Uses current and complete client information
Understands the product before recommending it
Identifies conflicts early
Avoids misleading statements
Escalates to supervision or compliance
Creates a clear record
Preserves market integrity
Does not bypass firm procedures
Does not rely on informal shortcuts

Professional conduct themes

Theme	What it means in exam terms
Fair dealing	Treat clients honestly, fairly, and in good faith
Competence	Do not recommend or discuss products beyond your understanding or approval
Diligence	Investigate, clarify, and document before acting
Confidentiality	Protect client information and material non-public information
Integrity	Do not mislead clients, regulators, the firm, or the market
Accountability	Escalate issues instead of hiding, delaying, or informally resolving them

Client Relationship Lifecycle

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, KYP, and Suitability

The three-part chain

Concept	Key question	Candidate memory cue
KYC — Know Your Client	Who is this client, and what do they need?	Client facts
KYP — Know Your Product	What is this product or strategy, including costs and risks?	Product facts
Suitability	Does the product or strategy fit this client now?	Match the two

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

Trap	Why it is wrong
“The client signed the form, so it is suitable.”	Documentation supports suitability; it does not replace suitability.
“The product is low risk, so it suits everyone.”	Time horizon, liquidity, concentration, and objective still matter.
“The client is wealthy, so complex products are fine.”	Wealth is not the same as knowledge, tolerance, or need.
“The client requested the trade, so there is no duty.”	Unsolicited orders still require proper handling and documentation.
“High return objective means high-risk recommendation is suitable.”	Risk tolerance and risk capacity must support the objective.
“Diversification is only about number of holdings.”	Sector, issuer, geography, currency, and strategy concentration also matter.
“Disclosure cures all conflicts.”	Some conflicts must be avoided or controlled; disclosure may be insufficient.
“A good outcome proves the recommendation was suitable.”	Suitability is assessed based on information and process at the time.

Account Types and Trading Authority

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

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.

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

Conflicts of Interest

Conflict analysis sequence

Use this sequence in CPH scenarios:

Identify the conflict or potential conflict.
Assess whether it is material.
Avoid the conflict if it cannot be properly addressed.
Control the conflict through supervision, restrictions, or process.
Disclose clearly and in a timely way where appropriate.
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

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.

Weak answer	Stronger answer
“The product pays more but is still allowed.”	Compare suitability, costs, alternatives, and conflicts.
“The client did not ask about fees.”	Explain material costs and compensation where required.
“The client is responsible for reading all documents.”	Provide clear, balanced explanation; documents do not excuse misleading conduct.
“Everyone in the branch sells this product.”	Suitability is client-specific.
“The firm approved the product, so it is suitable.”	Product approval is not client suitability.

High-yield communication rules

Communication issue	What to remember
Fair and balanced	Include material risks, limitations, and assumptions
Not misleading	Avoid omissions, exaggeration, selective facts, or confusing comparisons
No guarantees	Do not imply guaranteed returns unless the guarantee is real, explained, and backed by an appropriate party
Performance claims	Avoid cherry-picking; disclose assumptions, periods, benchmarks, and limitations
Titles and designations	Use only accurate, approved titles; avoid implying expertise not held
Testimonials / endorsements	Follow firm approval and regulatory requirements
Social media	Business communications are still supervised communications
Email / messaging	Use approved channels and preserve records
Educational content	Can still be misleading if it promotes a product without balanced disclosure

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

Area	Review point
Order instructions	Confirm account, security, action, quantity, order type, price limits, and timing
Order priority	Handle client orders fairly and according to priority rules
Best execution	Seek advantageous execution terms reasonably available under the circumstances
Fair allocation	Allocate fills fairly, especially for block or partial fills
Error handling	Report, correct, and document errors under firm procedures
Personal trading	Avoid front-running, conflicts, and misuse of client or firm information
Market manipulation	Do not create false or misleading market activity
Records	Maintain accurate order tickets, timestamps, communications, and approvals

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?

Question	If yes, be careful
Is the information about a public issuer or security?	It may affect trading decisions
Is it material?	A reasonable investor might consider it important
Is it non-public?	It has not been broadly disclosed
Did it come from a special relationship, client, issuer, insider, or confidential source?	Confidentiality and trading restrictions may apply
Would trading appear unfair to the market?	Market integrity concern

Exam-safe response

If a representative receives possible material non-public information:

Do not trade for self, client, or related accounts.
Do not recommend trading based on the information.
Do not tip others.
Preserve confidentiality.
Escalate to compliance or supervision.
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.

Scenario	Better CPH response
Client says “you never explained the risk”	Escalate and document as a potential complaint
Client demands reimbursement	Do not personally settle; notify supervisor/compliance
Representative made an order entry error	Report promptly under firm procedures
Client threatens regulator or lawyer	Escalate; do not argue or destroy records
Complaint seems unreasonable	Still follow complaint-handling process
Representative wants to call client privately to “fix it”	Communicate through approved process and document

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

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, 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

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.

Fees, Costs, and Compensation

What candidates should review

Cost or compensation item	Why it matters
Commissions	Affect recommendation conflicts and client return
Fee-based accounts	Must make sense for expected services and trading pattern
Embedded fees	Client may not see them directly but they affect return
Spreads	Relevant in fixed income and certain principal transactions
Deferred or redemption charges	Affect liquidity and suitability
Performance fees	Create incentive conflicts
Referral fees	Require conflict analysis and disclosure
Margin interest	Can materially affect leveraged strategies

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.

Strategy	Conduct concern
Margin borrowing	Losses can exceed initial cash invested; interest costs matter
Borrowing to invest	Client must have risk capacity and cash flow to service debt
Short selling	Potentially large losses, borrowing costs, recall risk, market risk
Options / derivatives	Complexity, expiry, leverage, assignment, volatility
Structured products	Payoff complexity, issuer credit risk, liquidity, costs
Inverse or leveraged funds	May be unsuitable for long-term holding if structure creates path dependency
Illiquid exempt products	Valuation, resale limits, concentration, disclosure

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

Issue	Review point
New issue allocation	Must be fair and consistent with firm procedures
Selling group compensation	May create conflict requiring disclosure and supervision
Connected or related issuer	Client needs clear conflict information
Due diligence	Do not rely only on promotional materials
Suitability	New issue popularity does not make it suitable
Selling pressure	Do not recommend because allocation is available or firm wants distribution
Stabilization or market activity	Must comply with market integrity rules

Research, Recommendations, and Information Barriers

Topic	CPH review point
Research independence	Recommendations should not be improperly influenced by banking or issuer relationships
Conflicts in research	Disclose material conflicts where applicable
Information barriers	Prevent misuse of confidential information
Rumours	Do not present unverified rumours as fact
Selective disclosure	Avoid giving some clients material information unfairly
Model portfolios	Still require client-specific suitability if used for recommendations

Supervision and Compliance

Who is responsible?

Role	Responsibility
Representative	Know client, know product, recommend suitably, document, escalate
Supervisor / branch manager	Review activity, approve accounts, monitor exceptions, address issues
Compliance	Policies, surveillance, advice, investigations, regulatory liaison
Firm	Systems of supervision, training, records, complaint handling, culture
Senior management	Oversight, resources, control environment

Supervision traps

Trap	Why it is wrong
“Compliance approved the product, so I can sell it to anyone.”	Product shelf approval is not suitability.
“The supervisor was copied, so I have no responsibility.”	Individual obligations remain.
“No client complaint means no issue.”	Surveillance may identify unsuitable activity before a complaint.
“Experienced representatives need less documentation.”	Experience does not replace records.
“Verbal approval is enough.”	Follow required documentation and approval process.

Records and Documentation

What good documentation proves

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

Record	Why it matters
KYC information	Basis for suitability
Client communications	Evidence of explanation and instructions
Order records	What was ordered, when, and by whom
Disclosure records	Costs, risks, conflicts, relationship terms
Notes of meetings/calls	Context for advice and client decisions
Supervisory approvals	Account, product, trade, and exception oversight
Complaint file	Fair and timely handling
Error reports	Correction process and accountability

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:

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

Common CPH Question Patterns

Question pattern	What the exam is testing
“Client insists…”	Whether client preference overrides suitability or conduct duties
“Representative believes…”	Whether good intentions excuse missing authority or documentation
“Firm approved…”	Difference between product approval and client suitability
“Urgent market opportunity…”	Whether urgency excuses shortcuts
“Long-time client…”	Whether familiarity replaces current KYC
“Wealthy client…”	Whether wealth replaces risk analysis
“Unsolicited order…”	Whether documentation and warnings are required
“Private conversation…”	Whether business communication and complaints must be recorded
“Everyone knows…”	Whether rumour or non-public information can be used
“Small gift…”	Whether conflicts can arise from appearance, not just amount

Rapid Review Tables by Topic

KYC / suitability quick table

If you see…	Focus on…
Retired client	income needs, capital preservation, liquidity, risk capacity
Young high-income client	objectives, debt, horizon, actual risk tolerance
Business owner	liquidity, concentration, tax, succession, business risk
Insider / employee of issuer	trading restrictions and material information
New immigrant or non-resident facts	identity, tax, jurisdiction, documentation
Client with heavy sector exposure	concentration and diversification
Client wants “safe high yield”	credit risk, liquidity risk, unrealistic expectations
Client wants options	knowledge, approval, risk, strategy, margin
Client wants to borrow to invest	debt service, loss capacity, disclosure

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.

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

Day	Review focus	Practice task
Day 1	KYC, KYP, suitability	Topic drills on client profiles and recommendations
Day 2	Conflicts, fees, compensation	Scenario questions with disclosure/control decisions
Day 3	Account authority, discretionary trading, managed accounts	Drills on who can give instructions and when
Day 4	Trading conduct, insider information, market manipulation	Mixed market-integrity questions
Day 5	Communications, complaints, privacy, AML	Compliance-process drills
Day 6	Supervision, records, ethics	Case-based questions with escalation choices
Day 7	Mixed mock exam review	Analyze explanations and redo missed topics

How to Use a Question Bank After This Review

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

Best practice sequence

Start with topic drills
Drill KYC/suitability, conflicts, account authority, trading conduct, communications, complaints, and AML separately.
Read detailed explanations carefully
Do not only mark right or wrong. Identify why the tempting answer was weaker.
Build a trap log
Track errors such as “ignored conflict,” “assumed client consent was enough,” or “missed escalation.”
Move to mixed sets
Mixed questions force you to identify the topic before choosing the rule.
Finish with mock exams
Use mock exams to improve pacing, stamina, and scenario recognition.

Final Quick Review 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?

Practical Next Step

Use this CPH Quick Review to identify weak areas, then work through original practice questions by topic. Focus on the detailed explanations for every missed or guessed question, especially scenarios involving suitability, conflicts, discretionary authority, complaints, and market integrity.

Maintaining Client Accounts and Relationships

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